... and it falls to the Independent Administrator to pro-actively steer the beneficiaries towards a resolution, whilst maintaining their position of neutrality.
But when might an Independent Administrator have to consider making a decision which might be unpopular with one beneficiary, for the greater good of the estate as a whole?
This question was considered recently by VWV Partners Michelle Rose and Mary McCrorie as the Court appointed Independent Administrators for the deadlocked estates of a husband and wife, Mr and Mrs McDonald.
Mr and Mrs McDonald died within two years of each other, leaving behind six adult children and a combined estate worth over £40 million, part of which comprised two family companies.
Earlier this year, one of the siblings, the sixth beneficiary, appealed against a decision of the High Court dismissing his proprietary estoppel claim for the bulk of his parents' estates and an increased shareholding in the family companies. The Court of Appeal agreed with the findings of the first instance judge and dismissed the appeal. The full reported judgement can be found here: McDonald v Rose  EWCA Civ 4.
Against the backdrop of these highly contentious proceedings, Mary and Michelle are continuing to administer the estate and take difficult decisions to drive the administration forward and to fulfil their Bartlett duty to all six residuary beneficiaries of the estates.
It is well-established that trustees are under a duty to protect and safeguard trust property. They should conduct trust business with the care that a reasonably prudent businessman would extend to his own affairs.
The case of Bartlett v Barclays Bank Trust Co Limited  1 Ch 515 established the principle that the duty of care owed by a Trustee with a controlling shareholding in a company is higher and requires the Trustee to become involved in the business of the company and to review the progress of the business with the directors.
It was stated in Bartlett that a prudent businessman, seeking to safeguard his investment, would not be content to simply receive information about the company's activities at AGMs. He would go further than this and use his additional powers (by virtue of his controlling interest) to intervene if he was dissatisfied with how affairs were being conducted.
Trustees in this position must therefore adopt a more interventionist approach and be willing to obtain information and take appropriate action in order to safeguard the trust property and discharge their duties as trustees.
Following the High Court proceedings, the Administrators became the registered shareholders of all of the issued shares of the family companies. Conscious of their Bartlett duty, and in light of the proprietary estoppel claim, the Administrators took the difficult decision to appoint another Director to monitor the day to day management and control of the companies. This ensured that their Bartlett duty was met.
Whilst such difficult decisions might be met with hostility by some beneficiaries, an Independent Administrator must put the interests of the estate as a whole at the forefront of every decision. When dealing with an acrimonious estate, proactive steps will be crucial to breaking a deadlock, guiding beneficiaries to a resolution and making a final distribution.