Wednesday, July 1, 2015

Canada Day is also a day of memorial in Newfoundland and Labrador

Today, July 1st is Canada Day. Here in my home province of Newfoundland and Labrador, it's also a day of remembrance for all of the brave, young men of Newfoundland who were killed at the Battle of the Somme in Beaumont-Hamel, France.

On July 1, 1916, 801 members of the 1st Newfoundland Regiment fought in that battle. Only 68 answered the roll call the next morning.

Shortly after the Great War, the Government of Newfoundland purchased the ground over which the 1st Newfoundland Regiment made its heroic advance on July 1. At each of the five Newfoundland Memorials sites in Europe, it erected a statue of the noble caribou, the emblem of the Regiment, standing facing the former foe with head thrown high in defiance. One of them is shown in the photo above, which shows the opening of the Newfoundland Memorial Park.

Source and photo credit:

Tuesday, June 30, 2015

Three years after getting a Clearance Certificate, an executor is notified of an unpaid bill. Now what?

An executor gets a letter three years after an estate is concluded, telling her that there is an unpaid bill. The executor no longer has records of what she paid. What does she do now? A reader recently asked me about this issue. Her letter and my response are below:

"My sister and I were executors of my father's estate. We received the final clearance certificate from Revenue Canada nearly three years ago, and so the estate was disbursed and the estate account was closed out. Now nearly three years later, I got a letter claiming that a bill was not paid. I thought I sent them a cheque at the time, but it's been so long that I am not certain. We did do an advertisement at the time to make sure there were outstanding debts and had no response. So I thought it was over and done with, long ago. Now I am getting this letter. Are my sister and I responsible even though the estate was long ago wrapped up and we got the clearance certificate?"

I'd like to deal first with the significance of the Clearance Certificate.  Receiving this certificate means only one thing, which is that the estate does not owe any more taxes. It doesn't mean that the government has in any way approved of other aspects of the estate. It doesn't mean that you can't be held responsible for other things, such as unpaid debts.

I wanted to start with that comment because I'm often asked by executors and beneficiaries alike about who at the government approves of the estate and closes it. They often assume that a Clearance Certificate is a blanket approval that the estate was all handled correctly. However, nobody from the government does that. Nobody at the government reviews the debts and checks to see whether they've been paid, except for taxes. It's up to the beneficiaries of the estate, with the assistance of the courts if necessary, to police an estate.

Now on to the rest of the question. You and your sister are executors for life, so you do legally have to deal with anything that comes up on the estate.

If you paid out the beneficiaries when there was an outstanding debt, you may be responsible for the payment of the debt yourselves.

You raise a good point about advertising for creditors. If you had never heard of this creditor and they missed out on the deadline you imposed in your notice to creditors, you would have a good case for refusing to pay them. After all, that's the purpose of advertising for creditors - to limit the claims of a creditor to a reasonable period so that the estate can be wrapped up efficiently and the executor can be confident that distribution is correct. However, it seems obvious that you did know about them because you said you thought you sent them a cheque.

If you paid estate debts using cheques, do you still have the cancelled cheques? Or can you find the cheque online using the bank account number? If not, perhaps the bank would be able to assist with a printout.

Do they refer to any earlier correspondence or phone calls? If they cannot establish that they discussed the bill with you within time, they may just be out of luck. The answer to your question might lie in what evidence exists that you and they were in touch during the estate administration. Have you asked them to remind you of when and how they contacted you earlier? Three years really does seem like a very long time for someone to wait to follow up on earlier correspondence or phone calls, so I wouldn't be surprised if they are unable to prove they asked within time.

An executor really should still have estate records three years later, since it's not that unusual for things to pop up. For their own protection, executors really should hang onto records for several years, as they cannot be certain that they'll never be asked to prove what they did or didn't do.

Sunday, June 28, 2015

We're applying to be administrators of an estate. Do we need a lawyer?

I received an interesting question recently from a reader asking about applying for letters of administration. Anyone out there who is in a similar position should take a look at the following question and answer:

"My husband's uncle died and did not have a will. My husband and his sisters are the only next of kin alive. We don't believe there are surviving family that will want part of his money/estate. My husband will be applying as administrator. Is probate required? Should we be hiring a lawyer?"

