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Thursday, January 26, 2017

The executor says he had a verbal agreement with the deceased to do as he pleases with the estate

Most people who act as executors do so only once in a lifetime. This means there are an awful lot of rookie executors who don't have training or experience in the new job they've taken on. Of course there are going to be questions about the limits of the job. In some cases, the questions are small points of procedure asked by an executor is managing just fine, and in other cases, the executor seems to have no idea at all what he is supposed to be doing. This post is about the latter.

A reader recently wrote to me about an executor who does not appear to understand his role. Read on to see the question and my response:

"Can a claim by an Executor to the effect that he "had a verbal agreement" with the deceased to do just he pleases with the estate - e.g., to withdraw funds from it for his own benefit as he sees fit, or to make investments in property without consulting or informing the estate's beneficiaries - actually stand up in a court of law, simply on his say-so?"

The short answer is: No. Absolutely not.

Let's talk about why that's the answer. The fact that this person is an executor means there is a will that names him. The will contains the deceased's instructions about how his or her estate is to be distributed. A verbal agreement is of no value, as in Canada all wills must be in written form. The executor is bound by law to carry out the instructions in the will, and if he doesn't want to do so, he should renounce. An executor who is on one hand saying the will appoints him and on the other hand saying that the will does not contain accurate instructions is in a conflict of interest. He can't pick and choose which parts of the will suit him and which do not.

One of the reasons that wills must be written documents is that anyone could come forward and say that a verbal agreement exists even if one does not exist. There is no way to prove it or disprove it.

An executor who takes money from an estate "for his own benefit as he sees fit" is stealing from the estate.

It could be that this executor really does think he has the legal right to behave this way. As I said, most people have never been an executor and are learning as they go. It could also be that he knows full well that he is acting wrongly and doesn't care. Either way, if he continues on the way he is going, the estate will soon be dissipated and the beneficiaries will have to sue him and hope there is something left to get.

There is no government department or official overseer of estates. This means there is no watchdog to whom you can complain about the executor. The residual beneficiaries named in the will are the people who have the right and the responsibility to keep the executor on track. If the executor cannot be contained voluntarily, the beneficiaries should consider banding together to approach the courts for help. If the executor hasn't done too much damage and is willing to carry out the will's instructions properly, he might be allowed to stay on. Otherwise, the court might remove him because he is endangering the estate.


4 comments:

  1. Lynne
    There is no government department or official overseer of estates[..]
    Considering what has been going on for decades there should be. What has been going on is criminal in my humble opinion (IMHO).
    I was pleased to read your recent post that referred to Brown V Rigsby. Finally a Judge, and a female Judge at that, that is trying to stop the nonsense that has been going on for decades with Executors. To some degree this applies to beneficiaries as well. The cost to society is enormous in so many ways. Let's stop this madness.

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  2. I'm curious about your assertion that an executor may only do w is written in the will. What about secret and semi secret trusts or dispositions? This also seems to ignore dispersal of assets set out in contact. In Canada these are dealt with in the common law and to Adobe degree in the legislation.

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    Replies
    1. If a will is properly written, it contains all powers, authorities, and instructions that an executor will need, supported by legislation that defines and refines terms, and the common law that provides clarity and certainty through precedent.

      Trusts that are set up separately such as those you mention are not dealt with by a will, but by the trust deed that establishes them. Therefore they are not within the jurisdiction of the authority conveyed by the will.

      I assume that by "contact" you mean "contract" and no, it certainly does not ignore that since an executor must deal with all obligations of the deceased, including those created by contract.

      As for "adobe degree", I'm curious about your assertion that it - whatever it is - applies in Canada.

      That an executor is legally bound to follow the will is one of the cornerstones of our inheritance law. I covered the development of this legislation in my book "Sound Mind and Memory".

      Lynne

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  3. https://en.wikipedia.org/wiki/Secret_trust
    "dispersal of assets set out in contact" [CL] (or contract). Nothing shows directly ie Google
    @Carolyn Leblanc. I am curious, what is your background re Estate Law?

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