Can an executor be sued for secretiveness and delay?

I'd like to answer another excellent reader question today. The first thing I noticed about this question is that it starts with a complaint that the executor doesn't give any information. Executors reading this blog, take note at the number of problems that start when you hoard information! Just be transparent and a lot of these issues just don't ever arise.

Here is the reader's question:

"The executor does not give us any information about the estate of my mother, who died in 2004. He still does not want to settle the estate. He and his lawyer are saying there is an estate tax to be paid, which I believe is a capital gains tax as there are several piece of property involved. I was told that capital gains tax was paid in 2006. Now he is saying it is not. Can the beneficiaries sue the executor for lying for years?"

The fact that capital gains tax was paid in 2006 but must be paid again doesn't necessarily mean the executor is lying. Keep in mind that capital gains tax is payable each time a piece of capital property such as real estate changes hands. Back in 2006, tax was paid on transfers of the property from 2004 to 2006. If property is now changing hands - say it's being transferred to a beneficiary or being sold to an independent buyer - then there likely is additional tax because of this transaction. After all, the properties have been sitting in the name of the estate for seven years and have probably gained in value during that time.

Having said that, in my view seven years is much too long for the wind-up of an estate. Obviously I don't know all of the facts, so there could be complications that I don't know about, such as farms or businesses on the lands in question. But any executor who takes seven years (so far) with an estate without at least giving regular reports to the residuary beneficiaries is taking a huge risk.

I never understand why executors are so darn secretive. Perhaps they think that it's better to just keep their mouths shut and not invite trouble by telling others what they're doing. Unfortunately this is almost always the wrong way to go about it and they just shoot themselves in the foot.

When an executor mishandles an estate (and I don't know for sure that this one has - I'm making a general statement here) he or she can be taken to courts by the beneficiaries. It isn't really suing the executor, in the familiar sense of suing for monetary damages. The usual outcomes are that the court will force an executor to pass accounts, or will remove an executor from the job, or will force the executor to lose his or her executor's fees, or all of the above. Executors are sometimes ordered to pay the estate out of their own pockets if their behaviour has been really over the top in terms of dishonesty or mismanagement.

This executor is fortunate that he hasn't already been taken to court. There may be nothing wrong at all with the estate, but if so, he hasn't let anyone know.