Missing Beneficiaries
You may have been named as the executor of someone’s estate, or as their administrator if no will exists. When acting as an executor or administrator, you will assume various duties and responsibilities. You must ensure that the estate is dealt with correctly and that monies are paid to the right people.
Identifying and paying legacies to beneficiaries or people entitled under an intestacy, is usually straightforward. However, you may encounter some difficulties. For instance, perhaps a beneficiary has moved away or cannot easily be identified from the will.
What happens if you cannot find a beneficiary?
If you cannot find a beneficiary, you should avoid paying out all the monies from the estate. You could be personally liable to pay the beneficiary their share of the estate if they later come forward.
To avoid this, you should take whatever steps you can to locate the beneficiary before distributing the estate. There are also options available to you to protect yourself from this potential liability, which we discuss below.
What steps can I take to try to locate the missing beneficiary?
There are various steps you can take to try to track down a missing beneficiary. Often, the deceased’s friends, family or another beneficiary may have useful information which will help in locating the beneficiary. This is a good place to start as, even if you still do not manage to locate the beneficiary. You may find that some of the information helps you in investigating further by other means.
You should consider placing advertisements in the local newspaper of the beneficiary’s last known address, and the London Gazette. These advertisements ask the beneficiary, or someone who may know them, to come forward.
Information about the beneficiary may be available from the General Register Office (GRO). The GRO holds information on births, marriages, and deaths. It may be that the beneficiary has passed away without the knowledge of the family. By obtaining their death certificate from the Registry, this will your investigations to an end. It will then allow you to distribute this beneficiary’s share of the estate.
If the above steps are unsuccessful, you should consider using the services of a genealogy company. These companies specialise in locating missing beneficiaries. They will let you know what they will need from you to assist in their search. Before starting work, they will provide a costs estimate, which is usually a percentage of the estate value.
What can I do to protect myself?
Below are some of the common steps which you can take to protect yourself from becoming personally liable to pay the missing beneficiary if they come forward at a later date:
S27 Notices
You can place adverts in both the local paper to where the deceased lived, and the London Gazette, known as s27 Notices (from s27 of the Trustee Act 1925). These are different to the ones mentioned above asking for the beneficiary to come forward. These notices ask for any unknown beneficiaries or creditors of the estate to come forward within a specified period, usually two months. This gives you some protection when distributing the estate, for example, where a deceased’s grandchild which you were unaware of comes forward after this two month period. You will not be liable to pay this beneficiary a share of the estate.
Reserve funds
You should consider holding a sum of money back if the estate is fairly small and straightforward. You can use this money to cover the event of a missing beneficiary coming forward after the estate has been distributed. A suggested period of time for you to hold these funds is around 6 months. After this time period has passed, you can then distribute the balance to the other beneficiaries.
Obtain an indemnity from the other beneficiaries
If you do not wish to hold funds back, you might want to seek the consent from the other beneficiaries to distribute the estate to them on the agreement that the beneficiaries will pay monies back to you if a missing beneficiary later comes forward. You can do this by obtaining an indemnity signed by the beneficiaries. Keep in mind that there is a risk that a beneficiary may not have funds available in the future to do this.
Missing beneficiary insurance
You can contact a company offering what is known as missing beneficiary indemnity insurance. The estate pays the insurer a premium to put a policy in place. This policy would pay a missing beneficiary’s share out to them if they were to come forward in the future, provided that the terms of the insurance policy were met. This is useful where the estate needs to be distributed quickly, and a retention of funds or obtaining beneficiary indemnities are not practical options.
Apply for a Benjamin Order
A more expensive and lengthy process, you should take legal advice on the feasibility of applying to the Court for what is known as a Benjamin Order (from the case Re: Benjamin [1902] 1CH723). This Order allows you to distribute the estate on the presumption that the missing beneficiary has died. If your missing beneficiary comes forward at a later date, you will be protected by this Order, and so the missing beneficiary would need to approach the other beneficiaries directly to try to claim their share of the estate.
Pay the funds into Court
As with a Benjamin Order, you should take legal advice on this option, as it can be quite complex and expensive. If you have been unable to determine whether a missing beneficiary is alive, you can apply to have a share of the estate paid into the Court Funds Office. This would allow you to distribute the remainder of the estate to the other beneficiaries and would protect you as the personal representative of the estate.