Think twice before you say yes

Do people named as executors in wills know that they have the right to turn down the executorship appointment?

I bet William Bourner wishes he had refused to act as executor. I'm attaching a link to a story on www.allaboutestates.ca that tells Mr. Bourner's story. He acted as executor for his mother's estate, and ended up being ordered by the court to produce an accounting for things that happened almost 50 years before he took over as executor. Click here to read the article, which is a real eye-opener.

The key to turning down (known as "renouncing") an executor appointment is to do so before you take any steps on behalf of the estate. Once you've started acting as executor, you can't just walk away from the job no matter how irritating it may be, without the court's permission. You're executor for life until the court dismisses you.

So, as our friends at www.allaboutestates.ca have already said, think twice before you say yes.

How do I change executors?

I'm often asked this question, but before answering I always ask whether the person's whose Will it is (the testator) is still alive. In other words, are you trying to change the appointment of an executor in a Will, or are you trying to change an executor who is already in charge of an estate?

A person can change his or her choice of executor in the Will as long as he or she has mental capacity to do so. Changing the executor doesn't necessarily mean making a whole new Will. If you are happy with your Will other than the executor named, you can have a Codicil made that only changes the executorship. A Codicil is simply a new, brief document that amends your Will. It is much like a Will, in that all of the rules for Will-making also apply to Codicils. The advantage to having a Codicil made is that the process and the document are shorter and less expensive.

The Will and the Codicil must be kept together so that they can be read as one document.

If you are interested in changing an executor who was named in the Will but who has not done anything on behalf of the estate, and who doesn't want to do anything for the estate, that executor can opt out. The legal term for it is renouncing the right to be an executor. An executor might renounce if he or she is too ill to be the executor, if he or she has moved very far away, if he or she has lost mental capacity, if he or she doesn't get along with the family members, or for other reasons.

The important thing to remember about renouncing is that it can only be done right at the beginning of an estate before an executor does any work. Once the executor takes any steps at all as executor, he or she can't quit being an executor until the court says so.

If an executor renounces and there is an alternate executor named, the alternate executor can then take over and be in charge of the estate.

If there is no alternate executor named, you are left with a Will that is completely valid except that there is no executor to carry out the work. At this point, someone will have to be appointed as an administrator of the estate. The Will is still used, but the court will appoint an administrator to do the work that the executor would have done.

If an executor is part way through the job of being an executor and wants to resign from it, he or she must ask the court for permission. At that time, the executor will be required to give a full accounting of all financial transactions that he or she has done on behalf of the estate. This includes an update on the current balances and values of all accounts, properties and other assets, and an explanation for each expenditure. This process is sometimes called passing of accounts. Until the court has approved the accounts and dismissed the executor, he or she remains the executor.

Sometimes the family members want to change or remove an executor who they believe is not doing a good job. They want to remove someone who doesn't want to be removed. This is not easy. The court will not want to remove an executor who was chosen personally by the executor without very good reason. It is pretty nasty litigation most of the time, and not something that should be attempted lightly.

If you're appointed as an executor, should you accept?

One of the things I've heard many times from clients is that they've been named as someone's executor and they are honored to have been chosen. Don't kid yourself. It may be intended as an honour but the reality is that it's detailed, lengthy, thankless work at times. In this post I want to look at a few of the factors you should consider before you agree to accept the job of being executor.

Keep in mind that you can't be forced to be an executor. You can refuse ("renounce") as long as you refuse before you do anything about the estate that makes you look like you're accepting the job. In many cases, people accept the role out of family obligation, but if that is not the case for you, consider the following questions:

1. Are you prepared to accept the fact that being an executor carries personal liability for any losses you cause to the estate due to fraud, negligence or mistakes?

2. Are you in (or likely to be in) a conflict of interest? The most common of these is a person who wants to contest what he or she is getting under the Will but who is also named as executor. It's not a good idea to try to do both.

3. Is a bond required? And if so, are you bondable? If you live outside of the province in which the estate is to be probated, you will likely have to obtain a bond in the full amount of the estate before you are allowed to proceed.

