Posted in Fairness Campaigns
Guidance on the use by local authorities of genealogical researchers when dealing with those who die intestate with no known next of kin, or for other purposes.
1. Given the increasing interest by heir hunters in pursuing work associated with Public Health Act funerals the purpose of this note is to provide guidance to local authorities when they are dealing with the death of a person who dies intestate within their boundaries without known relatives, including:
- when and how to refer the matter to the Government Legal Department’s Bona Vacantia Division (‘BVD’) or to the Duchies of Lancaster or Cornwall (‘the Duchies’) in their areas;
- if the local authority elects not to refer the matter to the BVD or Duchies, when and how to make relevant information available to probate researchers, genealogists or heir hunters so as to help ensure: openness and transparency; a quality service is provided; the entitled relatives do not pay excessive commission fees to heir hunters or other third parties; the local authority recoups or avoids funeral expenses; and the local authority is protected from risk in the event of entitled kin being omitted from estate distribution.
2. The guidance provides relevant background detail and other information to help ensure that the local authority is aware of essential considerations, and it includes sources where additional information can be obtained, if required.
3. The guidance also explains the relationship of the probate research, genealogy and heir hunting industry with public bodies (and particularly local authorities) and provides information and points for consideration by authorities’ chief legal and finance officers.
4. It also sets out a voluntary code of practice that authorities may wish to adopt in order to promote probity and transparency, minimise risk and avoid reputational damage.
Legal context for the arrangement and cost of public health funerals
5. District and unitary authorities have a statutory duty to arrange the funeral of a person found dead in their areas where it appears to them that no other suitable arrangements have been or are being made otherwise than by the authority (see note 1). The statute does not expressly extend to circumstances where it appears to local authorities that suitable arrangements ‘could be’ made otherwise than by the authority. Authorities also have a duty not to organise a cremation of the body where the council “has reason to believe” that cremation would be contrary to the wishes of the deceased.
6. Authorities then have the power to recover the expenses of making the arrangement for that funeral (see note 2).
7. Such expenses will cover the costs of a funeral appropriate to the estate that the deceased has left behind, and also can be interpreted to include the direct costs of officer time in making appropriate funeral arrangements.
8. Where there is cash, this can be used to fund a funeral. Alternatively, where there is a bank/building society account belonging to the deceased, most savings institutions will release funds to cover the funeral expenses in advance of a grant of letters of administration. They will require the relevant invoices and proof of standing (where Section 46(5) of the Act is relevant).
9. The funeral expenses are the first preferential debt on the deceased person’s estate (see note 3). If not already released by the deceased’s savings provider, the debt can be discharged from the estate, if there are assets, once relatives are located following the usual referral process via the BVD or the Duchies, or direct from these authorities if no relatives are located. It appears that authorities may charge a fee to the estate of a deceased person for officer time in making a referral to the BVD or Duchies.
10. It appears that officer time in making funeral arrangements can be an “expense” to be charged against the deceased person’s estate. However, there is no authority which supports the legitimacy of claiming expenses from an estate for officer time taken in instructing a third party to locate relatives, and then verifying kinship claims, nor of the costs of purchase of birth, marriage or death certificates by any party.
11. If the deceased person had assets, the local authority will not end up out of pocket through arranging the funeral itself. As soon as the estate is administered by the BVD or Duchies, or through a personal representative (PR) located through advertising by the BVD or Duchies, the authority will obtain a repayment of its funeral expenses, if it has not already received them direct from a savings institution where the deceased held an account.
12. It should be noted that in making arrangements for the funeral and then recovering the costs, the authority will not assume liability and accountability as an executor de son tort (see note 4).
13. Many authorities adopt or provide guidance on ‘deaths in the community’, through which members of the public can obtain information about local authorities’ duties and practices in respect of people who die in an authority’s area. However, there is no statutory duty on the local authority to locate relatives of the deceased person. There is no government policy advice or guidance from the BVD (or from the Duchies) that states that there is any duty, obligation or other material reason to seek to locate a relative (through a probate researcher, heir hunter or any agent) if officers have not been able readily to locate relatives themselves from information contained on local authority record or in the possessions of the deceased person.
