Barbara’s mother died in February 2016. Barbara, who lived in the UK, was her only beneficiary. A professional trustee managed the distribution of the estate. The trustee sold Barbara’s late mother’s house in April 2016, but almost a year later Barbara was still waiting for finalisation of the estate.
In the meantime, the trustee gave various reasons for the delay. First, the trustee said that it was waiting for an investment to mature. Then, there was a ‘system change’ at the bank. Next, the trustee had to decide whether to lodge a personal tax assessment. Then, a tax refund was due (this took three months). Finally, the trustee was ‘upgrading its accounting system’ (this took over four months to rectify).
Barbara kept in regular contact with the trustee, and she became increasingly frustrated at the delays. She wondered why the trustee had not dealt with the tax and other issues at an earlier stage. Barbara also thought it unacceptable that, during the accounting system upgrade, the trustee was apparently unable to account for the estate’s money. Barbara wanted the whole thing finalised, and complained to FSCL.
We reviewed the trustee’s estate file. We agreed with Barbara that there had been significant delay.
We also noted areas where the trustee had failed to provide a reasonable administration service, and we could see that it had still charged the estate fees for that service.
For example, we noted that, because there was only one beneficiary, the trustee could have distributed the estate early. All assets could have been cashed up from the date the house was sold.
Another example was the accounting system upgrade- in our view, this was not a reason to delay final distribution. The trustee could have generated statements the old-fashioned way – by hand.
The trustee also delayed putting funds from the sale of the house on term deposit, costing Barbara six months’ worth of interest at term deposit rates.
We negotiated a settlement between Barbara and the trustee. The trustee paid Barbara around $12,000: it repaid fees it had incorrectly charged, it paid additional interest on the house proceeds, and it paid a sum to compensate Barbara for her inconvenience.
Insight for participants
When undue delay on the part of a professional trustee costs a beneficiary financially, the professional trustee should expect to have to compensate the beneficiary.