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Wednesday, April 22, 2015

Is taking a greedy executor to court to pass accounts worth it?


Whenever a person is thinking about bringing a lawsuit against someone, he or she goes through the mental process of weighing risks and downside against potential gains. The question is whether the lawsuit is worth it. A large part of the issue is the financial cost of the lawsuit, but in my view that's not the only important factor to consider. A reader recently wrote to me to ask the "is it worth it" question. His question and my response follow:

"Is it worth going through a contested passing of accounts because of a trustee who wants more than his 5 percent or are the costs involved so great that it's better to give in and let this trustee have his extra money even though he's been taking forever and not done things the way they were supposed to be done (never giving a proper accounting or any information at all) up to the point where I won't get anywhere with this situation without a lawyer's help?"

The question of whether it's "worth it" is on the face of it a question about money. You'd like to know whether the cost of hiring a lawyer is going to outweigh the savings to the estate. I'll talk about that, but I'd like to say that this question really is about more than money.

Your frustration comes out in the way you've worded your question. Obviously you have serious misgivings about the way this executor conducted himself during the course of the estate administration. Ask yourself whether you can live with him getting extra pay for doing such a terrible job. While a court fight can destroy any relationship between an executor and a beneficiary, so can the resentment felt by one party who feels the other has taken advantage of him.

Please understand that I'm not encouraging you to go to court; I just want you to recognize that you may harbour hard feelings for the executor after the estate is over if you allow him to do something that you feel is wrong. You may be okay with that, or you may not, but take it into account as you decide whether taking him on is worth it.

Passing of accounts applications are not the most expensive kind of lawsuit out there, since they generally are not a full trial with all the bells and whistles, but it's still a lot of money.

There may be a middle ground between "giving in" and taking the executor to court. The situation you've described sounds like something that could really be helped by mediation. The advantages to you would be that it is less expensive and less time-consuming than going to court, and that you get to say everything you need to say to the executor. You would hear his side of it too, but in a setting that is more about clearing the air and coming to an agreement than fighting it out.

Not everyone hires a lawyer for mediation, since the lawyers don't speak for you during mediation sessions. You and the executor would speak for yourselves and the lawyers would really only be there to advise on legal points, if they are there at all. The lawyers also do any preparation work requested by the mediator, if you find it too much to do on your own. If there are other beneficiaries of the estate, they should participate too, and perhaps you could share the cost of a lawyer with them.

I strongly urge you to consider this, as it wouldn't deplete the estate (or your bank account) and would be a lot easier on everyone's stress levels. If the mediation doesn't work,  your last resort would be a lawsuit.

5 comments:

  1. Excellent article.

    I just substituted 'Beneficiary' for Executor.

    I am an Executor going through a rough time and dealing with lawyers that have misbehaved. My lawyer wants to 'get off the record'. What he has done is unbelievable. I have conducted myself accordingly in every respect.
    Lynne, I would like to see an article on how to deal with lawyers that misbehave. Many thanks

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    Replies
    1. Good idea. That will be my next blog post!

      Lynne

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  2. What a wealth of information I have gained from your blog, Lynne. Thanks so much.
    Is it possible for me to file a formal notice to request a passing of accounts without using a lawyer? Could I complete the forms and take them to the courts myself? I hesitate to spend any more money on lawyers as the executor ignores all requests for information and will most likely not even bother to appear in court. She feels she is entitled to the entire estate, even though the will states otherwise. As far as she is concerned, the estate is settled and she has kept approximately $700,000 that she was not entitled to.

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  3. Hi, I wanted to ask this question on your Tenants In Common page, but it was full. we are a couple living common-law. The title on a house we bought together 5 years ago for $575,000, each contributing $200,000 downpayment, is on title as Tenants in Common. Now my common-law spouse has sold his business and is paying off the balance of the mortgage, claiming with extra mortgage payments over the past 5 years and this lump sum payment he has now paid an additional $180,000 into the equity in the house. He says this will benefit me as well in that there is no longer a mortgage. All I can see is that, should something unforeseen happen, my equity in the house is now approximately 1/3 of his equity and I would walk away with approximately $260,000 should the house sell for $700,000 net. I also feel that should he pass away before me, his 3 kids could order the house sold and I would be put out in the street with my $260,000 equity. I should add I have paid 1/2 the bills for the past 5 years and earn about 1/2 of what he earned during that time. Am I seeing this all wrong, or... ?

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  4. Hi Lynne,
    I was wondering if you can take an executor to court after all beneficiaries have been paid (and it's been 9years since the death). A lot of items were stolen from the home and it was sold for less than market value, we want to be given receipts for these items to prove he did a good job with sorting the estate without him dipping into estate funds for laywers fees. Thanks for any help !

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