What to do when an executor loses mental capacity

An executor who lacks mental capacity poses a serious risk to the deceased’s estate. An executor must take informed decisions regarding the administration of an estate to further the interests of the beneficiaries, and will need to process complex and varied information to do so. Any cognitive failings will impact the executor’s ability to take such decisions and may result, at worst, in poor decision making which may prejudice the beneficiaries, or at the very least in delays and confusion.

The extent of these risks are set out in our previous article An Executor loses mental capacity – are you prepared?.

So, what should be done when an executor loses capacity? In short, it is vital that they are removed from their position quickly in order to protect the beneficiaries’ interests and safeguard the estate. The steps necessary to remove an executor vary depending on when they are recognised as having lost capacity. In this article we explain:

1. how an executor’s capacity is assessed,
2. what to do if an executor loses capacity before the grant of probate has been obtained, and
3. what to do if an executor loses capacity after the administration of the estate has begun.
   
   

Assessing capacity

Recognising when an executor is deemed to have lost capacity is a crucial first step. Unfortunately, this can be a difficult and sensitive process as an individual’s capacity can fluctuate over time, and raising concerns over capacity will often cause upset and alarm. To complicate matters further, capacity is context-specific, meaning that an individual could have capacity to conduct day-to-day activities (in which decisions may be reasonably simple) while lacking the necessary capacity to administer an estate (in which decisions, relating to tax, distributions, and the protection of estate assets can be very complex), making a diagnosis difficult. It is also difficult to identify when an individual is in the early stages of mental decline, and when it is appropriate to begin the process of removing them as an executor. A capacity assessment also cannot be forced upon someone without an order of the Court of Protection, and the court will only order an assessment if doing so is in that person’s best interests.

Since the Mental Capacity Act 2005 (the Act) came into force the test for an executor’s capacity has been formalised and their capacity is now determined by reference to the criteria set out in sections 1-3 of the Act.

The assessment will be made on a decision-specific basis, so an individual may have capacity to make some decisions regarding the estate but not others. When assessing an executor’s capacity to make a decision, consideration must be given to whether: (i) the executor understands the nature and likely consequences of their actions, (ii) they are capable of communicating their decision, and (iii) they have a mental disability that prevents them from considering the relevant information to reach their decision.

For the reasons set out above, reaching a definitive assessment on capacity is not always easy, particularly when the individual’s capacity is fluctuating but not technically gone. We refer to this period as the “Twilight Zone” and you can find out more about protecting individuals at this difficult time in our previous article here.

If you have doubts about an executor’s capacity, please obtain legal advice as early as possible. 

Capacity lost before the grant of probate is obtained

It is an unfortunate possibility that a sole executor could lose capacity in the period between the making of the relevant Will and the death of the testator. The estate could be at risk if the testator died without having executed a new Will to remove the incapacitated executor. In this scenario, the executor would be incapable of performing their duties, but there would be no alternative in place. Therefore, if a sole executor is deemed to have lost capacity (in accordance with the criteria referred to above) before the grant of probate is obtained, it is important to remove them as executor prior to obtaining the grant so that their lack of capacity does not prejudice the estate and the beneficiaries.

Where a sole executor loses capacity, a qualifying individual is entitled to apply for the grant on their behalf.[1] A qualifying individual is someone that meets one of the following criteria: (i) an individual authorised by the Court of Protection to apply for a grant (ie someone who has applied to the Court of Protection to act as the executor in place of the incapacitated executor), (ii) the incapacitated executor’s registered attorney appointed under an enduring power of attorney, or (iii) if no individual can be found under (i) or (ii) then the person entitled to the deceased’s residuary estate may act. In most cases attempts to identify an individual under category (i) must be exhausted before someone qualifying under categories (ii) or (iii) can be considered. In other words, the first step is to notify the Court of Protection in order to seek its authorisation for an alternative person to apply for the grant in the place of the incapacitated executor. If the executor has not appointed an attorney, an application under (i) can be submitted alongside a deputyship application to reduce costs.

The process for removing an executor appointed jointly with one or more other executor(s) differs from the process to remove a sole executor.

For joint executors the position is more straightforward as the other executor(s) can apply for the grant of probate and reserve the incapacitated executors’ power. In practice, this means that the incapacitated individual is recognised on the grant as being an executor, but they cannot fulfil the role while they lack capacity. This enables the administration of the estate to continue without the input of the incapacitated executor, while also keeping open the possibility that they may be able to assist with the administration in the future if they were to regain capacity. To demonstrate that they had regained capacity a formal capacity assessment would need to be obtained from a doctor.

Capacity lost during the administration of the estate

An executor losing capacity during the administration of the estate poses the greatest threat to the beneficiaries, particularly if there are delays in obtaining a formal capacity assessment or removing them from their position. This is because they will already be in place and have authority to deal with estate assets.

If a sole or joint executor is deemed to have lost capacity, a beneficiary of the estate or a representative of the executor can make an application to Court to have them removed.[2] The beneficiary can ask the Court to appoint a substitute if the executor was acting alone or in the case of joint executors they can apply to terminate the appointment of one (or more, but not all) of the executors. In order to approve the beneficiary’s request, the Court must be satisfied that “the personal representative’s acts or omissions endangered the trust property or showed a want of proper capacity to execute the duties or a want of reasonable fidelity.”[3] This is in effect a two limb test, the satisfaction of either limb being sufficient for the Court to remove the executor. Therefore, in practice it must be demonstrated that either (i) the executor’s behaviour risked damaging the value of the estate, or (ii) that the executor lacks capacity, most likely by reference to the criteria in sections 1-3 of the Act.

In the case of joint executors an alternative option is to apply to have the original grant revoked and a fresh grant issued with the incapacitated executor’s powers reserved until their recovery (as explained above). However, in practice this is more convoluted and less favourable than simply making an application to have them removed.

In the unlikely event that both joint executors were deemed to have lost mental capacity during the administration the Courts are entitled to revoke the grant of probate and issue a new grant to the person(s) next entitled in priority.[4]

Conclusion

If you are concerned about an executor’s capacity it is important to seek legal assistance in order to protect the estate and to ensure that the matter is dealt with at the appropriate time and with the required sensitivity.

Footnotes

[1] Rule 35(2) of The Non-Contentious Probate Rules 1987
[2] Section 50 of the Administration of Justice Act 1985
[3] Thomas and Agnes Carvel Foundation v Carvel [2007] All ER (D) 76
[4] Re Galbraith [1951]

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, September 2023