14. In circumstances where there is a known relative who cannot be located, the BVD will not accept a referral of the estate. In such circumstances there are various courses of action that an authority might consider, but the provision of the details of the estate or the relative to a sole researcher or heir hunter, whether informally or through a tender process, may lead to detrimental outcomes. It is therefore an option that ought to be considered very carefully (see in particular section 31 below). Such an option could be improved by appointing a panel of three genealogists, with all being provided simultaneously with the name and date of death of the deceased person. Alternatively, the authority could publish such information on its website in the same way that the BVD would have done. Both these solutions encourage transparency, competition and fair dealing for the relatives.
Government guidance on referral of intestate estates to the BVD
15. When someone dies intestate and with no next of kin, any assets that they owned are bona vacantia (meaning ‘ownerless goods or assets) and pass, under the rules of intestacy, to the Crown or to the Duchies of Lancaster or Cornwall in their areas. Thereafter, if the BVD on behalf of the Crown knows that the Crown does not have an interest in the property because a relative is entitled to it, their involvement will cease. However, we suggest that it continues to be incumbent upon the BVD as part of the Government Legal Department, to ensure through their policy and actions that relatives are not prejudiced and that fair dealing for the public prevails.
16. The BVD provides guidance on referral of intestate estates (for non-Duchy areas) on its website (see note 5). To summarise, BVD does not deal with cases where:
- there is a valid will, even if the executor and beneficiaries cannot be traced or do not wish to deal with the estate;
- there is known to be, or likely to be, entitled relatives even if these have subsequently died, cannot be traced or do not wish to deal with the estate;
- the estate is insolvent (there are more debts than assets); or
- the net estate is under £500.
Cases should be referred to BVD as soon as possible after the death using the case referral form - BV1A.
17. Details of such intestate deaths are then openly advertised by the BVD on the BVD website. Experienced genealogists and heir hunters alike monitor BVD advertisements and endeavour to locate entitled kin, with the intention of obtaining a finder’s fee agreement from each relative, in return for which they will advise them of the source of their potential inheritance. Competition for business between genealogists and heir hunters means that the level of fees is kept to a minimum and also helps to ensure that all entitled relatives of the correct qualifying degree are located.
18. Unless there is evidence of a living relative from the local authority’s records or from documents in the possession of the deceased, if there are net assets of over £500 and no sign of a valid will, estates should be referred by local authorities to the BVD as soon as possible after death.
Local authority arrangements with genealogists and heir hunters
19. Despite the situation set out above, departments of local authorities that deal with public health funerals have increasingly made arrangements with genealogists or heir hunters to locate relatives.
20. These relationships are often formed at junior officer level because the perceived financial implications to the authority are thought to be minimal and the statutory function is generally low profile. However, the rate of increase in these arrangements, and the successful criminal prosecution of an individual employed by a local authority to deal with public health funeral arrangements (see paragraph 36 below), demonstrate that this area provides a lucrative money-making opportunity and thus involves risks that are higher than many local authorities had previously appreciated.
21. Genealogists, probate researchers and heir hunters all act in a wholly unregulated arena (other than their employees being regulated, for example, as lawyers). In many cases they earn fees from the wider public that are facilitated by, and a direct result of their relationship with, local authorities. The potential implications of such arrangements to the reputation of a public authority are set out in this document.
22. For the purpose of this note a probate genealogist, probate researcher or ‘heir hunter’ is any person, company or organisation who identifies and locates relatives who are legally entitled to a deceased’s unclaimed assets. There are widely differing levels of experience, accreditation, qualifications and competence between such entities. Some genealogy is so far-reaching and complex that it can be beyond the capabilities of untrained researchers who identify themselves as heir hunters. In such matters there can be benefits to a number of different accredited genealogists working in competition on the same case, thereby ensuring thoroughness and accuracy.