I'm going to say that your husband should hire a lawyer to assist him, because it seems to me that he is already off-track before he even starts. This is not intended to sound unkind, so I'll explain why I think that.

First of all, there is confusion about what administration and probate are all about, which makes me think that the chance of making errors is increased. If there is no will, it's impossible to apply for probate. Your husband is correct in that someone needs to apply to be appointed as administrator, though his sisters have the same right to apply as he does, and will have to sign off. If what you meant to ask is whether applying at all is necessary, then yes, it most likely is required.

Unless the uncle's assets were all either jointly owned with someone else or named direct beneficiaries, then someone has to deal with them. Without a will, nobody  has the legal authority to touch anything of his, so the court has to appoint someone. Otherwise, anybody selling or taking the assets is doing so illegally.

Secondly, you are assuming that only people who are currently alive need to be considered. There may be offspring of deceased family members who are entitled to a share of the estate. I don't know anything about your husband's family other than what you've shared here, so it's probably a good idea to go to a lawyer who can tell your husband about how intestacy law in your province will apply specifically to his family.

Thirdly, whenever I see mention of an executor or administrator making decisions about "who will want" a part of the estate, my alarm bells ring. This just isn't his decision. He has to include everyone who is legally entitled to be included, regardless of whether your husband believes they want to be involved. Not doing so would be a huge mistake on your husband's part. Even if he is proceeding with the best of intentions, he simply cannot make a judgment about who wouldn't want a share.

All of this makes me feel that your husband would benefit from a discussion with a lawyer who can give him some guidance on what to do, and what not to do. The paperwork for applying for administration is more complex than that needed to probate a will, and your husband would probably be thankful for assistance with it.

I'm really glad you asked this question before your husband got started on the estate. Often executors and administrators plow ahead without even realizing they aren't armed with the information and assistance they need, and they almost always run into trouble. I can't even tell you how many jaws have dropped in my office when I tell executors that what they've been doing is illegal at worse, and deceitful at best. Most of the time they weren't trying to break any laws; they just didn't know. With a bit of help, your husband can avoid all that strife.

Friday, June 26, 2015

Court Removes “Ill-Mannered” Administrator, Sanctions Him With Special Costs

I sure get a lot of questions from readers about executors. Sometimes readers tell me that the executor they are dealing with is hostile or unreasonable. Well, you haven't seen anything yet. 

Recently the court in BC had to deal with an unbelievably difficult co-administrator of an estate named James Campbell. James said he would charge the estate  $300 per email, $500 per telephone call, and $1,500 per letter to work on the estate. His emails to his two fellow co-administrators (his siblings) were disrespectful and profane. He demanded $40,000 from each of them before he'd do anything on the estate. He told the court he had evidence that the other two administrators had stolen from the deceased but wouldn't tell anyone what the evidence was.

The estate, not surprisingly, was at a standstill. This would be bad news for any estate, but in this particular case they had to deal with a caregiver who had embezzled $175,000 in cash along with other assets. There was an ongoing police investigation. In other words, the co-administrators had a lot to do, and James' unreasonableness was making it impossible for the estate to proceed.

So what did the court do with James Campbell? 

The court removed him as administrator. That wasn't too surprising. But the court went further, and ordered that James would have to pay the legal costs of the other two. The judge said that he ordered this financial punishment as a warning to any other executors or administrators who got up to "nonsense" instead of doing the job they were appointed to do.

This is the Estate of Forbes MacTavish Campbell. If you'd like to read a more detailed description of the behaviour that led to the removal of this administrator and the reasons given by the judge, click here to read a very good article by Amy Mortimore of the law firm of Clark Wilson LLP.

Friday, June 12, 2015

I'm away for a week

Dear friends,
I'll be gone all next week and won't be posting. I'm off to Alberta for my daughter's university convocation. That's her in the photo. We now have a criminologist in the family! See you all when I get back.
Love, proud Mom

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