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Tuesday, December 1, 2015

Tips for beneficiaries and executors on getting and giving an accounting

Every week I receive several questions about how to get executors to respond to requests for information about the estate accounts. This issue is obviously a problem for a lot of people. I think that both executors and beneficiaries need a little bit of coaching on what to do in this situation, so in this post I'm offering a bit of information to both.

Let's start with the beneficiaries. My general observation is that beneficiaries need to temper their expectations. Before you demand information from an executor, be sure that you are a person who is entitled to the information. If you are not a residuary beneficiary, then the executor does not have to tell you how much the house was sold for, or who got Mom's bedroom suite. It's simply none of your business, even if that doesn't seem fair to you.

Beneficiaries also need to be reasonable about what they ask for. For example, not everyone can demand to have the originals of everything, since there is only one original.  When you ask an executor for an accounting, be specific. For example, you could ask what was paid to realtors and lawyers in the house sale. You are much more likely to hear the answer you want if you ask the right question. Sometimes beneficiaries will complain that they weren't told how much was in Dad's bank account, and when I ask whether they enquired about the bank account, they say they didn't. So, rather than talking to me, they should be directing a specific question to the executor.

Also, be reasonable in the time you allow for a response. Most executors are also juggling jobs, homes, and families along with their executor work and may not be able to drop everything to respond to your question. Set a reasonable deadline, such as a week, for a reply.

Now, on to the executors. I often wonder why so many executors are so unwilling to give information to beneficiaries. It isn't in your best interests to ignore requests, or worse, to respond with hostility. If you refuse to cooperate with reasonable requests for information, the beneficiary has the option to take you to court to force you to respond. This doesn't usually end well for executors, simply because judges get a bit sick of playing referee for grown people who should be able to manage these things between themselves. Sometimes the executor is punished by the judge by way of being ordered to forego the executor fee, or being removed from the estate entirely.

Executors, you are required to share all financial information with the residuary beneficiaries of the estate. Maybe you don't want to, and maybe you think those people are being a pain in the neck with all their questions, but that's the job. You agreed to be the executor and this is part of what you have to do.

This doesn't mean you have to jump every time someone barks at you. You have to give full, accurate answers in a reasonable time, but if someone is calling you at 2:00 am with a desperate need to know how much  you sold Dad's car for, you are within your rights to tell that person to go away.

The best advice I can give executors is to keep your records up to date, and as detailed as possible. Be transparent because I can guarantee that the more you keep information to yourself, the more the other people involved in the estate will suspect you of wrongdoing.

I'd like to remind both beneficiaries and executors that basic courtesy, respect, and manners go a long, long way to getting optimum results and minimizing conflict. I'd also like to remind them that most executors are family, and before heading off to court to beat answers out of each other, you might try mediation and talking to resolve your differences.




12 comments:

  1. Excellent. Thank you thank you thank you.

    You are describing my situation. As the Executor I have been 100% open and transparent with all Estate issues. There are no secrets. The same cannot be said for a disgruntled beneficiary. Lawyers have really bungled up my resolution and settlement of parent's estate. Still working on it. Lynne you could write a book with respect to my situation.

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    1. Odds are good that in one of the 9 books I've written, your situation was covered ;)

      Lynne

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  2. Great article. I just want to add that if there is a surviving spouse, do not wait, demand your legal rights as soon as possible, and if the executor does not comply - do not wait. My mother lost everything because for 14 years she was unwilling to take her son (my brother) to court. He stole all her property rights, kept title of the matrimonial home in the estate even though she is sole owner, and took all property rental income without sharing one cent with her even though by law she is half owner in them. By doing nothing she lost everything. He took the rents, refuse to give an account, and put the property taxes so far in arrears they total over $100,000. Filing now in court means a long drawn out battle & she still loses her home.

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    1. Trudi, you touch on a really important point here, that being the unwillingness of parents to prosecute - or even question - their kids even when they know things are not right. This is a real challenge for lawyers like me. For example, I often suggest several ways to beef up the security of power of attorney documents to avoid financial abuse, but parents won't allow me to include them. They say they won't sign anything that even hints that their kids could do something dishonest.

      This is such a tough issue. I'm a parent, and I understand the loyalty and the need to protect the child. But whatever happened to sticking up for yourself against a bully or a con man?

      I don't know what the answer is, but I keep working on it.

