Monday, July 18, 2016
How can a beneficiary make sure that the executor is disbursing the money according to the will?
Posted by Lynne Butler
A reader recently wrote to me asking about how to keep an eye on an executor, which is a perfectly normal question to ask. I did note, however, that the reader mentioned suspicion of shady activity. As far as I can tell there is no evidence of shady activity other than the lack of communication. So executors, take note. If you don't tell the beneficiaries what's going on, they'll just create their own narrative, and that can lead to a lawsuit.
Below is the reader's question and my response:
"How can I ensure that the executor of my sister's estate is honestly disbursing the money as the will stated? That is, equally among 6 relatives. Her assets were in investments so I only know of a ballpark figure. The executor has not notified any heirs with valid paperwork or phone call or mail, except for sending a copy of the will. I am told by another heir that a lot of the money was paid to income tax so the amount is less than anticipated. There is some shady activity going on and I believe the executor has to show paperwork of the distribution of the estate, do they not?"
Certainly executors have to show paperwork of the distribution of the estate, but you should not expect him or her to send every beneficiary a copy of everything he or she does on a daily basis. That is unreasonable and there are not enough hours in a day for an executor to do that.
It appears from your question that nobody has received their cheques yet. The normal way that an executor proceeds when he or she is ready to pay out the beneficiaries is to send the beneficiaries a full accounting of the estate, together with a release. At that point, the beneficiaries all get a chance to look at what has been done. You'll be able to see the exact amount that was held in investments, and what was paid in income tax. There will also be dozens of other things too, such as legal fees, accounting fees, utility bills, credit card payments, bank charges, etc. If the accounting is half decent at all, you should get a pretty good idea of what's been done.
Part of the accounting will be some form of statement that shows what each beneficiary will get. At that point you can be reassured that everyone is receiving the same. All the beneficiaries get the same paperwork so if someone notices a mistake that nobody else knows about, the executor should correct it so that everyone has the proper information.
If you believe that the accounting is acceptable, you will sign the release and soon thereafter receive your cheque.
If you believe that there has been "shady activity going on" and you can point to it in the accounting - such as funds that are missing - then you do not have to sign the Release. You can ask for more information or paperwork. If you cannot get answers to your questions from the executor, your only option is to force the executor to pass his or her accounts through the court. At that point you will have a chance to tell the court what you think is wrong.
Be sure that you know what you're talking about. Don't even think about going to the court and just saying there has been shady activity. You'd better know what that shady activity is, or at least what is missing. Otherwise the court could end up dinging you for the cost of the court application for going on a fishing expedition that wastes everybody's time.
All of this post so far has been about the executor's responsibility to provide an accounting at the end of the estate just prior to distribution. However, any residuary beneficiary can demand that the executor produce an accounting at any time during the estate. If you decide that you cannot wait for the final accounting and you want to demand one now, do so in writing. Leave the executor reasonable time to gather his or her thoughts and make a photocopy. Don't expect someone to have an accounting to you in 24 hours. Give a few days, because realistically people have jobs and families and cannot devote themselves to executor duties full time.
Keep your demands reasonable, but in light of your concerns about shady activities, examine the accounting carefully. Talking to other beneficiaries about the accounting, once you get it, is also helpful.
Beneficiaries who want more information about their rights, about how estates work and what to expect can find a ton of great info in my book called The Beneficiary's Answer Book.