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Monday, April 3, 2017

If I've distributed an amount of the estate equal to the date of death value, is the rest of the money still divided among beneficiaries?

The following question from a reader is exactly the kind of question I enjoy receiving. It's from someone who has been working hard as an executor and making good progress. He just needs a little bit more information to finish the job.

The reader's question deals with what is covered by the will and what is not. The estate has changed over time, in large part because of his care of it. Here is the question, followed by my comments:

"I was named as executor to my Father's estate. 10 years later, most of the estate has been wound up. My understanding of the will's jurisdiction is that it applies to the value of the estate on the day our Father passed away. In this instance it involved a large property with a house and shop, a RRSP, an investment portfolio and one or two bank accounts. Over 1000 hours were involved to repair and finish the house, have the shop painted, and fix equipment, which allowed us to have an auction and then use a realtor to sell what was now a decent looking property. Tons of junk were taken off the property. There is a small amount of money ($23,000) left in the estate account. The other 2 beneficiaries, each of whom did about 10% of the work are insisting the will has jurisdiction over these funds and should be split 3 ways. I say the value of the estate on the day my Dad died was distributed long ago and the minimal amount left does not fall under the jurisdiction of the will and should be directed to the person (myself and family who did 80% of the work, brought every resource required to complete the estate, as well as saved well over $10,000 on two issues) & put 20,000 kms on my vehicle as the property was distant from our house. Unfortunately the funds are contained in the estate account and from my perspective actually do not fall under the jurisdiction of the will as these funds did not exist on the day my Dad passed away."

You are completely mistaken about the distribution. All of the assets that exist now are, as you phrase it, under the jurisdiction of the will. They are assets of the estate. The passage of time doesn't change that. It's actually pretty common that executors find assets after filing the original inventory, since they are able to look more closely at records and paperwork. If twenty years from now, you discover a bank account owned by your father that nobody knew about, you'd still have to distribute it according to the will. Let go of the idea that the beneficiaries are only entitled to the value that existed on the date of death, because it is completely incorrect.

I'm not sure where the $23,000 came from since you said they did not exist when your father died. I assume they are the proceeds of sale of some estate assets. This account is an asset of the estate.

I understand that you have increased the value of the property by clearing and repairing it. This is always expected of an executor but it sounds as if you went above and beyond what many executors would bother doing. However, it seems that you believe you are entitled to to claim part of the estate based on the fact that you worked hard and the other beneficiaries did not. Be very clear on the fact that your family is not entitled to a single dollar. Whether they helped you or not, they are not beneficiaries and you're not entitled to include them in the will. The will creates legal rights, but only for the beneficiaries, not your family members.

Keep in mind as well that beneficiaries do not have to work for their inheritance. They are legally entitled to it even if they don't lift a finger. You simply cannot hold that against them, even if it doesn't feel fair. Yes, you did the work, but you're the executor. It's your job to do that work.

You haven't mentioned whether you've taken an executor's fee for your work. Executors are always entitled to request a fee, as long as the will does not disallow it. Since it appears that you've put in a lot of work and had good results, you might consider requesting a fee. Your fee would be calculated over and above repayment for reasonable out-of-pocket expenses you have incurred. Mileage is a legitimate expense. Between expenses and fees, your compensation could well consume the entire amount left in the estate.

You can't simply take the fee. You will have to calculate it and present your proposed fee to the beneficiaries for their approval along with a final accounting of the estate assets. I suggest that you find out more about executor's fees and expenses before you submit a bill to them.

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