What happens if the estate is not paid out within the "Executor's Year"?

I have blogged before about the so-called "Executor's Year", a common-law concept that says an executor should have wound up an estate within a year. Most of the time, beneficiaries of estates are content with using that concept as a guideline and are not too upset if there are small delays caused by events that the executor could not control.

But what happens when a year is exceeded by quite a bit and the beneficiaries have not been paid? Not all beneficiaries are okay with waiting for their inheritance.

This is where another legal concept, this one called "The Rule of Convenience" comes in. This rule says that if specific gifts (as opposed to residuary gifts) are not paid within a year, the beneficiary will earn interest on that specific gift. The interest starts running once the year is up and continues until the gift is paid.

I have recently read a very good blog post from www.allaboutestates.com that discusses a recent case from Ontario in which both of these concepts were discussed. Click here to read the blog post. I highly recommend it for executors who have been slow getting the estate finished. Here are the facts as set out in the blog post:

"The deceased died in October 2013.  In his last will, the deceased appointed his three children (a son and two daughters) as the co-estate trustees of his estate.  He left each of his two daughters specific legacies of $530,000.  The deceased left the residue of his estate to his son.

After their father’s death, the sisters challenged his last will.  The will challenge settled in August 2016, finding that the father’s last will was valid.  The sisters were paid their respective $530,000 legacies in October 2016 (2 years after the first anniversary of their father’s death).  The sisters resigned as estate trustees.  They also claimed that they were owed interest at 5% per year on their respective legacies commencing on the first anniversary of their father’s death."

Anybody else find it overwhelmingly greedy of these sisters to claim that the estate took too long when (a) they were the executors and (b) they were the ones challenging the will and therefore causing the delay? The greed of some people just continues to astonish me. In any event, the judge denied their application for interest. Of course, the sisters appealed that decision.

The Ontario Court of Appeal allowed them to get the 5% interest per year on their inheritance. The court said that the sisters were entitled to their will challenge and that neither the sisters nor the brother should be rewarded or penalized by the passage of time. I'm having a bit of a hard time with that one, given that the interest amounting to more than $100,000 is coming right out of the residue that the brother would otherwise inherit.

In any event, what we can take away from this case is that the courts are prepared to stick to the Rule of Convenience.

If anyone wishes to read the case in full, it is called Rivard v. Morris and can be read here.