SA Abusing executor rights?

[Rambo47]

Hi

My older sister is executor of my mother’s will who passed away 2 years ago now. My sister has been living in my mother’s house for approx 5 years since my mother was placed in a nursing home. There are 3 siblings all together. Myself and 2 sisters. The will states that the estate is to be sold and split equally between us. My older sister who is currently living in the house is also bankrupt and refuses to sell the house until she is no longer bankrupt as she wishes to buy the house.

My other sister and myself believe that the we should not have to wait until it’s convenient for my sister to come out of bankruptcy before any action is taken on the house. The lawyer refuses to notify us of anything that is happening as he is working “on behalf” of my eldest sister (the executor).

Is my sister breaching the terms of the Will by not selling it straight away and distributing it three ways? Why isn’t the lawyer able to let myself and other sister know what is going on as we are mentioned in the Will?

Any help would be appreciated on this please!

 

[Rob Legat - SBPL]

This situation appears to have at least two major problems:
1. The executor may be in breach of their duty to avoid a conflict of interest. On its own it is hard to prove when they are a beneficiary themselves (however, see 2). There are some valid reasons to delay selling a house in an estate, including that the market is not favourable. The executor should be ensuring that their reasons for not dealing with the estate to distribute are reasonable, and not selfish.

If that was it, then it may not be worth taking further. However:

2. If your sister is currently bankrupt, that can drastically change things. A bankrupt is not precluded from being an executor of a will, but it can be a reason for the court to look past them in favour of someone someone else administering the estate. The big kicker though is that your sister is not entitled to distribution under the estate while bankrupt - her share belongs to the bankruptcy trustee. Her stated actions in waiting until discharge from bankruptcy and then buying the property appears to be an intention to defraud creditors in bankruptcy by hiding assets, and that’s an offence under the bankruptcy legislation.

She has a positive obligation to alert her bankruptcy trustee to the inheritance, and then as executor achieve the best possible outcome for the beneficiaries. In practical terms these are you, your other sister, and the bankruptcy trustee (who will distribute to creditors). If there’s anything left after discharging the debts, she may get some back.

It may also be the case that she is not suitable to be the executor given her apparent nobility to comply with the will’s directions and her obligations in bankruptcy.