Most people who act as an executor on an estate do so only once in a lifetime. This means that there are an awful lot of rookie executors out there doing their best to figure out what they are supposed to be doing. It's not easy.
An executor is personally liable for any losses he or she causes the estate. That means that if the executor is negligent or very slow-moving or reckless with any of the assets of the estate and that causes a loss in monetary value, the executor is personally on the hook for repaying the loss. The loss could be penalties and interest on a tax return that the executor filed extremely late for no good reason. It could be the purchase of a house where the executor sold the estate's house for much less than market value because he or she didn't bother getting estimates. It could be covering expenses such as meals or travel that should not be covered as they are not legitimate estate expenses.
This rule can be tough to translate into actual practice, because most people understand that an executor's expenses and legal fees are covered by the estate. This is often taken by inexperienced executors to mean they can charge every meal, every kilometre they drive, every item they purchase, to the estate, and that no matter what they do, they are backed by estate money. However, the estate will pay the reasonable costs and expenses of a proper administration. The estate will not pay for the executor's mistakes that could have been avoided with a little bit of attention. The estate won't pay for the executor's trip to Hawaii.
There is a line that can be crossed by an executor. There comes a point where the executor's behaviour is so unreasonable that it amounts to fraud or neglect. The courts deal with estates like this on a case-by-case basis.
If the executor has simply neglected to take care of things and monetary value has been lost, the executor could repay the loss by reducing or completely eliminating the pay he would otherwise have received for being the executor. If it goes beyond that, and the executor has behaved in an egregious way, foregoing the fee might not be enough. The executor could be held liable in court for losses that must be paid out of his own money.
If you are a beneficiary and you really believe that the executor on an estate you're involved in is causing losses to the estate, make an appointment to see an experienced estate planning lawyer. Take all the paperwork relating to the estate with you. Get an opinion on what, if anything, should be done about the executor.
If you are an executor and you are worried about your own liability, remember that if you are honest, let everyone know what you're doing, and move things along as quickly as is reasonably possible, you are not likely to run into trouble. You can also avoid losses and mistakes by relying on experienced professional help, such as accountants, lawyers, realtors and appraisers. That way you can back up your actions with documented proof of why you took the steps you took.
Most estates are wrapped up within a year (not including receipt of the final tax clearance certificate from Canada Revenue Agency), so this should be your goal. It might take longer if the estate involves selling a business, dealing with real estate in other countries, asking the court for clarification of things in the Will, etc.
An executor is personally liable for any losses he or she causes the estate. That means that if the executor is negligent or very slow-moving or reckless with any of the assets of the estate and that causes a loss in monetary value, the executor is personally on the hook for repaying the loss. The loss could be penalties and interest on a tax return that the executor filed extremely late for no good reason. It could be the purchase of a house where the executor sold the estate's house for much less than market value because he or she didn't bother getting estimates. It could be covering expenses such as meals or travel that should not be covered as they are not legitimate estate expenses.
This rule can be tough to translate into actual practice, because most people understand that an executor's expenses and legal fees are covered by the estate. This is often taken by inexperienced executors to mean they can charge every meal, every kilometre they drive, every item they purchase, to the estate, and that no matter what they do, they are backed by estate money. However, the estate will pay the reasonable costs and expenses of a proper administration. The estate will not pay for the executor's mistakes that could have been avoided with a little bit of attention. The estate won't pay for the executor's trip to Hawaii.
There is a line that can be crossed by an executor. There comes a point where the executor's behaviour is so unreasonable that it amounts to fraud or neglect. The courts deal with estates like this on a case-by-case basis.
If the executor has simply neglected to take care of things and monetary value has been lost, the executor could repay the loss by reducing or completely eliminating the pay he would otherwise have received for being the executor. If it goes beyond that, and the executor has behaved in an egregious way, foregoing the fee might not be enough. The executor could be held liable in court for losses that must be paid out of his own money.
If you are a beneficiary and you really believe that the executor on an estate you're involved in is causing losses to the estate, make an appointment to see an experienced estate planning lawyer. Take all the paperwork relating to the estate with you. Get an opinion on what, if anything, should be done about the executor.
If you are an executor and you are worried about your own liability, remember that if you are honest, let everyone know what you're doing, and move things along as quickly as is reasonably possible, you are not likely to run into trouble. You can also avoid losses and mistakes by relying on experienced professional help, such as accountants, lawyers, realtors and appraisers. That way you can back up your actions with documented proof of why you took the steps you took.
Most estates are wrapped up within a year (not including receipt of the final tax clearance certificate from Canada Revenue Agency), so this should be your goal. It might take longer if the estate involves selling a business, dealing with real estate in other countries, asking the court for clarification of things in the Will, etc.
I posted but can't find it, so I'll do it again. I'm a beneficiary who was told by the Executrix that her lawyer(same lawyer as the Testator)was applying for a Grant of Probate. Alberta law states the beneficiaries MUST be notified BEFORE application is filed with Surrogate Court. Questioning this upset her and she indicated she'd been waiting for all the documents to come in before notifying the beneficiaries. She will not divulge the name of their lawyer. I feel under-informed and distrustful now. I am, according to the Testator, not 'getting very much', so my concern isn't with the what or really the when. I can wait. My concern is the secrecy. Should I be arming myself? I hate being suspicious. Or should I merely wait until that lawyer contacts me and take it that she is one of those Executrix' who feels it's no one's business but hers?
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