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Tuesday, November 8, 2016

Is it a good idea to act as executor and POA for someone I don't know much about?

It used to be that people felt honoured to be chosen as someone's executor. I have always thought that frame of mind to be a bit naive, really. Being an executor is a lot of work and is generally thankless. It doesn't feel like much of an honour once you're out there, in the trenches! Recently a reader wrote to me to ask about taking on the job:

"An elderly friend of mine has asked me to be executor of her estate and Power of Attorney. I have only known her for 2 years and do not know her family at all. I know she has one daughter who she doesn't get along with. I don't believe she has a large estate as she doesn't own the home she is living in but resides in a senior's complex. Because I know very little about her I am nervous about taking this on. I am a senior myself and do not want to take on anything that may cost me financially as I only have my pension. I really would like to help my friend as she is not doing well but not too sure what all this would involve. I guess my question is 'Would it be a good idea to act as executor and POA for someone I know very little about but would like to help?"

Your heart's in the right place, but I understand  your concerns. Estates can be messy business, and nobody wants to get drawn into another family's drama.

Acting as an executor should not cost you financially. You don't have to use your own money and you are not personally responsible for her debts. If there is not enough money in the estate to pay all of the bills, the creditors cannot come after you, assuming that you have not done anything unlawful with the funds. Some bills come in pretty quickly, such as the funeral bill, and this might happen before you have access to estate funds. In that case, you would take the bill to the bank where your friend has an account and ask the bank to pay the funeral home directly. Assuming there are enough funds in the account, banks are quite willing to provide this service.

It does sometimes happen that executors pay for things themselves (for example, the probate fee at the court) but that is usually voluntary, and done just to keep things moving. If you do that, you can reimburse yourself from the estate.

Acting as executor can expose you to personal liability. As a general rule, executors who take reasonable care and act honestly don't have a problem, though unruly beneficiaries can take an otherwise normal estate to ridiculous places. If you cause any financial losses to the estate due to your fraudulent or negligent actions, you could be required to repay those losses personally.

Perhaps a good place to start would be to find out more information. Decisions are always easier and better if you have more data. Casual conversations about related topics are fine, but perhaps you and your friend should sit down together and exchange detailed, factual information. Take a look at the workbook I designed (click here) that has space to record everything from bank accounts to passwords to family to the names of your friend's doctor and pharmacist.

Having this kind of information on hand is absolutely essential so that if you act for your friend in the future you do not miss things or make mistakes.

Recording this info will achieve a number of things. It will create a valuable resource for future use, of course, but it will also give you a good idea of what you'd be getting into. Sometimes people can have quite convoluted financial affairs that we know nothing about. You'd have a chance to ask your friend whether she already has her will and POA done, and if they are up to date (she may have asked you to act because she is having new ones drawn up). She may or may not be willing to show you the actual will, but she should be willing to describe her general estate plan. If you do get to see the will, check to see what it says about paying you as executor. You don't want to have to fight with your friend's family to get the compensation you are entitled to.

You might find out about things your friend may have had no reason to mention, such as an unsettled lawsuit, a timeshare in Florida, a joint account with a grandchild, a safe deposit box full of Canada Savings Bonds, unfiled taxes for the last 20 years, or a dozen other things.

I would also suggest that you ask your friend to be frank with you about why she does not get along with her daughter. I hope you will be sensitive in asking the question because that sort of discussion is not always easy for a parent, but you need to know whether the issue between them is likely going to impact your ability to be an effective representative for your friend.

Consider what resources you will need to access, such as a local lawyer who could help you with the estate. You will likely also want an accountant to prepare your friend's tax return. Being an executor often involves a lot of trips to the lawyer, land registry, court house, and bank, so getting around to all of those places should be taken into consideration.

Because your friend is of modest means, she may not be willing (or eligible) to name a trust company as her executor and POA. Many people appoint their children but it appears that is not a good choice for her either. It's great that she has a friend like you who is willing to consider helping, but you are smart to do some homework to see what's involved. While you are on this site, search "executor's duties" and you'll find lists of the tasks that most executors have to do on most estates.

