Alan Shanoff of the Toronto Sun recently reviewed my book, "How Executors Avoid Personal Liability". Check it out here if you have been wondering if this book is for you. The article didn't appear in the online version of the paper, so a link is not available. Clicking on the review below will increase its size so you don't need a magnifying glass!
Tuesday, August 26, 2014
Friday, August 22, 2014
I came across this article by Paul Fawcett that is a great primer on who can use Registered Disability Savings Plans (RDSPs) and the advantages of having one of these plans. Click here to read Paul's article. I find RDSPs to a wonderful estate planning tool, largely because they don't interfere with provincial disability benefits. RDSPs provide parents of disabled children another tool to use when making plans for the child's future, and having options is a good thing. If you've been thinking about setting up an RDSP, this article is a good place to start.
Thursday, August 21, 2014
A reader recently wrote to me to ask about his legal position as co-executor. Here is his note and my response:
"As co-executor, can I be held legally and financially responsible for costs if a co-executor (who has power of attorney and all other financial and legal documents) runs up debt and runs off with the money from the estate? I don't trust either the co-executor or the author of the will."
I'm assuming for the purposes of answering this question that the testator has already passed away. You have basically two options. One is to accept the risk of dealing with the other co-executor and get on with the executor's work, and the other is to renounce your role as executor.
Renouncing as executor basically means turning down the job right from the start. You can't quit halfway through, as the courts will not allow that, so if you are going to renounce you have to do so right at the start of the estate. Once you have started acting as a co-executor, you have to stick with it unless you get permission to quit. Given the level of distrust you have with your co-executor, renouncing might be a viable option for you.
If you renounce, no liability will attach to you for any actions taken by the executor as he deals with the estate.
Assuming that it's too late to renounce, or that you don't think it's a good idea, you are stuck with your co-executor. The general rule is that a co-executor is not liable for the actions of the other co-executor, so if that person behaves dishonestly or carelessly and causes a loss to the estate, you will not be liable for that. However... and this is a big caveat... you can't just sit by and let him do whatever he wants and think that you will be safe because you're not the one taking the actions.
If you simply sit passively by and turn a blind eye to the actions taken by the co-executor, the court will likely consider you to be just as responsible as the dishonest executor, since you did nothing to protect the estate even though you knew what was going on.
The lesson to be learned? You have to be either all in, or all out. Either you renounce at the beginning or you do your very best as an executor.
If you can show the court that you were carrying on in good faith, doing the best you could in an honest, prudent way and that the other co-executor acted wrongly without your consent or knowledge, then you will likely not be held liable for his or her wrongdoing.
It's a complex answer to what seems a simple question, but this is a complex area of estate law. If you want to know more about how to protect yourself from your co-executor, not to mention the beneficiaries and creditors of the estate, pick up my new book called How Executors Avoid Personal Liability.
Wednesday, August 20, 2014
I don't usually post music videos, and I'm not a country music fan, but everyone should hear this song about a son whose father has Alzheimer's disease.
Tuesday, August 19, 2014
"As a Executor, what if you give one of the beneficiaries listed in the will several chances to meet and divide household goods - and they keep stalling or changing the date or when a date is set, they don't show up. Can we proceed with distributing household goods and giving the rest to charity after giving them several opportunities?"
This is pretty typical of an estate administration, because it can be difficult to co-ordinate a number of people in a way that accommodates their work, family, and travel schedules. However, sometimes it becomes obvious that there is really only one person causing the delay. Everyone else manages to make it to the scheduled meetings, except for the same person again and again.
An executor in this position is balancing the rights and obligations of a number of parties and is going to have to exercise some judgement as he proceeds. The executor's primary obligation is to distribute the estate according to the will. That means that he must do everything that he can to ensure that the beneficiaries get what they are supposed to get from the will, even if it means setting more than one meeting.
However, the executor also has an obligation to proceed at a reasonable pace with the estate. There are other beneficiaries who have a right to expect a timely distribution of the estate. The beneficiaries should also be able to expect the common courtesy from each other not to hold the entire estate hostage, though common courtesy tends to be rare these days.
The executor is going to have to take control of the situation. You stated that numerous opportunities have already been given, so let's proceed on that basis. The executor should consider setting one last meeting date, and notifying all of the beneficiaries well in advance that the division of household goods is going forward on that date, whether or not all parties are present. I would suggest that the notification be made in writing (which includes e-mail) so that the executor has a record of his actions and words, and that it makes reference to the fact that several previous attempts were made to gather all beneficiaries together.
Anyone who finds they cannot attend on that date has the option of sending someone else in his or her place to act as a proxy. Alternatively, the person who must miss the meeting could make a written list of requests and forward it to the executor before the meeting. The executor is not bound by the requests, but if the family is using some method of choosing items that involves taking turns, the list could be used on behalf of the absent person.
Everyone who is present should proceed with the distribution, using either the method described in the will (if there is one) or the method devised by the executor, including the absent person in the best way they can. Box up the items earmarked for the absent person and let him or her know they are available to be picked up. Assuming there are items left over, the executor should email everyone and say that the leftover items will be sold or delivered to charity in 48 hours, so if anyone wants anything, they should pick it up during that 48 hours.
As always, an executor must keep meticulous records. If this issue came down to a lawsuit, it will not be much good for the executor to say that he provided the beneficiary with "a lot of" opportunities to select household goods. The executor must be able to list the dates and times in question. I also suggest that executors make a list of who took each item at the time of division. Keep in mind that there are more estate disputes over personal and household goods than there are about money, due to the emotional attachment to the items, so expect push-back from a beneficiary who is left out, even when you are being as fair as possible.