Many people will be familiar with Grants of Probate and Letters of Administration, but fewer may be aware that there are also several categories of “limited Grants”. A limited Grant is as it says on the tin, a Grant of Probate, but one that is limited by subject matter or time. One of the most common types of limited Grants is a Grant Ad Colligenda Bona. A Grant Ad Colligenda Bona is one that entitles the named executor or administrator to administer the estate but not distribute it. The Grant is limited to collecting in and preserving the assets.
Druces’ Contentious Estates team recently obtained such a Grant for the administrator of an estate. The estate was an intestate one where the deceased had died over two years ago. Various claims were being made against the estate, including a claim for proprietary estoppel from a disappointed beneficiary and two caveats that were preventing the issuing of the Grant. There was also active litigation concerning one of the properties owned by the estate; a tenant was making a claim for the long lease to be extended. The estate was predominantly made up of rental properties, which meant there were limited funds available to pay the large inheritance tax bill.
The inheritance tax bill had gone unpaid for many months and far in excess of the six-month period from the month of death in which you are given by HMRC to pay the tax owed, meaning significant interest had accrued and was continuing to accrue. The short-term tenancies had expired on the rental properties and new tenancies could not be signed because nobody had been named as administrator. Some of the rental properties had also fallen into disrepair because funds were unavailable to pay for repairs. In short, it was a perfect probate storm.
The estate was at real risk of wasting and it was feared if a Grant was not obtained soon and the estate administered, the value of the estate would soon be dwarfed by the unpaid inheritance tax and interest that accrued thereon.
Druces successfully filed an application for a Grant Ad Colligenda Bona that saw our client, the Deceased’s spouse, named as administrator of the estate. The application involved a paper probate application and a witness statement in support, setting out the reasons with evidence as to why a Grant Ad Colligenda Bona should be granted by the Probate Registry. The Probate Registry only issues these types of Grants in extreme circumstances, so it is important a substantiated and thorough case is put forward. To obtain the Grant, we also negotiated with the two caveators who had lodged caveats against the estate to have them removed. The Probate Registry would not issue the Grant without the caveats being removed or proof the caveators agreed to the administrator being named.
Having obtained the Grant, our client, the named administrator, has been able to agree to the lease extension and prevent the proceedings reaching Court; agree new tenancies over the short-term rental properties, which is providing an income to pay for estate expenses; sell shareholdings and properties to release funds to pay some of the inheritance tax. Although our client will not be able to distribute the estate, there is now breathing space to deal with the claims being made by disappointed beneficiaries and importantly, the estate is not wasting.
A Grant Ad Colligenda Bona is a highly effective tool when dealing with contentious estates because they protect and preserve the estate assets and allow assets to be sold to pay the inheritance tax owed, whilst allowing time to properly mediate claims. This is particularly true at the present time when the interest rate on unpaid tax is 7.25%. Caveats are very easily entered against estates and although a caveat should only be entered when there is a concern over the validity of the Will, there has been a rise of caveats being lodged by disappointed beneficiaries as a way of frustrating the administration of the estate. Often, these caveats are then sealed because the Probate Registry is failing to properly scrutinise the reasons behind the lodging of a caveat in a complete want of due process. In such instances, a Grant Ad Colligenda Bona is often the only solution to prevent the estate failing into rack and ruin.
If you are involved in contested estate proceedings and elements of the above case-study sound familiar to you, please contact either Paul Levy, Helen Freely or Zoe Norton from the Druces’ Contentious Trust and Estates team.
