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Wednesday, August 14, 2013

Executors, why are you so secretive about what you're doing?

I have just spent a bit of time answering some of the email questions I get from readers. I noticed that right now I have at least ten emails from beneficiaries asking me how to get information from the executors of estates. Beneficiaries who wrote to me said they have waited anything from a few months to several years for information that just doesn't seem to be forthcoming.

So what is it with executors being so stingy with information? What's the big secret anyway? I've always contended that if an executor can't or won't tell the beneficiaries what they're doing, the executors are probably doing something they shouldn't.

I'm not saying that the executors should blab private information all over the place. I'm not asking executors to hand out copies of paperwork to just anyone who asks. But when those people who are entitled to ask for information make a request, why do so many executors ignore the request, or respond with outright hostility? It makes a person wonder what's going on.

Is it really surprising that beneficiaries start to become suspicious when a house is being sold and bank accounts are being emptied, and nobody will even confirm the most basic information? This is where beneficiaries who were perfectly happy with the executor before lose faith, and lose patience, and start looking for lawyers to take the executor to court.

Executors should realize that residuary beneficiaries of the estate are entitled to a full accounting of all transactions. Yes, ALL of them. This is usually done through a statement or ledger prepared by the executor, as it would be unreasonable for an executor to have to photocopy every single receipt and parking stub for every beneficiary. This means that the beneficiaries are entitled to ask for the information if the executor doesn't provide it voluntarily. It's not the estate lawyer's job to give this accounting; this is the executor's job.

For you executors who simply won't answer a simple question when a beneficiary asks one, and forces a beneficiary to go through the courts, think about this. If the beneficiary is entitled to the information, and you are obligated to provide it, how do you think you look to the judge as you stand there talking about why you refused to provide it?

I assume that if you had a really good reason for not providing financial information, like say your house burned down with all of the estate paperwork in it, that you'd simply tell the beneficiary what happened and ask for 30 days to re-gather the paperwork from other sources. The beneficiary would then have to be reasonable in return, and give you that chance to get your documents together. As a general rule, every executor should be able to produce a full, written accounting within 30 days of a residuary beneficiary asking for one.

 Being busy really isn't going to cut it as an excuse; if you can't get the job done, maybe you should consider being taken off as executor.

9 comments:

  1. I am currently experiencing problems with the executor (she is also a sister) of my Mom's estate she passed Aug 2011. I have requested information in regards to the accounting excel spread sheet she has prepared to us siblings. I learned recently that she has now blocked my emails...what to do....what to do?

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  2. I am having a problem with seeing the accounting from the executor of my mother's estate. I requested more information on the accounting from the executor but received a letter from the lawyer that said I could view the information at the executor's home.
    The executor lives on an island. To view the information I would have to travel for a day and find accommodation.
    Do I have to travel to see the information?

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    1. That just seems so unreasonable. What a power trip! Is there some logical reason that information can't be emailed or faxed? If security is a problem, the info could always be sent by courier. Just shaking my head at how people behave to each other.

      Lynne

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  3. My mother passed away and left 3 brothers as executors. We agreed on estate lawyer and two brothers were doing complete avoidance by lawyer. One brother caught using dead mothers debit card and took out thousands of estate dollars for himself. Both brothers also living in two estate houses and will not get themselves or their personal belongings out of houses or they will not put up for sale for fair market value. They have now dumped original lawyer and got their own lawyer. They say they can outvote me on every decision as per clause in will. What can I do to protect myself from these two brothers of mine. thank you

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  4. My mother gave my brother the right to invest her will into shares on the stock market. Several times I have asked for an accounting of what was happening but the executor usually just sends out bits and pieces tallied up, rather than a clear accounting about how each of those totals were achieved.

    Are beneficiaries permitted to find out which stocks were bought and sold and at what price so that they can tally up how the executor got to the final amount? This information has been impossible to get except in financial programming format which neither I nor my accountant can read without having the program installed. The executor seems to enjoy holding back as much financial information as possible.

    If my mother lived in BC and the beneficiaries are in Alberta, what type of person would we hire to ensure a full accounting of the probate which will probably be 3 years by the time this will is settled?

    Would a person hire a lawyer or an accountant? I have tried to hire a lawyer from the province the beneficiaries and executor live in, to get a head start on examining the total financial documentation which none of us have been privy to so far, before the clearance from Revenue Canada comes in to avoid delay of settlement, but lawyers here have stated that I should hire one from BC.

    I think this is ridiculous since it's only a review of the accounting so we can see where all of the dollars were lost or gained. Again, should I be hiring a lawyer or an accountant before signing off the will (which is quite large), and where should that person be living -- in my province or in BC, the province of the deceased? Settlement of wills is extremely difficult when a parent lives in another province because lawyers from each province say they don't know the legal operations of the other province. This problem causes one of the greatest and most expensive headaches in will settlement. Thanks for your "best ever" web site by the way.

