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Wednesday, February 23, 2011

Refuse to pass accounts? Off to jail with you

This new case from Ontario should make out-of-control executors think twice about their refusal to conduct the estate properly. In Walling v. Walling, the beneficiaries of an estate got tired of trying to get the estate executor to deal with the estate and his refusal to account for what he'd done so far.  They applied to the court for help, and the court ordered the executor to pass his accounts, and fined him $1,000. He still didn't pass them so he was fined again for $1,500. By this time the judges were sick of him too so when he still failed to pass his accounts, he was put in jail for 7 days for contempt of court, and ordered to pay costs of $2,000.

Obviously I don't know why this executor refused to pass his accounts. But whatever the reason, I hope it was worth $4,500 and a week in jail. So far.

Read the full case here.

15 comments:

  1. Hi Lynne. I really think that if an executor can go to jail for refusing to pass accounts, then a beneficary who holds up an estate frivolously should either face a fine and/or spend some time in jail, too. As an executor, I have maintained excellent accounts, given up all executor's compensation, and after a full year a beneficiary has managed to prevent the approval of the accounts at the level of the court.

    I am an executor who had chosen to voluntarily pass the estate accounts through the court in Saskatchewan. I made copies of all bank statements, receipts, and income tax records for her first lawyer, and they were sent to her lawyer by the estate lawyer. Three months later, at the end of March, 2012, her lawyer had told the estate lawyer that he did not find anything wrong with the accounts; thus, she would be signing another final release. It never happened, and all communications had ceased by both this beneficiary and her lawyer. The estate lawyer made several more attempts to contact her lawyer to no avail, and I was forced to wait another month until the end of April, 2012, before I could pass the accounts.

    Finally, the paperwork was sent to the court and to the beneficaries and the other lawyer the first week of June, 2012, informing everyone of the intent to pass accounts. A judge ordered a court registrar to set a place and time to pass the accounts.

    Around mid November, 2012, the court appointment date finally arrived, and the unhappy beneficiary showed up with a friend: she stated that her previous lawyer had not bothered to share any estate info with her at all, and that her lawyer had withdrawn his services. The court registar stated that if the unhappy beneficiary's previous lawyer had not shared any of the estate information with her, then she would have a discrepancy against her lawyer, not the estate. This beneficiary further requested that she be allowed to consult with another lawyer because she had intended to file a dispute against the estate. Three weeks passed where we patiently waited for her to consult with her new lawyer. Finally, the estate lawyer was then given direction by the court to write this beneficiary's new lawyer a letter.

    The beneficiary's new lawyer told the estate lawyer that he could not find anything wrong with the accounting; thus, he requested time to explain it to his client. However, the beneficiary's lawyer then could not reach his client.

    It has now been well past 2 months since the last court appointment date. The unhappy beneficiary has now had over a year to tell everyone what her supposed dispute is. That is what the other beneficiary and I would still like to know.

    I also waived all my executor's fees on the interim release as requested to do so by the unhappy beneficiary. I gave her everything she asked for.

    Both the other beneficiary and I feel we have been held hostage and victimized by the unhappy beneficiary for over a year now and we still don't know why.

    The other beneficiary and I have to now wait for another court appointment date to be set with the court registrar.

    As an executor, I pride myself on the fact that I maintained impeccable records for the estate accounting. All I want is to be absolved from this estate once and for all. This job was so much work and stress that it is really painful when something like this happens.

    There has to be some sort of rule set by a court like a time period in which a beneficiary can file a dispute. If a beneficiary is found to be friviously holding up an estate, then there has to be some sort of consequences. There was only a small amount of tariff fees that the estate lawyer could charge to help me pass the accounts. If this progresses to a court hearing, no one benefits because there was an equally proposed divided share amongst each of us three beneficiares as stated in the Will "share and share alike." This is really unfair what this beneficiary has done holding up this estate.

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    1. Wow, what a nightmare People can be so selfish. If this is in court again, I wonder whether the judge would consider a request by you that the court costs come out of her share of the estate. Maybe not, since she is portraying herself as a victim, but worth a thought.

      Lynne

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    2. Dear Lynne: Thank you for your suggestion. This is not what my mother would have wanted -- Her Will stated that the estate was to be divided fair and equal for all. I will continue to concentrate on passing the accounts. I do wish I knew why the beneficiary has held up this estate for over a year now. She has not bothered to tell anyone what her dispute is other than initially she had proposed to her first lawyer that she thought there was more money in the estate than what was probated. The bank statements and accounts proved that what had been probated was in fact correct and true. Her lawyers have also been unable to find anything wrong with the accounting or to convince her of the facts, so if this goes to a formal court hearing, this beneficiary will likely be on her own. I'm a bit upset that finalizing this estate has now been held up over an entire year. I guess I will just have to be patient a while longer while waiting for the court to pass the accounts.
      Stressed



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    3. And if a foreign executor of a Canadian estate defies a court order to pass accounts there can be no fines. Would that make it simpler to have the executor removed? Foreign executors are common these days yet I see little information about them.

