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Monday, July 18, 2016

How can a beneficiary make sure that the executor is disbursing the money according to the will?

Whenever I work with executors or hold Executor Boot Camp, I always coach the executor to maintain good communication with the beneficiaries. I know that's not always easy, as beneficiaries can be just as obstructive and cranky as anyone else. But when an executor does not provide enough information to the beneficiaries, speculation begins. The beneficiaries find the lack of information suspicious and their imaginations take flight. In the space of a day, an executor goes from being a trusted family member to a supposed fraud and thief. The problem is aggravated by the fact that beneficiaries are not always sure about their rights or what to expect from an executor.

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.

10 comments:

  1. Excellent

    I hope lawyers, executors and beneficiaries in my region see and read this.

    ReplyDelete
  2. Hi,
    Is there a statute of limitations or the like for this sort of issue?
    My "special needs" sister was once left an amount in our Gran's will. The money was put into an account for Sis and the person appointed to act as 'trustee' never gave Sis a cent. Our parents asked, pleaded, and even tried legal help to get it for her, but the 'trustee' ignored or refused any requests.
    That was over 30 years ago. The 'trustee' (more of an 'account holder', it would seem) eventually left the money for her own children, but my sister never saw a cent.
    So is there a time limit for people to just hang on to part of an estate, like money intended for my sister, or the guy who kept the summer home for personal use, when after a certain time it's too late and nothing can be done?
    Thanks,
    Lisa

    ReplyDelete
  3. " 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."
    How does someone go about doing this?

    "At that point you will have a chance to tell the court what you think is wrong."is this a lengthy process? Would proving that executors didn't account for the deceased' possessions by showing photos of the deceased' apartment/house and its contents be proof enough? Would I need a signed affidavit from the non-beneficiaries who received the goods?

    "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"
    Is it enough to show some of what they distributed to non-beneficiaries and then what little I received in photos to prove inequity? If they didn't write everything down, how can the court find them guilty?

    How do people generally prove inequity if the executors withhold all the info?

    If the court forces them to show the accounting, how and when does a beneficiary receive the accounts?

    Does the beneficiary have to pay court fees in order to compel an executor to do what they should have done by law in the first place?

    ReplyDelete
  4. Many interesting questions are being raised here. I hope that Lynne can respond to some of them.
    As an Executor I am currently involved in an Estate Horror . I have been through the gauntlet. In fact, I have not reached the end. You ask the question of Pass Accounts. A little of my case.
    Pass Accounts can be Informal or Formal. In many cases Informal should be enough when there is full co-operation between the parties. Everything should be on the table. Both sides should be forthright. If Informal does not work then a beneficiary has a legal right to get what is missing via Formal Pass Accounts. I believe there is a Court form for this request. This request form is then sent to the Executors's lawyer, who then passes it on to the client. The Executor now has an obligation to provide the documentation that is required to satisfy the beneficiary. A request for Informal Pass Accounts I believe, should be done via a letter, from one lawyer to another. In my case it was not. I believe the Executor can also ask at the same time for an Informal passing of accounts if the beneficiary is withholding Estate funds. In my case the question is why wouldn't my lawyer just ask for a Formal Passing of Accounts since it is known that the beneficiary is withholding Estate funds. Both sides now have to provide Formal Pass Accounts. It begs the question. Why are Estate Funds in a beneficiaries personal bank account, period? For the record, I have completed both Informal and Formal Pass Accounts. They balance. My case has been going on for 11 years.