      Lynne

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  3. Hi Lynn,
    I'm in Manitoba and myself and my siblings are issues in my grandmother's will. My mom tragically passed a month and a half prior to my grandmother. Mom use to always say "God forbid the day baba passes, as it will be a uphill battle". Well she was right! My siblings and I would like to know what form/action through the courts to have my uncle (the executor) be forced to provide us with financial affairs and back-up that we have already requested through a lawyer but that he has not provided.?!
    Thanks,
    Teresa

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  4. Hi Lynne, This is very helpful. We currently in a situation where our Executor on my Mom's Estate has been reluctant to supply us with an accounting document / financial statement of the estate holdings and liability, information is not well organized and been given to us only in pieces, including current funds transferred into the estate from Trustee, along with Outstanding Mortgages that the estate will be collecting in the next five years due the real property investments my Mom had. He has been reluctant to meet with all the beneficiaries, he has been vague and elusive in our inquires, our communication with him has been only via email.
    We recently exchanged number of emails to align on amounts for an interim release of estate funds to the beneficiaries. He has sent us surprisingly an Interim Release Form to sign. I find signing this form very concerning. In the form he stipulates what funds we will be receiving, however, he has not provided an accounting document highlighting the assets, liabilities, expenses, monies held back for future payments that need to be made by the Estate. He is also requesting in the Form "forever discharge" the estate for any and all actions, suits expenses to the estate and Executor. In addition, he asking us to approve his fees which he has not documented in the form, as well he asking us to further not make any claim or take any other person or corporation who might claim contribution or indemnity for the Estate or Executor.
    I find all this very troubling giving it is an interim release of partials funds, especially when it's value we receiving is going to be only 10% of the total estate value that will be ultimately divided to the beneficiaries upon closing the estate which will most likely be in 5 years. I could understand all these clauses if it were the final release of funds. As I stated there has been no Accounting document provided either. Am I expecting too much to request an Accounting Document to be appended to the form, what his fees are, I am very hesitant to forever discharge him as Executor given it is only a partial release of funds. Is this all normal, it seems very suspicious to me, any advice on what my options are?

    frustratedbeneficiary

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  5. Hmm. Let's back up a bit for us noobs. What happens when the executor is the beneficiary? What is the process to obtain financial information now that the POA is invalid because it ceases upon death of the person? Maybe this question will go unanswered since Lynne hasn't replied since December.

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    1. Actually, I answer questions on this blog pretty much every day, even on weekends. Sometimes I don't answer the really long ones because someone with a complex question isn't going to get what he or she needs from a brief blog post and it's safer for them and for me if I don't try to throw something quick at them.

      Anyway, the executor is frequently a beneficiary as well. When you say "what happens", what do you mean? Are you asking whether the executor must prepare an accounting even though he or she is the ONLY beneficiary? If so, then no they don't have to prepare one.

      You are correct that the POA ceases when the donor dies. At that point, the will takes over and the named executor has the authority to gather any information regarding the deceased, such as from banks, CRA, insurance companies, etc.

      Lynne

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  6. Hello Lynne I have a question My brother committed suicide, He left a suicide note advising who ever found him to call me for help, He has no will and owes 100,000 in credit well over his pension and life insurance He was never married but has two young daughters who he has been estranged from them for years They are his beneficiaries, Should I become the executor knowing that the girls may never see a dime I am really frightened Anne Marie PS I haven't any money for a lawyer, I had him cremated at my own cost

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    1. Hi Anne Marie. Since I saw this question on my email before I saw it here, I answered it on email.

      Lynne

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  7. I live in Ontario. I have questions about the executor's responsibility to account to residuary beneficiaries. The executor has recently applied for a Clearance Certificate from Revenue Canada and has indicated that the next step is asset distribution. The executor has also stated that residuary beneficiaries (of which I am one) will NOT be asked to sign a Release. My understanding is that residuary beneficiaries are entitled to a Statement of Accounts. However, if these beneficiaries are not asked to sign a Release (we understand that a Release is not a legal obligation), what happens? More specifically:

    Is it a legal obligation for the executor to produce a Statement of Accounts? If it is a legal obligation, but the executor does not intend to seek a Release, when should beneficiaries ask to receive a Statement of Accounts?

    Can an executor refuse to provide a Statement of Accounts? If the executor refuses, what recourse does a beneficiary have?

    Is approval of a Statement of Accounts by beneficiaries (when no Release is sought) a condition for the executor to get paid? If approval by beneficiaries is a legal requirement, how and when do beneficiaries grant approval (note that, in this case, the executor's compensation is a set percentage of the estate, as stipulated in the Will)?

    Finally, who decides when it is okay for the executor to get paid? This question is not about how much the executor gets paid, as the Will stipulates the rate of compensation. It is about who decides that the executor can actually be paid.

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