23. Heir hunters are generally those who define themselves by that phrase, and an examination of published information on heir hunters indicates that they seldom have any genealogical qualifications or accreditations, although they may make claims to be genealogists. However, they all usually receive payment by obtaining a finder’s fee contract from the relatives they locate, expressed as a percentage of the entitlement that the relative eventually receives. Alternatively, in some instances, a genealogist or heir hunter may locate one beneficiary who is persuaded to become the PR with responsibility for the administration of the deceased’s estate. The PR is then encouraged to authorise further genealogical research, which the same heir hunter undertakes at an hourly rate, with all fees deducted from the estate. The latter arrangement can often earn a researcher greater fees than a finder’s fee arrangement. It also appears that some heir hunters are now seeking to secure (via a beneficiary who they hope will become the PR) a percentage fee from the whole estate, where the beneficiaries have no say in this deduction. This has been successfully challenged through solicitors and if resisted is likely to lead to litigation (and has already done so – see the case study here).
24. Some heir hunters have adopted the strategy of targeting public authorities with professional marketing campaigns and enticing proposals in the hope of obtaining profitable work. The authorities, through their statutory functions, are often the first possessors of valuable confidential information about individuals who die intestate with no evident relatives. The heir hunter’s main selling proposition is ‘This service we are offering you is free to the local authority and useful to the council’. This begs the question as to why heir hunters spend so much time and money on such advertising and promotion.
25. An heir hunter who is given exclusive or early information about the death of an intestate person with assets is likely to locate some next of kin and enter into a contract with them to obtain a percentage commission for obtaining their inheritance. If the information about the deceased upon which the heir hunter is acting is not in the public domain, the heir hunter is not only free to dictate high fees, but the extent of their research will also often be left unscrutinised – see 31e below.
26. The marketing and sales proposition made by heir hunters to authorities may take the form of promoting an assumed advantage to public authorities of early recovery of public funeral costs. They may also highlight as a primary benefit the possible attendance at the funeral of the deceased by estranged or unknown relatives or give insight into whether they were opposed to cremation. Whilst these may appear to be worthy aims, local authorities may wish to consider:
- whether taken as a whole these projected outcomes are more speculative than real;
- the wider implications to the public of entering into formal or informal exclusive arrangements with heir hunters or other third party agents who locate next of kin, where that exclusivity has no benefit to any party other than the heir hunter.
27. Public authorities may wish to obtain their own legal advice on the potential areas of legal and reputational risk highlighted in this note if they make arrangements other than the referral of intestate estates (where there are no immediately obvious heirs) to the Government Legal Department’s Bona Vacantia Division or the Duchies. This would allow them to weigh up the risks and benefits of entering into arrangements with genealogists or heir hunters.
Protection from officer misconduct
28. Public authorities whose officers have access to details of people who die intestate with no evident next of kin may also wish to take advice about the internal practices and controls which protect an authority from activities that could bring it into disrepute. It is unlikely that the convicted local authority officer mentioned in paragraph 36 below is alone, across public authorities, in realising the commercial value of information about intestate deaths, and acting upon this realisation.
29. The commercial value of information about those who die intestate is also demonstrated by a memo within a relevant trade association, the Heir Hunters’ Association (‘HHA’). This organisation (which is believed to have 2000 subscribers) has admitted to intercepting estates before they are passed to the BVD and to paying any source or referrer a “useful bounty”:
The basis of the HHA has been to trace heirs to intestate estates and this will continue to be the backbone of the company, not only to BV listed estates but an increasing number of leads that may never reach BV and are referred direct to the HHA, in some cases earning the referrer a useful bounty, often thousands, just by sending a few emails with the information [sic].
Heir Hunters’ Association newsletter, October 2015
The HHA also runs a scheme – unclaimed-estates.org.uk and the ‘Inheritances App’ to entice people to provide ‘leads’ to the HHA. It states that referrers can “earn money … by referring to us details of estates where someone has died without a will and no known next of kin.”
30. Some heir hunters engage field agents to make contact with any local authority or other public officer who may have early information about intestate deaths in their area. These field agents are incentivised by payment of an hourly rate for such work, together with a significant proportion of any commissions earned as a result of these ‘leads’. If the financial incentive offered to field agents prompts them to offer inducements of any sort to a local government officer, an officer who took an incentive and supplied leads may be involved in an act which could constitute both a crime and the civil tort of misfeasance in a public office. Employees of local authorities who deal with heir hunters must be alert to any indication that they will personally benefit from any arrangements made in relation to heir hunters such as supplying information to them. Such conduct may well amount to a criminal offence as well as a tortious act and would also give rise to the employee becoming personally liable to pay damages to any person who suffers as a result of this conduct.