4. How long is the estate likely to take before it is completely wound up? Are there lengthy trusts under the Will, such as for a young child who is not going to inherit until he or she is 21? Are you prepared to be in charge of the trusts for that long?

5. How complex is the estate? Does the testator own a business that you would have to sell, carry on or wind up? Does he or she own a farm that will require management until it is sold? Are there beneficiaries that are going to be next to impossible to track down? Are there problems with the Will itself that are going to need Court interpretation? Is anyone going to contest the Will?

6. Do you have the time and skills to properly look after the estate? Note that executors can delegate administrative tasks, but can't delegate tasks that require him or her to exercise judgment or discretion.

7. If there is a co-executor named, can you two get along well enough to manage an estate?

8. What are the family dynamics like? If you're part of the family, are long-standing rivalries or disputes going to cause a problem for you? Will you be able to resist the temptation to take sides? Will you be able to handle it if people in your family criticize or nag you?

9. How much compensation will you receive when all the work is done? Hopefully the Will will contain some guidance, but in the event it does not, will getting paid from the estate be a problem?

As you can see, this is a more complex decision than you might have thought at first. Try to be practical in deciding whether you're really prepared to take on an executorship. If you really don't want to do it but there simply isn't anyone else, consider accepting the executorship but hiring a trust company to handle most of the work for you.

Am I still the executor of the Will of someone I've divorced?

Here's another recent question (you can see from the variety of things people ask me that my job is never dull!).

If a husband and wife make Wills that appoint each other as their executor, and later they get divorced, are they still each other's executors? Is the executor appointment revoked by a separation agreement, minutes of settlement or divorce decree?

Divorce in itself does nothing to your Will. So the fact that you are divorced will not change the fact that you're an executor for your ex's Will. Signing an agreement doesn't change it either.

To remove your ex as your executor, you need to either make a new Will or make a Codicil to the Will. Most people want to make new Wills after divorce anyway because they don't want to leave their estate to their ex.

If the Wills were never changed, your ex dies, and you do not want to be the executor, you can choose to renounce your appointment. This basically means to refuse to be the executor, which every executor has the right to do. Hopefully when the Will was made, an alternate executor was named, and that person will do the job instead of you.

Do you have to be an executor if you don't want to?

In this blog, I like to try to answer the questions that I've been asked by clients repeatedly over the years. This is one of those questions. I am often asked by individuals who have been appointed as an executor in someone's Will whether they must act as executor even though they really don't want to.

The short answer to the question is no, you can't be forced to be an executor. If a person passes away and has named you as his or her executor, you have the choice either to be the executor or to renounce (waive) your right to be the executor.

But, as with all general rules, there is an exception. If you have intermeddled in the estate, you will have no choice but to carry on as executor until the court discharges you. In other words, if you are going to renounce, you had better do it right at the very beginning, before you handle anything to do with the estate. Intermeddling is a legal term that means you have done something with the deceased's assets that leads people to believe that you intend to be the executor. For example, you might write a letter to a bank saying that you are the executor and asking them to freeze an account. This would lead the bank to believe that you plan to act as executor of the estate. Taking possession of any of the deceased's assets would also be considered to be intermeddling.

There have been plenty of cases through the courts to determine what is intermeddling and what is not. It's clear that if the only thing you do for the estate is pay the funeral expenses, you will not be considered to be intermeddling.

Keep in mind that if you are legally bound to be the executor but you refuse to do anything or you do it sloppily, and the estate suffers financial loss because of your actions, you could well be on the hook personally to repay those financial losses.

If you are named as an executor, you should consider whether you are really able and willing to carry out the job. You should think about personal liability for your mistakes, the complexity of the estate, the nature and value of the assets, the demands on your time, the expertise that might be needed, conflicts with family members or beneficiaries, the need to post a bond, and whether you will have any trouble getting fair compensation from the estate. Obviously you need to think about all of this before you take any action on behalf of the estate.

If you've been named executor of an estate and you really feel overwhelmed by it, remember that you can walk into any Scotiabank branch and ask them to put you in touch with the staff in the trust department who administer estates every day. You might be surprised at how many options are open to you at that point, and there is no cost to simply asking about our services. If you're in Alberta, feel free to call me personally to talk about it.