    ReplyDelete
  5. Yikes! Eleven years is crazy.my mother died on August 28, 2013 so it has only been three years however I would like the matter to be settled. The amount of stress that we experience, even on a subconscious level, from this sort of ongoing conflict is immense. I hope you achieve some sort of resolution soon. In my case, I really just want to know what has transpired. Because I am 14-8 yrs younger than my siblings, they've often treated me with contempt. Though we share the same set of parents, I can well empathise with step-siblings as they have perhaps treated me worse than they may have treated actual step-siblings. They somehow feel that because I live abroad, they can shut me out of everything. Acting from afar, I would dearly love to know if there are forms that I can compel the executors/equal beneficiaries to share all the accounts with me before they try to pass the accounts in court. I also don't know if the process of passing accounts in court would cause a notification to all beneficiaries. For all I know--living in NZ-they could have closed our mother's estate account and wrapped up her estate without my knowledge. Despite dealing with executors who are equally bonded as a Revenue Canada auditor/CPA and a personal banker with TD Canada Trust, they have not behaved within the context of the law thus far. I have little faith in them, especially since they continue to withhold information despite my asking for this info for the past three years. As for the actual property that was left in our mother's possession at the time of her death, they had already received many items prior to this when they had her sell her home in the preceding year in anticipation of her imminent death however refused to Skype or FaceTime with me as they went through her possessions. They preferred to give most of her items to cousins, aunts and charity than to allow me my right as a beneficiary. They did allow me the right to certain items but where I requested general items such as clothes ( my mother had a wardrobe to die for!) they preferred to gift it to non-beneficiaries and charity than to allow me to have anything. They even threatened to give what little they allowed me if I was not able to arrange collection from a moving company within a week. I was lucky to have found a kind woman in Barrie who moved heaven and earth to arrange this for me since I lived so far away. Then this stranger skyped with me in order to allow me to see whT I was paying $4000.00 to ship given that I wouldn't put it past them to fill boxes with rocks-they are that hateful and jealous of me. I am dealing with people who had "next time get it yourself" written on a birthday cake from Dufflette's because they resented having to pick up the cake for the party.

    ReplyDelete
    Replies
    1. One of the many problems with estate litigation is that it really can become hopelessly bogged down and just take years and years to wind up. I wish more lawyers recommended mediation of these things. I know it doesn't always work - some hateful people would rather spend tens of thousands on a lawyer than spend half a day in the same room as someone in their family - but most of the time it can significantly cut down on time, costs, and stress.

      Lynne

      Delete
  6. @Canadian Kiwi
    You are in what appears to be a rather complex situation that you might not be able to resolve to your satisfaction. It is said that we have legal rights, but the cost to legal action can be expensive. Executors, beneficiaries, lawyers and others often count on that.
    My situation is local and is really quite simple yet a sibling beneficiary, unscrupulous lawyers and others have allowed it to drag on. I am expecting more information and a Trial date has been set for Nov 2016. Who knows what will happen between now and then. TBC.

    ReplyDelete
  7. Lynne, I could not agree more. Mediation was never brought up in my case. However a devious, deceitful lawyer tried to resolve it with 'Case Management Conference' with no prior discussion or authorization. In my case I present Formal Pass accounts but the beneficiary does not. In fact while were were still involved with CMC my lawyer had received approval to 'get off the record'. I don't know if the Judge knew about this, let alone the other side.

    ReplyDelete
  8. Thanks for your insight webeye. I think if I can get some answers to the following questions, I might be able to push matters through and highlight how the average layperson might do the same in order to prevent unscrupulous executors from manipulating the system and associated costs to their advantage. Lynn, if you can shed some light on the following questions, I'd really appreciate your help.
    1. "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."
    HOW DOES SOMEONE GO ABOUT DOING THIS WITHOUT A LAWYER?

    2. "At that point you will have a chance to tell the court what you think is wrong." IS THIS A LENGTHY PROCESS AND HOW IS A BENEFICIARY ADVISED THIS IS HAPPENING?

    3. MUST ALL BENEFICIARIES BE NOTIFIED?

    4. Would proving that executors didn't account for the deceased's possessions by showing photos of the deceased's apartment/house prior to the date of death and its contents be proof enough?

    5. Would a signed affidavit from the non-beneficiaries who received the goods be proof?

    6. "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"
    Is it enough to show some of what they distributed to non-beneficiaries and then what little I received in photos to prove inequity? HOW EXACTLY WOULD YOU SUGGEST SOMEONE DO THIS? Especially when it comes to personal effects?

    7. If they didn't write everything or anything down, how can the court find them guilty?
    WHAT MUST I DO TO PROVE THIS?

    8. How do people generally prove inequity if the executors withhold all the info?

    9. If the court forces them to show the accounting, how and when does a beneficiary receive the accounts?

    10. Does the beneficiary have to pay court fees in order to compel an executor to do what they should have done by law in the first place?

    ReplyDelete
    Replies
    1. The reason I haven't responded to your many questions is that this is way beyond what a blog post can address. It is too risky for you (and for me) to rely on general rules such as those set out in the space and other limitations of a blog post. You clearly need a lawyer - someone who can examine documentation, do searches, ask questions - to help you.

      Lynne

      Delete

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