Authorities who determine that they wish to employ/procure the services of genealogists or heir hunters
31. If an authority considers that there is any circumstance where it may have a requirement to use a genealogist or an heir hunter to locate relatives, there are a number of points it should consider.
a. Are there any officers within the authority who are aware of the deceased’s relatives? Note: there are cases where relatives have made themselves known to a local authority officer (at a funeral or in a care home), only to be approached some months later by an heir hunter claiming to act on behalf of the authority, who has then charged a fee to the relatives.
b. Does the authority wish to allow genealogists or heir hunters to represent themselves to members of the public as acting on behalf of the local authority, with the consequential implication that the commercial arrangement to be entered into between genealogist or heir hunter and relative is sanctioned by the council?
c. An authority should satisfy itself that the ‘finder’s fee’ to be sought by the heir hunter is a fair price, especially if the heir hunter has been granted exclusivity. Without the competition that arises from open publication, the fees sought from relatives will not be subject to market forces (which often reduce fees to as low as 5% for easy-to-find relatives, particularly for larger estates which include a house).
d. An authority should satisfy itself that any procurement procedure has been followed in accordance with EU and any other relevant provisions.
e. In law ALL entitled relatives must share in the estate of an intestate deceased person, but the application of the rules of entitlement can be complex. It is the ultimate responsibility of the PR (identified by and contracted with the genealogist or heir hunter) to ensure that all entitled relatives receive their share of the estate. However, the PR (and the professional estate administrators) will rely on the advice of the heir hunter as to the completeness of the family tree. Where only a sole heir hunter is privy to the intestacy information, there may be a temptation to cut corners and to avoid expending effort on investigating difficult lines. In contrast, open publication of intestacies, as in the BVD’s system, ensures that every advertised intestacy attracts the interest of several rival researchers, with the consequence that even the remotest entitled relatives are usually found.
f. Before passing details of an intestacy to a genealogist or heir hunter (or any other third party) with the intention of that party locating a next of kin claimant, authorities should have officers in place who possess sufficient skill and knowledge to inspect evidence and verify kinship claims (as do officers in the BVD or Duchies). Importantly, these officers should be able to verify that any closer degrees of qualifying kinship have been correctly accounted for.
g. Authorities should be aware that the public nature of the lists that are published by the BVD or by the Duchies encourages expert genealogical scrutiny of the full family tree of a deceased person by many competing heir hunters. When one party alone is privy to the information there is no such scrutiny of the correct and full identification of entitled heirs (who may often number in the dozens).
h. Regardless of the commercial value of information about intestate deaths to heir hunters and others, authorities cannot receive payment from third parties in return for this information.
i. Some heir hunters at their absolute discretion are offering payments to local authorities as a contribution to unfunded public health funerals. These payments come from a small fund derived from commissions the heir hunters have received. Such offers of payment should not in any way be linked to the provision of information about intestate deceased people to the heir hunter offering the public health funeral contribution. Employees of a local authority will appreciate that they can only lawfully do what the authority’s statutory powers or duties permit, and employees must therefore satisfy themselves that they have statutory lawful power to accept any financial inducement offered by an heir hunter, whether by applying to a fund or otherwise.
j. As there is no statutory duty to locate relatives of a deceased person dying in their area, an authority should have available a reasoned justification and statement of costs to the authority before officers can authorise or instigate or tolerate the use of officer time or the making of payments to agents who locate a relative or relatives of the deceased. Officer time and any payments made to any heir hunter or other agent will be payable by the local authority: these re-charges or costs cannot be a debt payable from, or charge on, the estate of the deceased person because they do not lie within the provisions of S 46(5) of the Public Health (Control of Disease) Act 1984.
