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Monday, December 8, 2014

The executor is going to sell an asset and give the proceeds to non-beneficiaries. What do I do?

What would you do if, while waiting to receive your inheritance, you found out that the executor planned to sell an asset and give the money to someone who isn't a beneficiary? A reader who is in that situation wrote to me recently. His letter and my response are below:

"I am one of three beneficiaries. I recently learned that the safe contents (coins) will be appraised and sold this week by the trustee (who is also one of the beneficiaries) and the monies distributed among the grandchildren, who are not beneficiaries. I don't know what to do."

I'm assuming that  your concern here is not so much the sale of the coin collection, but the unauthorized distribution of the sale proceeds. You cannot stop the executor from selling any specific estate asset for a fair price, though of course you can suggest that you receive the coins as part of your share if they are of interest to you.

If the grandchildren are not beneficiaries of the estate, then they should not be receiving anything from the estate. But before we get into what you can do about it, let's take a moment to look at what could be happening to cause this situation. I always tell people that before they start talking about lawsuits, they have to be absolutely certain of the facts.

In particular, I want to ensure that you have read the will and are positive that the grandchildren are not entitled to receive anything. Does the will give the executor any discretion to deal with household or personal goods? For example, sometimes wills say that executors can distribute personal items as they see fit, or among family members as they see fit. If there is wording like that in this will, the executor is within his or her rights to include the grandchildren.

There is an incredible range of wills out there. Not all of them deal separately with household and personal items, though I wish they all did. Make sure you check the exact wording of the will and understand how it works in this case.

It's also possible that the executor doesn't realize that he or she is not allowed to give anything to the grandchildren. Let's face it, most executors only act as executors once, and some either don't get legal advice, don't listen to the advice, or don't really understand it. This certainly wouldn't be the first executor who mistakenly thought it was up to them to "make things fair", even if it meant ignoring parts of the will. Have you raised your concerns with the executor and received an explanation as to why the grandchildren are receiving these funds?

Assuming that you have checked the will and you are certain that the grandchildren are not supposed to be beneficiaries, you have to decide how firmly you want to dig in your heels on the issue. You should start by discussing the matter with the executor and making it clear that you object to the distribution to the grandchildren. If the executor doesn't respond by confirming that he or she will not make the distribution to them, follow up your verbal discussion with a letter stating  your objection. In the letter, tell the executor that you will take the legal action necessary to prevent the distribution.

At this point, most executors will talk to a lawyer to find out why they cannot give anything to the grandchildren. Some will decide to follow the rules once they are aware of them, and hopefully this executor is one of them. One possibility open to the executor, if he or she feels strongly about giving something to the grandkids, is to ask all of the beneficiaries to agree to the gift in writing. Basically this would mean each of you receiving a little less from the estate in order to share with the grandchildren.

Sometimes beneficiaries don't mind agreeing to receiving less, but in other cases they don't agree because they want to honour the wishes of the deceased as they were set out in the will. You don't have to agree if you don't want to, and you don't have to explain your decision.

If the executor proceeds with giving funds to the grandchildren without the written consent of all three beneficiaries, you only have one option left, and that is taking the executor to court. There is a range of orders the court can make. Most typically, the court would require that the executor repay the estate out of his or her own funds, or that the executor's fee be reduced by the amount that was improperly paid out.

When I say that you have to decide how far you want to dig in your heels, I mean that you have to decide whether you want to go through a lawsuit because of the distribution of the sale of the coins. I understand that it's not just about the money; the executor is trying to get away with something he or she has no legal right to do. Lawsuits are expensive and can be really ugly, so try everything else you can before resorting to that.

1 comment:

  1. Dear Lynne, I am a beneficiary and believe the executor committed fraud. I was told to contact the Fraud Dept. by police. Before I had a chance to make contact, I received my release. I want to pursue legal action, but one beneficiary is sick and the others do not want to pay legal costs. If I sign my release does it release the executor from criminal investigation? Do I still have the option of filing a complaint with law enforcement and submit my evidence to support my claim? Please help!

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