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    4. I am interested to learn why the beneficiaries opted for contempt of court instead of having the executor removed. I would think that refusing to pass accounts would be a breech of the executor's promise to execute the estate according to the law. Would this action not have been simpler and seeming more relevant?

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    5. In this particular case, the beneficiaries could have asked for the executor to be removed. However, when an executor is removed, he still has to account, which this guy apparently had no intention of doing. I think everyone realized that he just wasn't going to cooperate unless he was forced.

      Lynne

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    6. Re: the comment about foreign executors. I have seen a number of foreign executors in cases where family members have moved to Canada for work, or have immigrated. When there is an executor appointed who lives outside of the country, our courts have the option, at the time of granting probate, to require the executor to post a bond in the full amount of the estate. This system isn't perfect, but at least it provides a fund so that if an executor refuses to co-operate by accounting for estate funds, any losses can be claimed against the bond.

      Lynne

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    7. Wish my parents' executor had been as responsible - his idea of his 'duties' is to rob the estate blind and treat the beneficiaries like mushrooms: keep them in the dark and feed them sh**! Then act injured and insulted when asked the hard questions and blame the messenger...

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  2. Lynne
    I just happened to come across this Post.
    I have a similar problem in Ontario. Mine has been going on for MANY years. I am trying to get mine to Trial as nothing else works. My lawyer and the opposition lawyer are doing all they can to prevent this from happening. Why?..lawyers and a beneficiary that have misbehaved. No word from my lawyer for 6 weeks based on a scheduled court appearance, (another request for direction from the court). What is going on? I inquired about getting representation as beneficiary but I was told that my lawyer did both. My lawyer would like me to fire him, like the previous lawyer. You can well imagine how they could twist this around and I would be seen as the unstable party. The other side would have a field day with this. Something is very wrong in the state of...? Lynne, your blog is helpful in so many ways. Thank you.

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  3. Hi Lynne: My brother-in-law's will states to 'share and share alike'. A very simple will. He left his estate to his sister and brother. The brother passed away before distribution. Does the estate pass to the sister and to the brother's estate or just to the sister under the definition of 'share and share alike'?

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    1. Does his will have the words "if he or she survives me" after the gift to his siblings? Does it say anything like "to my sister and brother or the survivor of them"?

      These extra words will help clear up the matter.

      In the absence of any clarifying words (and shame on the lawyer who drew the will if there are not) then I would assume that the brother's share would go to his children.

      Lynne

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  4. The writer does indicate 'brother's estate' therefore it just make sense to me that it goes to his estate. There is no mention of children. I am a little confused. It would be helpful if the writer gave a little more information.

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    1. No there is no mention of children, but I chose that word deliberately. Children are in a much different legal position than anyone else in his estate, for example, a wife.

      Lynne

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  5. Hi Lynne: My last two posts have gone astray.
    The younger brother passed away without a spouse or descendants leaving his estate to his sister and older brother. The older brother passed away before distribution. Does the residue go to the sister or to the older brother's adult child?

    Anyway, when I searched your fellow blogger's site (Stan Rule, rulelaw.blogspot.ca)regarding 'share and share alike' I come up with Haider v Kalugin 2008 BCSC 930. It is about a missing will but the bequest is quite similar to my deceased brother-in-law. 'James Kalugin made a will on July 11, 1955, leaving his estate to “my brothers and sisters, surviving me in equal shares, share and share alike….” No clarifying words after that. No per stirpes or per capita. Nothing. It goes on Mr. Kalugin did not have a spouse, children, or other descendants on his death. Some of his siblings survived him, but some had died before him with children. If he died without a will, then the children of the deceased siblings would be entitled to share in the estate. On the other hand, if the copy of the will were recognized, then the nieces and nephews would be excluded by the provisions of the will, and the estate would be divided only among the brothers and sisters who survived James Kalugin.

    When I Google 'share and share alike' I come up with the estate does not pass to the descendants but to the surviving sibling.

    Your thoughts please.

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  6. Since this is a blog that invites comments I will add mine.
    My thought is that the brother is an 'estate' or similar to a company. That would apply to all siblings. If one sibling who had children died then it would go to his estate. From what I see your brother's will was well intended but it has too many loopholes in it. IMHO.

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