k. Authorities should be aware that professional estate administrators and genealogists or heir hunters who trace next of kin with a view to obtaining finders’ fees from relatives should not treat the cost of obtaining birth, marriage and death certificates as a legitimate expense on an estate: the cost of certificate purchase is a cost of research necessary in order to earn a finder’s fee. So too are specialist database subscriptions. There is clear evidence that some heir hunters have invoiced estates for these operational overheads in addition to the finder’s fee charged to the relatives they have located. Such double charging should be avoided. Third party costs of research from which fees are hoped to be gained by heir hunters should not be treated as a funeral expense which can be reclaimed from an estate. Authorities should consider whether it is a prudent use of public funds to refund or underwrite such expenses of heir hunters or other third party agents, or whether it is challengeable expenditure.
l. Authorities should satisfy themselves that any genealogists or heir hunters with whom they enter into arrangements are using contractual documentation that is compliant with consumer legislation and otherwise conduct themselves in accordance with the law and best practice; regulation by the Solicitors Regulation Authority, the Chartered Institute of Legal Executives or the Professional Paralegal Register would raise a strong indication of probity, but documentation and procedures should be checked.
m. An authority may wish to consider how credible or likely it is that when distant or out-of-touch kin are traced, they will voluntarily arrange and fund the deceased person’s funeral. Given that the authority can recover the funeral costs from the estate in any event, it should consider what realistic benefits it may gain, and whether they outweigh any compliance or probity risks identified.
n. In fulfilling its duty not to organise a cremation when there is reason to believe that the deceased did not want a cremation, an authority should consider whether tracing distant or out-of-touch kin helps it fulfil its obligations, or whether the deceased’s personal effects and carers, friends or neighbours are likely to provide sufficient information about the deceased’s wishes. It will be relevant to consider the likelihood that remote next of kin will have any knowledge of this preference.
o. For the purpose of transparency, authorities may wish to make available clear reasons as to why the authority has made a decision that:
- involves a genealogist, heir hunter or other agent in tracing any relative of a deceased person with no evident next of kin; or
- provides information about such a deceased person’s death to any genealogist, heir hunter or other third party
- to a funeral director who has been instructed by the authority and who has agreed to maintain confidentiality; and/or
- to a house clearance or asset valuation operator who has been instructed by the authority and who has agreed to maintain confidentiality and who has no business association with an heir hunter; and/or
- to the BVD or Duchies or such other person who needs to know about the funeral or estate of a deceased person in order that the authority can fulfil its duty under S 46(1) of the Public Health (Control of Disease) Act 1984.
p. If, having regard to the issues raised in this note, an authority decides that it is required or useful to trace the relatives of a deceased person, the authority should consider appointing a panel of three genealogists (following a transparent procurement procedure). All three would simultaneously be provided with the relevant details of each intestacy, and would work in competition with one another. Where there are material estate assets to be distributed after the funeral costs have been paid out, this would encourage competitive fee levels (see 31c above) and improve the likelihood that all entitled relatives are found (see 31e above).
q. Details of the assets contained in the estates of those who are being given a Public Health Act funeral are always exempt information for the purpose of the Freedom of Information Act 2000 (FOIA). Authorities may consider that as a safeguard, only after a period of 7 days after the referral to the BVD or Duchies has been made and the name and date of death of the deceased has been published by the BVD or Duchies should the information be disclosed in response to a request under the FOIA.
r. Given that, through poor or incomplete research, an heir hunter may fail to identify all beneficiaries, authorities who pass details of an intestacy to an heir hunter must consider carefully whether there is any justification under the FOIA to decline to provide those details to others who seek them, or seek to know of the heir hunter who has been passed such details.
s. In addition, an authority may consider publishing on its public access website the names and dates of death of all deceased persons who are receiving a Public Health Act funeral. However, the authority may then wish to satisfy itself that its officers are equipped to make a genealogical assessment of kinship claims on an estate that may be submitted to them in response to the advertisement if the matter has not first been referred to the BVD or Duchies.
