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Assignment of Monies to an estate

Assignment of Monies to an estate

Postby miner » Wed Feb 18, 2015 12:07 am

Can the administrators of an estate assign to the estate the benefit of costs orders made in their personal favour made before they became the administrators?

Am I correct in assuming that the financial benefit of any such costs orders so assigned to an estate become assets of the estate and would then thus be distributable to the residuary beneficiaries as such?

That would of course be a method of ensuring that the estate gains the benefit of the amount of the costs orders, which are then distributed as part of the assets of the estate?

I know that in many jurisdictions, the costs of legal actions by beneficiaries in determining who should administer an prior to the appointment by the Court of administrators are routinely ultimately borne by the estate. Perhaps an "assignment" such as I described above would be a method of leading to that result?
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Re: Assignment of Monies to an estate

Postby dls » Wed Feb 18, 2015 9:38 am

Orders assigning costs of an action to the estate were fairly standard, but less so now.

I am not sure what the purpose would be of assigning the benefit of such orders would be. If so, then presumably the executors should also be able to seek payment of the associated costs from the estate resulting roughly in a null position.
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Re: Assignment of Monies to an estate

Postby miner » Wed Feb 18, 2015 7:02 pm

Thanks, dls. your comment as per your para 1 is particularly interesting.

So if the benefits of a Costs Order (= the monies relating to the Costs order, presumably, as what other "benefits" could there be?) are assigned to the estate, do the monies in the Costs Order become part of the estate's funds, given that an administrator cannot use the estate for his own benefit. Effectively, as I perceive the situation, any assets assigned specifically to the estate would automatically become part of the estate itself.

I cannot see how it could be otherwise, but perhaps the knowledge and experience of others may suggest a different interpretation?
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Re: Assignment of Monies to an estate

Postby dls » Wed Feb 18, 2015 9:51 pm

The real point is that if the proposed administrators take court action, as a result of which they succeed and receive an order for costs in their favour, that order will universally represent a sum smaller than they have expended. If both expenses laid out and costs received are passed to the estate, the estate will be the worse off.
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Re: Assignment of Monies to an estate

Postby miner » Sat Jul 18, 2015 1:00 am

dls wrote:The real point is that if the proposed administrators take court action, as a result of which they succeed and receive an order for costs in their favour, that order will universally represent a sum smaller than they have expended.


Yes, I agree.

The issue is a rather different one.

A, B and C are residuary beneficiaries. The litigation which led to the Costs Orders was between A and B acting together as one party against C as the other party. (The litigation was not against the estate, and A and B were not Personal Representatives at the time.) A and B became the Administrators after the litigation was over, the result of the litigation having then left the way clear for them to subsequently become the PR's / administrators.

No payment of the Court Orders was made by C for a number of reasons.

The solicitors acting for A & B stated that if payment of the Court Orders was not made by C and C did not authorize the solicitors to deduct the funds from C's legacy, a Court Order would have to be obtained to enable them to deduct the amount of the Court Orders from the legacy due to C from the estate.

No such Court Order was ever obtained by A & B or by their solicitor - they simply deducted the monies from the legacy due to C. 2 years later, in a move apparently hatched by their solicitors, A and B are reported as having assigned to the estate of the deceased the benefit of the Costs Orders.

A and B then deducted from the legacy (estate funds) due to C the full amount of the Costs Orders.

Thus, what A and B did was to use the estate as a vehicle to pay themselves the full amount of the costs orders.

Is such action legal and permissible under their duties as administrators, in accordance with the Administration of Estates Act 1925?

So, the monies were "assigned" by A and B to the estate (using (... abusing???? ) their positions as Administrators), but were then extracted in full from the estate for the personal benefit of A and B.

Even if assigning the benefit of the Costs Orders to the estate was legally acceptable, is seems to me that those monies once so assigned became estate funds and as such distributable in equal shares to A, B and C?
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Re: Assignment of Monies to an estate

Postby atticus » Sat Jul 18, 2015 9:09 am

Sue them. They will counterclaim. You will win on your claim. They will win on the counterclaim, and set off what you owe them against what they owe you. Net result: No change, except another costs order against you.
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Re: Assignment of Monies to an estate

Postby miner » Sat Jul 18, 2015 2:16 pm

With respect, advice on what to do or not do was not sought.

Please re-read my post. Responses to my question:

"Is such action legal and permissible under their duties as administrators, in accordance with the Administration of Estates Act 1925"?

would be helpful. There are factors which may make any successful counterclaim very difficult.
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Re: Assignment of Monies to an estate

Postby dls » Thu Jul 23, 2015 9:24 am

Not sure I have followed the exact logic here, but a relevant point may be that an administrator is an administrator _only_ on the issue of the grant. An executor has authorities from the date of death, whose actions prior to the grant are (broadly) ratified on the issue.
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