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Thursday, October 14, 2010

What's the executor's role with respect to assets that pass outside the estate?

Not everything owned by a person will form part of his or her estate upon death. For example, if the deceased was an owner of jointly owned property and the other joint owner is still alive, then the joint property is not part of the deceased's estate. The surviving joint owner will have complete ownership. This rule applies to joint real estate and joint financial assets, such as bank accounts.

Another example is an asset with a beneficiary that was designated by the deceased while he or she was alive. For most estates, this means an RRSP, RRIF, LIRA, life insurance policy and/or a pension. When the deceased passed away, the person named in the asset became entitled to ownership of the funds. (Note that this does not apply to an RESP, which behaves differently).

When assets owned by the deceased are going to be owned automatically by someone else and are not controlled by the deceased's Will, they are said to "pass outside of the estate". An executor is appointed by a Will to take care of the assets in the estate. So what is an executor supposed to do about the assets that pass outside of the estate?

The executor will not be able to deal with those assets as it will be beyond his or her legal role to sign the necessary documents or to receive the funds. The executor's role is more or less to provide notification, information and documentation to others so that they can deal with the assets.

The executor must let each of the holders of the assets - the holders being the banks, insurance companies, etc - know that the deceased has passed away. This should be done in writing by providing a copy of the Death Certificate. The funds will not be sent to the executor for handling and in most cases the executor won't even be kept in the informational loop about what is happening with the assets. But if the executor has in a timely manner provided the necessary information that allows others to get on with business that will cause the deceased's plans to be carried out, then the executor has fulfilled his or her duty.

In the matter of joint property, the executor can simply notify the other joint owner(s) of the deceased's death, provide a copy of the Death Certificate, and ask that the surviving joint owner deal with the asset. After that, it's up to the surviving joint owner to get the asset switched into their name alone.

14 comments:

  1. My siblings and I (4 of us) are both executors and beneficiaries of our parents will. One sibling has vowed not to sell the house, the bulk of the estate. What are are options? Can anything be done in the will to prevent a big conflict?
    thank you

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  2. My parents have designated their four children as executors and beneficiaries. their estate consists mainly of a valuable home. One sibling says she will never agree to sell it. What are the options for us other three, and can our parents do anything now to stop her blocking a sale in the future?

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    Replies
    1. Four executors is a ridiculous idea. It's already malfunctioning and your parents haven't even passed away. By putting everyone in charge, they have put nobody in charge.

      When parents do this, it's because they are afraid of insulting one of the kids or appearing as if they favour one of them. They need to give their head a shake and pick someone. Otherwise they are condemning the four of you to a couple of years of bitter court fights and a reduced inheritance.

      As for the sibling who says she will never sell the house, what does she think is going to happen to it once your parents are gone? Does she plan to buy it herself and is that a realistic option? If not, she needs to behave like an adult who needs to make a business decision. She obviously isn't executor material.

      Lynne

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  3. The POA has sold my father's house for a ridiculously low price..Below fair market value..My father is still alive and i don't know if he was aware of how low the price was..I think the POA got rid of it because he didn't want to have to maintain the property..Is there anything we can do about it..

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  4. My older brother passed away 9 months ago he named me as executor of his will and i will get his entire estate and assets.I have 2 other brothers one was named beneficary of his life insuance one is beneficary of his RRSP and pension from work both assets outside of the estate.they have both received their money.Now one of my brothers wants a copy of the will to take to his accountant because he thinks he his more money coming or that i am hiding something.I told him he could look at it but i didn't feel it necessary to copy it for other people to see.I just want to know if legally i have to give him a copy.He was named to be executor if i refused or passed away first.

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    Replies
    1. If I understand it correctly, the only beneficiary named in the will is you. Therefore your brother is not legally entitled to have a copy of the will. People always think that because they are family members, they are entitled but the hard truth is that they are not.

      I think your offer to allow him to view the will is fine, as he is clearly wondering whether he has been named in the will and you're hiding it. It's easier on both of you for you to show him the will voluntarily rather than go through a lawsuit where he tries to force you to give him a copy.

      Interesting that he wants this for his accountant, and not his lawyer. I wonder whether the accountant has a specific question that you could answer without providing a copy of the will.

      Lynne

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  5. I am inquiring about Alberta estate law. There are three siblings of which one had the power of attorney and was the executrix. (All siblings are over 50yrs old) Can each other sibling legally request the copy of the will and the financials pertaining to exactly where all the money from the estate went? There is immense secrecy and not all documents were shared just what the executrix wanted each sibling to see.

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  6. further to the question, each sibling was given money out of the estate and the grandchildren were given some. A fairly large chunk of the money seems to be not accounted for, therefore the question of can the other siblings ask where the money went? When asked for the information the sibling was not happy and extremely defensive saying to get a lawyer if you want to fight this. There is no fighting, just a simple explanation and proof.