The risks to local authorities who decide to use sole heir hunters to locate relatives of deceased persons
32. There is an obvious commercial value to heir hunters in being privy to information on intestate estates. This information is of much greater value when only one heir hunter is given the information, be it via an officer ‘tip off’ or in a structured way. In contrast, open publication with its consequential competitiveness is much less lucrative to probate genealogists and is much fairer to the public, as indicated even by what one large heir hunting company states on its website: “The majority of professional probate genealogists see it as vital to maintain an open competitive market, which drives down costs for heirs and shares the risk” (see note 6).
33. When an estate is openly advertised by the BVD or Duchies, competition ensures that fees are reduced, because any experienced researcher will know that other researchers will compete by asking for a lower fee. In contrast, when no competition is involved, the heir hunter is free to dictate high fees.
34. Where an estate is not advertised by the BVD or Duchies and therefore not generally circulated, and thus fails to be investigated by several genealogists or heir hunters, there is a danger that in instances of complex and extended family dispositions, some beneficiaries will be overlooked and deprived of their rightful share. The failure of a researcher to locate all entitled kin may be a result of incompetence or may arise from a desire to expend minimal effort by locating only easy-to-find relatives. This latter scenario may become tempting when a researcher is aware that he or she has exclusive knowledge of a particular intestacy. Unfortunately, once the estate has been distributed, it is very hard for overlooked beneficiaries to recover their share from the PR or other beneficiaries, because of the cost of litigation and the potential legal obstacles and defences that can be employed by the PR and beneficiaries. However, it remains an open question whether, if the heir hunter has been negligent, a local authority may have a tortious liability to the entitled but overlooked relative, particularly if that relative is of a closer degree of kinship than those who have received the estate funds. If the authority could have and should have spotted the heir hunter’s mistake, it too may have tortious liability to the entitled but overlooked next of kin. This is considered below.
Risks of authority malpractice where there is access to commercially valuable information
35. The access to this commercially valuable information by officers in public authorities (whether district or county councils, coroners’ offices or hospital trusts) provides an area of risk of malpractice, misconduct or fraud. Without direct, transparent and enforceable controls or internal guidelines for how such information should be received, maintained and passed on to other bodies by officers at any level of seniority and in any local authority function, there can be a semblance of improper conduct, regardless of whether malpractice has actually taken place.
36. Note the case of R. v Cook (2012): Deborah Cook, an administrative officer of Leeds City Council with responsibility for handling deaths in the community, traced on her own account heirs of intestate deceased persons of whom she had privileged knowledge. She charged commissions to the identified next of kin totalling £160,000 and also used the bank cards of deceased people. Cook was prosecuted for misconduct in a public office, fraud and theft and sentenced to imprisonment for 16 months. The prosecutor explained to the court that Cook’s actions were akin to insider trading because she was getting a head start on other research or heir hunting firms who may otherwise have been in competition to trace a next of kin.
37. Another case involved a bereavement adviser from University Hospitals of Leicester. In April 2010 Yvette Adams was jailed for five years after using her position to gain access fraudulently to the estates of deceased patients. She stole more than £750,000 over 7 years from estates of patients who had died intestate. In particular, she made fraudulent applications to the local Register Office in relation to seven patients who died intestate, some of whom, she claimed, had no traceable relatives. In mitigation, Adams argued that the money she had taken would have gone to the Crown as bona vacantia. The estates of those who have died intestate with no obvious next of kin are vulnerable to fraud and the privileged knowledge of such estates creates opportunities for fraud which must be carefully monitored and managed for risk by the organisations in which they arise.
38. As soon as these crimes came to light, University Hospitals of Leicester NHS Trust altered its internal procedures to tackle the opportunity for fraud and crime.
Legal risks of authorities’ involvement in kin location
39. If an authority is inclined to participate in the location of beneficiaries of an estate, it may wish to consider whether there is a risk of it therefore placing itself in a duty of care and/or fiduciary relationship with all the beneficiaries. The law in relation to fiduciary duties is complex conceptually and in its application and the categories of fiduciary duties are not closed. It is well established that the scope of fiduciary duties is moulded according to the nature of the relationship between principal and fiduciary and the facts of the case.
