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Sunday, October 10, 2010

Taming the Out-of-Control Executor

The executor moves into the deceased’s home, living rent-free and refusing to sell the home. His lifestyle has vastly improved and you suspect that he might be living on estate money. The estate has dragged on for years and nobody in the family can find out anything. Any questions asked by the family are met with hostility and sometimes even threats. Family relations have broken down.

Sound familiar? The Out-of-Control Executor is, unfortunately, not a rare breed. In fact, they are infuriatingly common.

I’ll never understand what possesses an otherwise normal person to turn into a petty dictator the minute he is appointed by a Will. Is it the unfamiliar sensation of actually being in charge for once that makes them mad with power? Is it a chance to redress festering childhood wrongs? Is it simply pride that doesn’t allow a person to admit that they are messing things up royally and ask for help? The most likely answer is that it’s a toxic mix of greed and inexperience.

Is there anything you as a beneficiary can do to tame the Out-of-Control Executor beast? The following are some tips:

Firstly, you need to understand the role of the various parties. The executor is in charge of the estate. However, the role is very poorly understood by executors. Their job is to do what’s in the will, not re-write the will as they see fit.And they are supposed to do this within a reasonable time. The role of a residuary beneficiary (i.e. a person getting a share of the bulk of the estate) is to police the executor to keep him or her on the right track. This means that a residuary beneficiary has both a right and a responsibility to watch what the executor is up to.

Understand that executors will resent your watching and directing. However, you should not accept being told that you are greedy or mistrustful for asking what’s going on in the estate. It’s your job to do that. Perhaps the way to look at it is that an executor with nothing to hide is not going to mind telling you what’s happening.

Also understand that you cannot call the estate lawyer and ask that he or she keep your conversations secret or that he or she take instructions from you instead. The lawyer is supposed to be working for the estate, which means taking instructions from the executor on behalf of the estate and the beneficiaries. A lawyer who understands the workings of an estate will give information to residuary beneficiaries on request, or advise the executor to do that. If you are a residuary beneficiary and the lawyer tells you that the executor instructed him or her not to tell you anything, your alarm bells should ring.

Now please understand that just because you are related to the deceased, or you are getting an item such as piece of jewelry from the estate, you are not entitled to information about the estate. Only residuary beneficiaries are entitled to that.

Keep the executor’s year in mind. If a year has gone by since the deceased passed away and the estate has not been substantially completed, you have a decision to make. Is this issue important enough for you to pursue?

If it is, your first step is to request information. Ask the executor for an accounting. Your typical Out-of-Control Executor will disappoint you in this, but you have to ask. Assuming you don’t get the information you asked for, you will have to hire a lawyer. It is absolutely essential that you get a lawyer who has quite a bit of experience in estate matters. If you have an executor who doesn’t know what he or she is doing and you are working with a lawyer who doesn’t really know what he or she is doing either, it’s all going to bog down.

Clients are resistant to the notion that lawyers specialize, but I don’t know why. You wouldn’t ask a medical GP to do open-heart surgery, so why would you ask a generalist lawyer to take on a specialized estate matter? It’s going to be expensive so spend your money on someone who doesn’t need to learn on your dime. See if other beneficiaries want to pool costs with you.

When Out-of-Control Executors instruct their lawyers to obstruct your requests for information or action, you may have to counter by suggesting that they will have to forfeit any executor fee as they are doing such a bad job. Remember that the residuary beneficiaries are the ones who have to agree to an executor’s fee. Also make it clear that you are aware of (and prepared to enforce) the rule that an executor who helps himself to an estate or causes losses is personally liable to repay it.

Executors who take the deceased’s money are stealing. I’ve seen executors who live in the deceased’s home, drive the deceased’s car, use the deceased’s bank account and take vacations billed to the estate. There are times when you might have to call the police to report the theft. I’m not suggesting that this is easy to do when the executor is a family member, but it might have to be done to stop the embezzling.

A less dramatic way of focusing the executor on finalizing the estate is to ask your lawyer to set up a family meeting, or, if things have really deteriorated, a mediation session. This will allow everyone to talk, ask questions and decide on a timeline. Keep in mind that this setting can be very threatening for an executor who feels that everyone is against him, and he will likely want to bring the estate lawyer with him. Perhaps it’s appropriate for your lawyer to attend as well.

This type of session is also available through the courts in many places, if you have filed a claim against the estate. And it might end up, if all else fails, as a court application to remove the Out-of-Control Executor from his role.

1 comment:

  1. Lynne, I was separated from my spouse for 4 years and we did not have any legal separation nor divorce. She continued to live in our matrimonial house. I paid for all expenses, mortgage, my daughter s education, car insurance and lease payments, taxes on the house.

    She was diagnosed with Cancer 2 years ago and passed away in Dec 2012. She had a financial advisor who was also her estate planner and later after the funeral arrangements i came to know also the estate trustee.

    I made all the funeral arrangements and after everything was over, I asked her for the copy of the will and my deceased wife's wishes. She dodged my questions so I became suspicious and moved in to my matrimonial home. She kept asking in emails what I was planning to do with the house and if I wanted to sell it prior to my move.

    I hired an estate lawyer who basically sent her a letter asking for the copy of the will. After repeated letters, I got the will from the estate lawyer but no disclosures. The will was a standard will and had named her the trustee and my daughter as the beneficiary.

    In the following weeks as I went on to transfer title on our two jointly held properties, I found that the property that had equity, the matrimonial house was transferred to tenants in common by the estate lawyer in August of 2012 when the cancer had spread to her brain.

    I also found out that the lawyer had represented me and my wife in the electronic transfer with the registrar.

    I have objected to the will with the courts in January and it has not been probated by her. I made an application with the court for disclosure and the wrongful transfer to the estate lawyer.

    Please advise what is the fine line here? Who is doing what? My daughter is being influenced by the trustee since all the insurance amounts received by my daughter is invested with the trustee. She lives with me and wants the half of the house as per her mothers wishes.

    I don't mind paying her off but I see a lot if discrepancies by the actions of the estate trustee and the lawyer who was appointed by her. Please suggest.

    ReplyDelete

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