How do I stop someone from wasting the assets of a deceased estate? March 9, 2022

It‘s critical to understand your legal options if estate assets are being depleted or destroyed

Preservation of a deceased estate’s assets is vital for all beneficiaries. But following the death of a family member, tensions are often high. In some cases, this can lead to the wastage of estate assets through spending or destruction. What can you do if another beneficiary is wasting the assets of a deceased estate? And what happens if an executor is wasting the assets? 

Brothers demolish their family home

One of the most confronting cases of asset wastage was the 2021 example of two Queensland brothers who travelled to the regional Victorian town of Murtoa. They rented an excavator and then filmed themselves demolishing their deceased mother’s home the day before it was to be auctioned.

The brothers claimed that they were involved in a dispute with their sister, the estate’s executor. They had previously tried to challenge her appointment as executor, claiming that she had failed to pay money owing to their children.

It was expected that the property would sell for almost $100,000. But after the demolition, it sold for just $7,500.

The brothers were charged with criminal damage and theft. They were fined $10,000 each.

What can I do if a beneficiary wastes the assets of a deceased estate?

This was a case of two beneficiaries destroying the main asset of the estate. As a result, the sister (who was also a beneficiary) suffered a financial loss. Before we discuss her legal options, let’s assess the value of the loss. 

Suppose the property would potentially sell for around $100,000. In that case, the sister may have expected to receive one-third of that amount – up to $33,000. But because the property sold for $7500, her share was just $2,500, representing a loss of up to $30,500. 

The most important thing that the sister could have done was to seek urgent legal advice from an experienced wills and estates lawyer. Because in some circumstances, it may be reasonable for her as the executor not to distribute the funds to the other beneficiaries. However, she would need legal advice and court directions before taking this action.

Even if the sister kept the sale proceeds, she would still be around $23,000 out of pocket. The question then becomes whether she could recover this money, and how would she do it?  Perhaps the estate could sue the brothers for the remaining funds. The sister would need expert legal advice to work through the legal process.

What can I do if an executor wastes the assets of a deceased estate? 

If an executor wastes, destroys or mismanages the assets of an estate, you need to understand your legal options.  

Under Victorian laws, executors have specific legal duties. For example, the executor must wind up the estate, which includes locating all assets, paying bills and debts, and lodging tax returns. They must arrange for probate to be granted and then distribute the assets according to the will.

An executor must act in the best interests of the estate and the beneficiaries, including managing and protecting the estate’s assets. Specifically, executors are required to ensure that assets aren’t wasted or diminished in value. In addition, executors must not act according to their personal interests and avoid conflicts of interest. 

The beneficiaries can take legal action if they believe the executor isn’t properly performing their duties. Legal action may include the removal of the executor and the appointment of a new executor.  

If beneficiaries believe the executor is mismanaging the estate, they can take legal action known as devastavit. Davastavit is a breach of the duty to preserve, protect or manage the estate. The executor can be found liable for this breach of duty. 

Devastavit can happen by:

• Spending money inappropriately
• Making poor or ill-advised investments
• Theft of assets (known as conversion)
• Abuse of position
• Negligence

So if we consider a variation of the above scenario, what would happen if the executor allowed the house to sit idle for many years? What if the house suffered water damage from the neglected leaky roof and was overrun with rats and mice? In this situation, the beneficiaries may have a devastavit claim against the executor because the house was neglected, causing a decrease in value. Because the house wasn’t rented to tenants, they may also claim a lost opportunity to generate income for the estate. 

Consider another scenario. What would happen if the executor forgot to insure the property, and then it was destroyed by fire? The beneficiaries could claim devastavit for wasting the estate’s assets because the property was reduced to land value. 

The final word

When there are questions about whether an executor is appropriately performing their duties or whether the estate assets are at risk, you will need to seek urgent legal advice. Statutory executor duties and devastavit principles can help you take action to protect your interests. 

However, in the case of a beneficiary wasting estate assets, the legal options may be more complicated. 

If you’re concerned about asset wastage, whatever the circumstances, seek legal advice as soon as possible from an experienced deceased estate lawyer.

Contact us to learn more about what you can do when someone is wasting the assets of a deceased estate.