40. The distinguishing feature of a fiduciary is the obligation of loyalty. The potential remedies available for breach of fiduciary duties are wide, and, in particular, include payment of equitable compensation for loss caused to the principal by the breach of fiduciary duty (see note 7).
41. The argument can be made that if the authority chooses not to refer an estate to the BVD or the Duchies, but instead passes information concerning the estate to a single heir hunter who will seek to charge any identified beneficiaries a finder’s fee, the authority risks breaching assumed fiduciary duties in that:
(i) the authority may have:
- exposed the beneficiaries to paying a much greater finder’s fee than that which might have arisen via open publication;
- allowed an unentitled party to claim entitlement to an estate either through mistake or fraud;
- exposed the more elusive beneficiaries to the risk that their claims will be excluded.
(ii) to act in that way may itself constitute a breach of the authority’s general duty of loyalty towards the beneficiaries, if it is a fiduciary;
(iii) the authority may well have preferred the commercial interests of the heir hunter over the interests of the beneficiaries in breach of its duty not to act for the benefit of a third party without informed consent;
(iv) Further, in such circumstances, if the authority has a direct financial interest in locating relatives as quickly as possible at minimal cost in order to avoid the burden of arranging and financing the funeral and the inconvenience of attempting to recover the cost from the estate, the authority may well have preferred its own interests to those of the beneficiaries in breach of a potential duty not to act for its own benefit without informed consent.
42. If such breaches under a fiduciary relationship can be established an authority could be exposed, amongst other things (including an account for the benefit it has received), to claims for equitable compensation for the beneficiaries’ losses. If the authority owes a duty of care to the excluded next of kin and there has been negligence, the claim would be based on what would have happened had the tort not occurred. These losses could amount to a substantial percentage of the value of the estate, for example reflecting the disparity between the commission charged by the heir hunter who has exclusivity and the lower commission that might have been charged had the estate been advertised by the BVD or Duchies, or the sums that the excluded next of kin otherwise should have received.
43. An authority may wish to consider whether it would be acting improperly or in breach of a fiduciary duty to the wider class of beneficiaries if the reasons for taking on responsibility to try to locate the relatives of the deceased, or the reasons for taking the particular steps being adopted to achieve that purpose (as opposed to simply referring the matter to the BVD or the Duchies) include any of the following desired outcomes:
- to transfer responsibility and/or cost of funeral arrangement to a third-party beneficiary (that is, prior to any arrangements being made);
- to avoid time spent reclaiming the expenses of the funeral from the estate upon its administration by a PR;
- to avoid having to wait to recoup funeral expenses from the estate and/or make interest payments on the out of pocket costs of the funeral;
- to minimise dealing with the assets of the deceased e.g. inspection and securing of any real property, collating asset lists;
- to minimise liability for securing the property of the deceased and ensuring that associated crime is avoided;
- to avoid holding the assets of the deceased for any length of time;
- to minimise officer time spent on attempting to locate next of kin;
- to avoid recriminations at a later date if kin do eventually come forward or are located.
44. Authorities may care to note that if they were to intermeddle in the estate of a deceased person, for example by taking, using or disposing of the deceased’s goods, or demanding, receiving or releasing debts due to the deceased, other than to meet the reasonable funeral expenses of the deceased, they would render themselves liable to account as an executor de son tort under s. 28 of the Administration of Estates Act 1925. There is evidence of at least one large unitary authority, who at the time of writing is proposing to enter into a formal relationship with a genealogist or heir hunter, becoming at risk of involvement in decisions concerning the distribution of estates. An executor de son tort would also be liable to pay Inheritance Tax under ss. 199 and 200 Inheritance Tax Act 1984 on property in respect of which they have intermeddled. In particular, if assets are transferred or paid by the authority to someone other than the lawful representative of the deceased, and as a result those assets are lost to the estate, the local authority could be liable to compensate the estate for such loss.
45. There may be a question as to whether an authority involving itself in the affairs of a deceased person (for example, in relation to the question of the entitlement of alleged relatives to a share of an estate), may render itself an accessory to a breach of trust if it later transpires that the estate has been distributed incorrectly. Whether or not the authority will incur any liability in such circumstances may depend in particular on the extent of assistance offered and whether the authority has been “dishonest”. In this context, an accessory to a transaction is “dishonest” if s/he knows it involves a misapplication of trust assets to the detriment of the true beneficiaries, or if s/he deliberately closes his eyes and ears, or deliberately does not ask questions, lest s/he learn something s/he would rather not know and proceeds regardless (see note 8).
