One part of this process causes problems for both executors and beneficiaries. That's the part about waiting for ALL Releases to be signed before anyone gets their inheritance. This reader wrote to me to ask why she has to wait for other beneficiaries to sign their Releases. I thought the question and the answer would be useful to many of you, so here it is:
"The executor we are dealing with says that we have to wait for the 3rd person ( The estate was divided between 3 people) to sign off before she can give us our part of the money. The tax clearance certificate has been dealt with. But for some reason the executor keeps saying that we need to wait for that 3rd person to sign off on the papers. And the problem with this is that the 3rd person is apparently in Europe and they cannot get ahold of her which is completely delaying the process of me receiving the money. I was wondering if she was allowed to do this ? I dont understand why I need to wait for another person to sign off on their money for me to get mine."
In this case, the executor is following the right procedure.
All beneficiaries must agree to a certain distribution before the distribution can be made. The beneficiaries aren't just signing off on their own money; they are approving of all that the executor has done so far, and agreeing to the payout the executor is proposing for everyone.
Let's look at it this way. Say the estate was $30,000. The executor divides the estate three ways so that each beneficiary is going to get $10,000. Two of the beneficiaries agree, so she sends them $10,000 each. There is $10,000 left.
The third person, however, doesn't agree. The third person challenges the executor's accounting and refuses to sign the Release, so the executor has no choice but to apply to the court to pass her accounts. The court and legal fees add up to $5,000. The executor now has to divide an estate of $25,000 rather than $30,000 among the three people. That means each would get $8,300. She has overpaid the first two beneficiaries and now only has $5,000 to pay the third one. The balance of $3,300 would have to come out of the executor's personal pocket.
Until the third beneficiary signs the Release, the executor doesn't know whether there is going to be a costly dispute, so she is right to wait to send out the money. It's too bad that the person is unreachable at present, but every estate has at least one wrinkle to deal with.
The Clearance Certificate that you mentioned is issued by Canada Revenue Agency to certify that the estate does not owe any more tax. It should be reassuring to the beneficiaries that this has issued, as it will give them information that they need when considering signing the Release.
It sounds to me as if this executor is taking her time and completing one step at a time. It sounds as if the right steps are being followed. This can be frustrating for a beneficiary as sometimes it seems as if you are waiting an awfully long time, but that can easily happen when you don't see what's going on behind the scenes. I don't see anything wrong in the executor's actions based on what you've told me.