9 comments:

  1. Reading the title made me chuckle a bit. After my mom passed and I was appointed executor I was initially fine. My parents asked me if I would be their executor when they created their will and I accepted. Nearing the end of the process I now have a saying "Find someone you trust but don't like very much...make them your executor !". It is a lot of work and can be stressful at times...and there can be some very complex issues to deal with. Just be aware that the job requires work and potentially dealing with a lot of people and government agencies.

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  2. Excellent question and response.

    I/we know little of writer's involvement with her friend of 2 years. As an Executor who has gone through hell and still there my response is stay away. You do not need this. As Lynne state's it is a thankless job. To be fair, not all Estates are a mess but too many are. As an Executor I am hoping to resolve mine soon after 'many' years. Mine could be a mini movie of the week or certainly a write up in a book about Estate Horrors.

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  3. Hi Lynne, I'm a beneficiary of my father's estate, while my siblings are executors and beneficiaries. Recently, I was told to pick up a certified cheque as partial distribution of the estate. I am required to sign a release form before taking a cheque. They're withholding $60,000 for taxes and estate lawyer fees, with the remainder to be disbursed to beneficiaries. If I sign the release form for the first cheque, will they be able to keep the remainder?

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    Replies
    1. No, they don't get to keep it. Not legally, anyway. When you sign the release, you are approving of everything the executor has done so far. You should be given a set of financials to look at, and the $60,000 should show up on those financials as a "holdback". The situation you have described is exactly what I would expect to see. Once Canada Revenue Agency sends a tax clearance certificate (which will take many months), the $60,000 will be used to pay taxes and to pay the lawyer and any last minute bills. The rest of the $60,000 will be distributed among the beneficiaries in the same proportion as the rest of the estate.

      Lynne

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    2. Thank you for your response Lynne. There was a concern about the actions of one of the executors. (In the Will, it states there is a memorandum made and signed by my mother filed with the Will. But I only received the Will without the memo. Would the Memorandum be filed with the Will in the Court?) My sibling (executrix/beneficiary) has taken all of the jewelry including a very expensive piece of jewelry that belonged to my aunt that I was very close to. My mother always told me that I would have that piece of jewelry, but my sibling kept it, and told me that my mother said she was supposed to have it instead. Then, my sibling gave me a piece of jewelry that had lesser value, that my mother said was supposed to go to my sibling. My mother also gave my sibling her car and after my mother's death, my sibling's friend went into my mother's house and retrieved her expensive jewelry to give to my sibling to keep. My sibling basically cleared out all personal belongings, and her family took almost all of the furniture. When there was supposed to be a draw for who gets which family heirlooms, I was told I would be notified, but they had the draw without me, and I only received 1 item out of 21 items. When I asked who got what, they said they didn't remember. They're claiming expenses yet they do not provide receipts. The bank accounts are just Excel files (with incorrect years such as 2017). I've never been in this situation, so I would appreciate any advice you may have.

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  4. My take.Sounds like another Estate Horror Story.
    Beneficiaries (residuary) that are named in a Will have a legal right to an accounting of what is going on. Do you have a lawyer to champion your rights? I note your siblings (there are at least 2) are Executors but not you. Is that due to your age, parental concern or other?

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    1. The executor sibling that is the one taking almost everything was the main caregiver for this reason, I believe. She wined and dined her at my mother's expense, was in control of everything and I believe she influenced her decision for executors. I do not have a lawyer, as I cannot afford high legal fees but if I knew I had a definite case I would look for a lawyer.

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  5. I believe many lawyers give 1/2 hour of their time at no charge and will advise you as to where you stand. Perhaps Lynne knows of a good 'honest' lawyer in your area.

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  6. Hi Lynne. I am an executor trying to muddle through and probate a small estate myself. I was wondering if you could clarify something regarding beneficiaries in Alberta. Form NC6 requires a listing of beneficiaries. If a beneficiary gift is revoked (due to divorce after changes to the WSA, with no new wills done), do they have to be listed as a beneficiary and then also under the revoked gift section? My parents divorced after the new WSA in 2012, and my mom was the executor and the beneficiary of the estate, which under the new rules means she can't be the executor or receive the proceeds of the estate is my understanding. Additionally, if there are beneficiaries under the age of 18 receiving non-monetary gifts (family heirlooms) do the NC 20 forms need to be sent to the parents on behalf of the child, and then signed by the parents? (which would be myself and my husband)? Thanks in advance for any help you can provide, I wish the new book was out!

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