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Monday, June 11, 2018

Executor must repay $91,000 to estate plus legal costs for shirking responsibilities

It's tough being an executor. It's even tougher if you ignore your responsibilities, let estate assets fall apart, and mingle estate money with  your own. This is something that was recently brought painfully to life for Francesca Mary Duck of Clearwater, British Columbia.

Ms. Duck was the common law wife of Lloyd Arthur Wade. He died in 2011. Mr. Wade had adult children from his previous marriage and his will made provision for his children as well as for Ms. Duck.

The problem arose because of a motor home. In 2005 Mr. Wade and Ms. Duck bought a motor home for about $146,000. The contract for the purchase of the motor home listed Mr. Wade as the first buyer. The deceased's company and Ms. Wade were both listed as second buyers and the contract said that all parties were jointly and severally liable for the payments on the motor home. While Mr. Wade was alive, he made the payments from his business.

After Mr. Wade passed away, Ms. Duck made payments out of the deceased's company account until it was empty. Then she paid off the motor home (about $95,000) from the estate. At no time did she make any payments from her personal funds even though the contract said she was one of the buyers. She didn't use or maintain the motor home and eventually she just gave it away to a friend for free.

Mr. Wade's daughter got fed up with the situation and brought an application to the court to have Ms. Duck removed as executor. One of her main arguments was that Ms. Duck was mingling estate and personal funds (by using estate funds to make payments Ms. Duck should have  made herself). She also alleged that Ms. Duck was allowing a valuable estate asset to fall apart.

At the initial court hearing, Ms. Duck was successful. However, the daughter appealed the decision and won the appeal.

The end result was that Ms. Duck was removed as executrix. She was ordered to repay the estate $30,000 which was determined to be the value of the motor home at the time she gave it away. She was also ordered to pay $61,500 to the estate to make up for the payments she should have made personally. On top of all that, she had to pay the legal costs for the daughter. Ouch.

There is one simple lesson to be learned from this case, and that is that an executor cannot treat estate money as his or her own. Anyone who wants to read the whole case can find it here.

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