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Saturday, October 3, 2015

Does an executor have to agree to beneficiaries' requests to see expenses and statements?

Does an executor have to agree to beneficiaries' requests to see expenses and statements?  This seems to be an ongoing struggle in way too many estates. I'm not sure whether executors are not seeking legal advice, or ignoring legal advice, or simply getting inadequate legal advice, but the conflict between executors and beneficiaries carries on. A reader recently asked me a question about the requirements of an executor. Here is his question, followed by my comments:

"Is it legal within Canada that the executor can refuse to let beneficiaries know what their expenses are, and also refuse to show bank account statements unless the beneficiaries sign release of funds documents? My brother is saying that he is not obligated to show any accounting until he is ready to disperse money. Is he lying?"

I couldn't say for sure whether he's lying, or whether he's simply mistaken, but in either case, he's wrong. An executor must be prepared to produce an accounting for residuary beneficiaries at any time. By "any time" I don't mean that the executor must produce it five minutes after being asked, but he or she should be able to provide it to the beneficiary in writing within a reasonable number of days.

The requirement to account arises from the fact that the executor is a trustee and fiduciary. The executor doesn't own the estate or the assets of the estate; he or she is simply a custodian and manager of the assets. The estate belongs to the beneficiaries and therefore they have the right to ask what is going on.

In my view, the beneficiaries have more than a right to ask what's going on; I believe they have an obligation to ask. There are no executor police. There's nobody at the court or in the government whose job it is to check up on what executors do. It's up to the beneficiaries to ensure that the executor named in the will is actually doing what he or she was appointed to do.

Having said that, let's look at it from the executor's point of view. It's not reasonable for beneficiaries to ask for every receipt and expense as the executor carries out his daily tasks. There are not enough hours in a day for an executor to report on each and every step he takes, as he takes it. Nobody has time to make or receive that many calls and emails. I always urge executors to set up an email mailing list for the beneficiaries, and to send a summary every two weeks, or once a month once things slow down, to keep everyone informed.

While an executor is not entitled to keep bank statements secret from residuary beneficiaries, the beneficiaries do have to let him get on with the work with some level of trust.

The normal procedure in most estates is for an executor to provide a full accounting at the end of the estate when he is ready to write the cheques. Perhaps when your brother was told this by the estate lawyer he took it to mean that he doesn't have to do anything different.

This doesn't mean that he can do as you said, which is "refuse to show bank account statements unless the beneficiaries sign release of funds documents". He has to show the statements and the rest of his accounting first. How on earth could a beneficiary approve of his transactions if the beneficiary isn't told what those transactions are? He has that bit backwards. Generally the accounting and the release document arrive together, at the end of the estate administration, but beneficiaries should not sign releases without studying the full accounts first. If he does not provide an accounting first, he can be compelled by the court to pass his accounts.

The fact that you asked if your brother is lying is proof of something I tell executors constantly - hiding what they're doing only causes suspicion and speculation. They just need to be open about it.

9 comments:

  1. Is there a standard release form? Where can the Executor get one for Ontario?

    ReplyDelete
    Replies
    1. No, there is no standard release that applies to everyone, everywhere. They vary from province to province. In Ontario, try this page from Ontario court services that contains pre-formatted forms prescribed by the rules of civil procedure:
      http://www.ontariocourtforms.on.ca/english/civil/pre-formatted-fillable-estates-forms.

      Lynne

      Delete
    2. Lynne,

      Thanks for the link. While the site contains many useful forms, as far as I can tell, it doesn't include a release.

      Delete
  2. Lynne
    As I have previously written I have the opposite problem, a beneficiary that is withholding Estate monies and won't provide financial accounting. A Trial date has been set to get that. To me there is absolutely no question that the beneficiaries have a right to financial info from the Executor. What is there to hide? I happen to be a beneficiary as well and I want that info. It is difficult to believe/understand the BS that goes on with this and the games being played, This includes 'lawyers' as well.

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  3. I have two residuary beneficiaries that are 'Ridiculously Difficult' to deal with and won't even give out an address and keep changing their phone numbers. They 'both' live in another city (same city) in the province and don't seem to be interested in signing off or returning emails (email is ALL I have in terms of contact info for these two).

    As executor what should I do? Should I 'pay' to have a lawyer in that city hold on to the cheques and releases for both of them until they come in to sign or should I just do it like everyone else does (get a release, send the funds, kinda' thing.)

    Heck, I don't even know what these people look like, so I would assume that I'm going to have to get them show I.D. in the scenario above. I suppose I could also put the money in Trust for them until they finally decide they want to be 'found'. Either way, I'd like to get these two clowns to sign releases so I/ (we all) can get on with our lives. I suppose I could always ask the court to approve the accounting, but I'd rather not cost the Estate anymore than it has, especially since I'm basically at the home stretch in terms of finalizing this Estate.

    ReplyDelete
  4. I am dealing with residual beneficiaries that claim it is their right to see the other parties signed releases before they sign theirs. Is this a legitimate request under Estate Law as they claim it be. I can only find that the Executor is to receive all the signed releases before funds are disbursed. Any assistance would be appreciated.

    ReplyDelete
    Replies
    1. No, I wouldn't consider that to be a legitimate request and it certainly is not the law. Residuary beneficiaries are entitled to a full accounting of your transactions on the estate, which don't appear to be in issue. Seeing the other people's releases doesn't add anything.

      Lynne

      Delete
    2. I am in BC, and going through the same thing. Two beneficiaries have signed releases, but the third wants his (Ontario) lawyer daughter compose his complete release. In it, she is saying that he will be excluded should additional taxes/fees be accrued, he will be exempt, if they exceed the holdback, ($4,000.). We have told him that we are willing to sign a legal document that any additional costs will be paid in the same percentage as the residual funds are to be distributed-him 50%, my sister and I at 25% each. Taxes have all been paid and right now he is the only one adding costs to the minimal estate of $225k. He is paranoid that future taxes will be in the hundreds of thousands of dollars and thus, we cannot get even partial distribution. The deceased relatve was a mentally handicapped woman who was a ward of the court, and incapable of ever holding a job. It has been 3 years since her passing, and like others have mentioned, we, and the executor, just want to get on with our lives.

      Delete
  5. Hi Lynne,
    My youngest brother is the executor of our mother's estate. We were quite shocked when we found out he is going to be paid for being an executor of the funds from the estate (50 - 75K), as it was never mentioned till quite later on. He actually did very little on his own other than shovel sidewalks, cut grass etc. until the house was sold. He did get all the assets and liabilities together for the estate lawyer. The house and garage were quite a mess and had so much stuff/junk in them that it took from October to July to clean out which we did on weekends when we had free time. My wife was not working so she did all the research on how much certain items were worth so they could be sold. Myself, my wife and my other brother spent many hours helping our executor brother with all of this. Are we also entitled to be paid for our time?

    ReplyDelete

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