Maggie’s father died, leaving his money to be divided equally between Maggie and her brother Rob, but his house entirely to Maggie. When Rob discovered this, he placed a caveat on their father’s house and indicated that he intended challenging the will.
Over the next couple of years Maggie, Rob, and the trustee company, who were administering the estate, negotiated the release of the caveat. Eventually, Rob agreed to release the caveat and pay all the estate’s caveat-related costs. Maggie, Rob, and the trustee company also agreed that the estate would pay the first $3,000 of the property-related costs, like rates and insurance, but that Maggie would pay the rest of the costs. Everyone signed a settlement agreement, and the trustee company distributed the estate’s assets according to their reading of the settlement agreement.
When Rob received his share of the estate, he discovered that the trustee company had charged all the property related costs to the estate, about $7,000, rather than just the first $3,000. The trustee company immediately reimbursed Rob for the additional $4,000 and contacted Maggie, explaining their mistake, and asking her to return the overpayment.
Maggie refused, saying the costs related to delays in administering the estate because Rob had lodged the caveat. Rob had agreed to pay all the estate’s caveat-related costs so these costs should be paid by Rob.
Maggie said that when she first met the trustee company, she asked how much it would cost to administer a straightforward estate. The trustee company estimated the cost would be about $7,000. In fact, the trustee company’s costs were about $23,000 and, after Rob’s contribution for the caveat-related costs, the estate had still paid the trustee company about $18,000.
The trustee company were satisfied that their costs were accurate, explaining that Maggie and Rob’s dispute meant that the estate administration was no longer simple. The trustee company apologised for their error when calculating Maggie’s share of the estate and offered to discount the amount she owed by 20%.
Maggie did not accept the trustee company’s offer and complained to FSCL.
Dispute
Maggie said the trustee company had misread the settlement agreement. Rob had agreed he would pay all the costs associated with the caveat, in excess of the normal administration costs, including the costs incurred because of the delayed administration. If there had been no dispute about the caveat, the estate would have been administered much earlier at a much lower cost.
The trustee company said they had carefully calculated the caveat-related costs and did not agree that costs incurred as part of the delayed administration should be included in Rob’s share. However, in the interests of bringing the complaint to a conclusion, and as a gesture of goodwill, the trustee company offered to waive the $4,000 they considered Maggie owed.
Maggie initially did not accept the trustee company’s revised settlement offer.
Review
We reviewed the settlement agreement, and considered it was ambiguous. However, we did not consider it our role to determine which reading should be preferred. The trustee company was not involved in drafting the settlement agreement and had simply administered the estate on their understanding of the agreement. We did not consider the trustee company were wrong to have attributed only the costs directly related to the caveat to Rob.
We also considered Maggie’s complaint that the trustee company’s costs were excessive. We could see Maggie’s perspective. Her father’s most significant assets were a home and money in the bank. If there had been no dispute, the estate administration would have been straightforward and cost less.
However, Maggie’s father suffered from dementia and Rob had disputed the will. These factors added layers of complexity requiring additional work that the trustee company were entitled to be paid for.
It was our view that the trustee company’s settlement offer was reasonable, and we encouraged Maggie to accept it.
Resolution
After further consideration, Maggie agreed to accept the settlement offer and the complaint was resolved on this basis.
Insights for consumers A family dispute often complicates estate administration, resulting in delay and additional costs. The beneficiaries to an estate will be grieving and may bring with them unresolved issues. However, it is the trustee company’s role to administer the estate and they are entitled to be paid for their work. We remind the beneficiaries of an estate to manage their communication with the trustee company to, as much as possible, avoid additional costs.