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  5. Another stock market question if you don't mind,(hopefully). The executor recently settled the will with one of the beneficiaries who got less because of agreements made prior to death. Each of the remaining beneficiaries received the same amount of settlement at the time the first beneficiary was paid off, even though one didn't want anything to be settled IN FULL with just any single beneficiary until the entire thing was over. (Too bad, so sad, beneficiaries had no say!)

    The beneficiary then complained that since one beneficiary was now fully paid & there were only 2 executor hostages left, the remaining beneficiaries should have the right to decide how they wanted their money better invested/protected. "No way!" The executor would continue investing their portions in multiple stocks chosen by the him and bought and sold at unknown prices, possibly multiple times. (No one would know how many or what they were bought and sold for because he would consider this private information). The entire thing was put into one lump sum so that the executor as well as beneficiaries could profit more. One beneficiary felt this could indicate conflict of interest on the part of the Executor.

    The deceased originally gave the executor the right to invest it which beneficiaries agreed to when they thought the will would be settled in a few months, but after it went on very much longer, the executor would not allow them to change their minds. This was of concern because the Executor was an amateur stockbroker (and an stockbroker addict as well) who did stockbroking on his own computer. At the time he profited more from stocks than he would have with GIC's and believed this would protect him from charges in the event that the stockmarket went almost belly up, as long as stockmarket profit was still higher than GIC investment.

    Laws seem too much about the rights of executors versus beneficiaries who often tend to lose big time & sometimes everything because of their lack of representation.

    It appears that the executor may have since transferred much of the remaining portion of the complaining beneficiary from the stockmarket to GIC's although because of the secretive way this was handled, it wasn't possible to tell if this was the beneficiary's portion or a percentage of the overall amount for ALL of the remaining beneficiaries.

    Secrecy is a delightful game for many executors. The question about why many were secretive can probably be summed up in general to say it really does appear to be only because so many appear their bullying powers and control of others. They seem to feel that the rights of an executor are akin to the rights of a god and, yes, current laws do encourage such thought.

    I also think laws should state that all executors MUST PROVIDE full accounting details by REGISTERED MAIL to beneficiaries, for every 6 months the will isn't settled as well as just before asking for closing signatures. Without such a law, beneficiaries will forever continue to be on the losing end, and can suffer irreparable harm or total loss before they even realize what the executor has (or has not) been doing. Most beneficiaries can't afford to hire extra lawyers based on mere suspicion, especially since they don't have estate money to use to pay those lawyers like the executor does.

    One more thing to note was that after the 1st beneficiary received nearly full payment, the remainder of them also, like so many others in your blog, discovered that Revenue Canada claimed they didn't receive the release papers. The frequency of this claim should also alert lawmakers that it's easy to stop this type of carelessness (on the part of whoever is responsible on any end) by simply stating that executors are to send such forms by registered mail requiring a RECEIPT.

    Again, you're the greatest, Lynn Butler! Wish YOU were running the land yourself.

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    1. I appreciate the vote of confidence! While I don't wish to run the whole land, I often wish I could run the entire wills and estates system!

      You've made some really good points in your post. The executors are trustees under provincial trustee act legislation. This gives them full discretion on how funds are invested and they don't need the input or approval of the beneficiaries.

      However, trustee legislation does impose a standard of care on executors. Most of Canada has what is referred to as the prudent investor rule that allows executors to invest in anything sensible. This is where the questions arise. Is what THIS executor is doing sensible?

      Unfortunately, if you want to enforce your rights, you have to use the court system. That costs money if you use a lawyer, and few people can navigate the system without a lawyer.

      I wish that mediation was used more for this kind of issue. It really could solve so many issues in a single day at only a fraction of the cost of litigation. The executor could bring all of the financial papers and everyone could go through them and discuss them.

      One thing which you may not have thought about is that we lawyers can draft wills (and POAs for that matter) that contain at least some safeguards against executors who go off the rails. However, our clients refuse to allow it because they are naming family members as executors and don't want to insult them by insisting on things like regular accounting. Until human nature changes, most parents won't believe their children are capable of being obstructive or deceitful.

      Lynne

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  6. It has been two years since my Stepfather passed away. His sister is hostile and seems to be holding up the estate and being secretive. Should the estate be settled by now? how long does it take?

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    1. The length of time it takes to wrap up an estate really varies depending on a number of factors. It will take longer to finish an estate that has a business to wind up or sell, properties to sell, a missing beneficiary, challenges by beneficiaries or creditors, or a poorly worded will that needs clarification by the courts. In the absence of that kind of issue, most estates should be finished in 12 - 18 months.

      The part that often takes the longest is the application for, and receipt of, the tax clearance certificate. An executor is entitled to wait for that before disbursing the estate funds, as it indemnifies the executor from future tax liability. This certificate takes a good 6 months to arrive, and can only be requested when the estate is wound up. This may well be what's holding up matters in your case.

      Lynne

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