46. Authorities may wish to seek advice as to whether they may expose themselves to potential liability in dishonest assistance if, for example:
- they involve themselves in the assessment of alleged relatives’ claims of entitlement in an intestacy, or otherwise take steps to promote or discourage any such claim leading to an incorrect distribution of the deceased’s estate where no proper inquiries have been made for the purposes of resolving any doubts about any individual claim (such as an application to court), or
- no proper steps have been taken to protect the interests of a disappointed beneficiary against the consequences of an incorrect distribution (such as an appropriate policy of insurance) in the face of such doubts.
47. As set out above, in view of the possible high commercial value of information held by authorities related to the estates of intestate deceased people if not otherwise in the public domain the risk of fraud or malpractice is self-evident. If it is the practice of an authority to actively use that information, whether by involving itself in the process of assessing alleged relatives’ claims in the intestacy, or by ‘secretly’ and/or exclusively passing the information on to heir hunters in particular to seek to avoid its duties under s. 46 of the Public Health (Control of Disease) Act 1984, the risks of malpractice or fraud are increased. In such circumstances, if an officer or an authority receives a bribe in connection with such an estate, the officer knowing or deliberately ignoring the obvious risk that he is being asked to assist in an incorrect distribution of the estate, the authority may be exposed to vicarious liability for losses sustained by the lawful beneficiaries.
48. An authority that provides information about intestate deaths to a single heir hunter or probate genealogy firm would be remiss not to ask itself whether the interests of the general public are served by choosing to bypass competition - and whether the Competition and Markets Authority may take an interest in these anti-competitive practices.
- Under Section 46 (1) of the Public Health (Control of Disease) Act 1984 local authorities have the duty to bury or cremate the body of a person found dead in their area, when it appears that no suitable arrangements will otherwise be made. Thus the local authority is enabled to intervene by making funeral arrangements whether or not, strictly speaking, someone else has a duty to dispose of the body but in the authority’s opinion they have not or are not making suitable arrangements. Where authorities are not unitary, district authorities assume the duty under S46(1). As to whether a cremation or a burial should take place, the deceased’s wishes, if known, should be followed. The arrangements should be carried out in a manner suitable to the apparent estate the deceased leaves behind.
- Section 46(5) gives authorities the power to recover the “expenses” incurred in fulfilling the duty described above, that is “to cause to be buried or cremated the body of any person who has died or been found dead in their area…” (S 46(1)) OR who immediately before death was living in a local authority hostel or provided with accommodation by that authority under the National Assistance Act 1948 (S 46(2)).
- R v Wade (1819) 5 Price 621, Rees v Hughes (1946) KB 517. In the case of insolvent estates the funeral expenses are payable in priority to ordinary and preferential debts: see s. 305(5) Insolvency Act 1986 (as per the Administration of Insolvency Estates of Deceased Persons Order 1986 Sch 1 Part II para 20).
- A person not lawfully appointed executor or administrator and without title to a grant may by reason of his own intrusion upon the affairs of the deceased be treated for some purposes as having assumed the executorship (or administration in an intestacy). Such person is an “executor de son tort” and liable to account for his conduct pursuant to s. 28 Administration of Estates Act 1925. However, in the case of necessity a stranger may direct the funeral and defray the expenses out of the deceased’s effects without rendering himself liable as executor de son tort; see the footnote in Tugwell v Heyman (1812) 3 Campbell 298, cited with approval in Rees v Hughes (1946) KB 517, and Camden v Fletcher (1838) 4 M&W 378.
- The full Government advice on referring intestate estates to BVD can be found here.
- Source: the website of Finders International.
- See in general Snell’s Equity 33rd Edn Ch 7 Section 6.
- Royal Brunei Airlines Sdn.Bhd v Tan (1995) 2 AC 378 at 389B-E.