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Wednesday, July 22, 2020

Will a threat of contesting the will delay an interim distribution?

Just when you think an estate is going to wind up without a major issue, you're proven wrong. This may be the case for this reader, who sent in an interesting question:

"I just received my release papers the other day and have since learned that my sibling may be contesting the will. Will the interim distribution now be put on hold until this matter is settled with my sibling?"

Probably. It's really not unusual that at the time the accounting and releases are sent out to beneficiaries, a new fuss begins. It's usually because a beneficiary receives the accounting and sees something he or she doesn't like. Something is missing or the numbers don't add up. They then say they are going to contest the will.

In reality, their issue is not with the validity of the will but with the contents of the accounting. If they don't like the executor's accounting, it has nothing to do with whether the will was valid or not. The appropriate response is not to begin a long, arduous, expensive lawsuit against the will but simply to ask the executor for more information. Perhaps some receipts to back up the numbers. Hopefully if they lawyer up, their lawyers will tell them this.

Obviously in this case I don't know what the specific issue might be that causes your sibling to question the will. But what sort of issue could it be that wasn't important all through the administration of the estate and only arises (perhaps several months after the testator died) when the accounting is produced?  The time for casting suspicion on the validity of the will or the competence of the testator would be long past. This just leads me further to believe it's actually a problem with the accounting and not the will.

To answer your question, the interim distribution most likely would be postponed. However, a postponement while an executor provides additional information to a beneficiary could take a week or two to resolve (assuming the executor acts responsibly and answers the beneficiary's concerns). A postponement for a lawsuit could be expected to take five years.

If it's a problem with the accounting that cannot be resolved by the exchange of information, the worst case scenario is that the beneficiary would compel the executor to pass accounts. While this doesn't take as long as a trial by any means, it could be a matter of months.

The interim distribution would have to be postponed during this time because the numbers would all change. Remember that if an executor passes his accounts, the legal fees and any costs for that are usually covered by the estate. This leaves less money for the beneficiaries, so each of you would get less on an interim distribution. You would have to be provided with new paperwork.

With any luck, your sibling's concerns can be addressed by the executor in a timely manner and the disruption will be minor.

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