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  7. wow, quite a process to post on here,
    Anyways, 4th draft, hopefully i can get a post
    1 mother died, will probted in bc wesa rules.
    1. four siblings all beneficiaries
    2 executor a sibling and not a beneficiary.
    3 house, only property was sold for 130000,
    100000 left to be distributed tween four benficiaries.
    4 can executor pass accounts without letting me as benficiary see them?
    5. can executor distribute estae cash to only 3 of beneficiaries, leaving me out of distribution.
    I cant afford a lawyer, I am at poverty level unemployment insurance, I wanted to file P 29 form Notice of dispute form and submit to bc supreme court, and have judge decide how estate cash to be distributeed
    at present executor hasnt shown me a statement of acctsa, an told me to take her offer of 1000o an she distribute rest to 3 othe rbenenficiaries.

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  8. My husband's dad recently passed away. The will is vague. It basically listed my husband as executor/trustee and left him with all the decisions . The job is complicated by an incorporated business. It really hasn't been operating for years but it has not been dissolved and there are debts owing. My husband and his family are not agreeing on how to handle this. His lawyer and the accountant have both told him that he can sell the parts/equipment at the business - as the business is still active since it is incorporated. My husband would like to operate his business from the same location (keeping all things separate in terms of transactions). He wants to do this so he can be present and hopefully sell enough to cover the debts. His family thinks it is a bad idea, but his lawyer and accountant think it is a good idea. His family is concerned about conflict of interest. Also they are concerned that he may be liable if he was to mistakenly sell something for less than it was worth. While it may seem that a third party would be the best option, there is no money, Your thoughts would be appreciated.

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  9. Your site has been a tremendous source of information for me - I thought it was so good I passed it along to my sister shortly after my mother died in British Columbia last year. My sister is the executor for my mother's will and I am one of the residuary beneficiaries. One of the reasons this particular post was of interest to me was because most of what my mother owned before she passed away "passed outside of the estate". The bulk of her assets passed via the account beneficiary route. However, about 16% passed by intergenerational joint accounts. As you have mentioned in many of your posts, the rules surrounding these accounts have changed significantly since 2007 although the banks and other financial institutions have a spotty record of adopting them. Both of the joint accounts passed into the sole ownership of my siblings. My sister probably didn't know about the "new rules" around intergenerational joint accounts and since she believed my mother wanted this result she has proceeded as though these accounts are nobodies business other than the new sole owners. I should mention that my mother's will was last updated in 2011 (4 years after the rules changed) by a lawyer specializing in wills and estates and yet no mention was made of my mother's wishes regarding these joint accounts. Further, I don't know of any written indications of my mother's wishes in regards to these accounts at the lawyer's office or the bank or credit union involved. My sister is hostile to any questions regarding these accounts - obviously she didn't do much reading on your blogspot of this topic, the responsibilities of an executor, or the responsibilities (obligations really) of residuary beneficiaries.

    Compared to many stories on your blogspot this is a very small family drama but still it illustrates the importance of getting the word out on intergenerational joint accounts. You have done a great job on many individual posts of pointing out problems of joint accounts (your "keyword search" on the right hand side of the page - under "archives" worked great). However, if it's possible I would ask that you update this particular blog to emphasize that intergenerational joint accounts are one type of holding that shouldn't automatically "pass outside the estate.

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  10. I have been reading many stories and the excellent advice that you have given. I have not seen anything that addresses the situation I am about to describe. My mother passed away nearly 2 years ago naming one of my 4 sisters as executrix. my mother had no assets other than a very old house in need of major repair. Despite lowering the asking price, it has not sold. I had made various suggestions of low balling the asking price, even foreclosure. At that point it came to light that the executrix had co-signed a second mortgage with Mom several years ago so that Mom could afford to remain in the house. There is ongoing upkeep bills and with this old home there are major structural issues that need immediate addressing. With no other monies in the estate and repair bills, past energy efficiency government loan on windows and now a major structural repair ($$$$$), my sister wants all of the beneficiaries to cover these expenses. She refuses to low ball the asking price because she will not get her money back from co signing the mortgage. Are we the beneficiaries obligated to pay expenses,that we can not afford, to keep this house going until if and when the house is sold? I am really concerned. Winter is approaching, filling an oil tank is expensive and insurance is virtually unattainable on a vacant property to name just a few of the challenges. When I refuse to contribute any money, she said she would have me removed as beneficiary of the will and to sign a paper absolving me of all claims. There are no claims to be made on nothing! I do not intend to sign anything until I receive a final release on the estate. Are we obligated as beneficiaries to maintain the estate until it is sold?

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  11. My uncles executor has passed, how do we find out what the will says? The executors wife is in possession of the will and will not share.

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    Replies
    1. The first issue to be resolved is whether you have any right to know what the will says. Do you? The fact that you're a niece or nephew does not give you that right.

      The other issue is whether the executor's wife is entitled to keep the will. You haven't said that your uncle has died, but I am assuming that he has. So, if the executor was working on his estate and the executor died, it's likely that she is taking over because she is HIS executor. If that is the case, she is entitled to hold the will and only show it to those who are beneficiaries. Otherwise she is not entitled to keep it.

      There are facts here that I just don't have, so this is the best I can do with your question.

      Lynne

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