Executor who helped himself to estate must pay punitive damages

One of the issues I hear about frequently from readers of this blog is out-of-control executors and trustees who don't seem to know or care about the rules they are supposed to follow. Sometimes the beneficiaries choose not to take action against these executors and other times they take the executors to court.

I've just read a case review that I'm going to share with you. It's a new case from Ontario where a man named his brother as executor of his estate, to look after the estate for the deceased's sons aged 12 and 16. The estate was not large, but the uncle squandered it and spent it. He didn't give the boys the personal belongings the father left behind. The boys ended up getting nothing of their father's. Instead of having their education paid for as their father intended, they had to take on debt to get through school. They sued their uncle.

This case is interesting because it goes beyond the usual remedies that are available against executors and trustees. Usually when an executor is behaving badly, he or she can be removed from the job, made to give up any executor fee, and made to pay legal costs. If things are really bad, the executor may end up paying for damages or losses out of his or her own pocket.

But in this case, the judge awarded punitive damages against the uncle. As the name implies, punitive damages are assessed against someone to punish them, much like a fine. They are relatively rare in estate litigation. In fact, the judge was so annoyed at the uncle's behaviour that he awarded double what the sons asked for (which was also more than double the full amount of the estate)! Click here to read the case of Walling v Walling.

I am so pleased with this case (and thanks to www.allaboutestates.ca for bringing it to my attention). I'm glad that the courts are taking a hard line with executors who cause not only financial problems for the very people they are supposed to protect, but heartache and frustration as well.

Executors and trustees, listen up. Do the job you were named to do, or you too could end up on the hook for thousands of dollars.

Weak claim against the estate could cost you big time

"Gone are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation". So said Ontario's Court of Appeal in the case of Smith Estate v. Rotstein earlier this year.

In that case, a woman challenged her mother's will on the basis that the deceased lacked testamentary capacity (i.e. didn't know what she was signing) and was unduly influenced into making the will. The woman's brother was the executor and was forced to defend the will. By the time the case made it through two levels of court, his legal bills were over $700,000.

The judge said that there was so little evidence supporting the woman's claim that she should never have brought the case in the first place. And if she had brought the case in good faith, she should have dropped it early on once she saw all of the evidence. However, the woman stubbornly carried on with the lawsuit, apparently thinking that the costs wouldn't matter because the estate would pay them.

She had a nasty surprise. The judge made her responsible for the brother's costs of $700,000, as well as $30,000 in disbursements. Ouch!

This should be a major heads-up to anyone who is thinking about bringing a weak lawsuit against an estate for emotional reasons. Yes, it's tempting to make the executor stop and pay attention to your issues. Yes, it's tempting to vent your emotions this way. And yes, you may even have heard that when estates end up in court, the estate pays all the lawyers. But this case makes it clear that pointless litigation just for spite won't be tolerated. The free ride for will contests is over. Unless there is strong evidence to back up your claim, don't count on the estate paying your lawyer.

Baronet's son claims father duped him out of his inheritance

I'm attaching a story from www.telegraph.co.uk in which a baronet's son claims he was duped out of his inheritance by his own father, when his father sold the castle that had been in the family for almost 400 years. The court did not support his claim.

I've often said that the things that happen to the rich and famous are the same issues that happen with the rest of us. Maybe for us it's a modest bungalow in the city rather than a castle, but the concept of the child thinking he's entitled to whatever the parent has seems to be found everywhere.

Click here to read the story. The reporting/writing is pretty shaky, but the story behind it is great. The attached photos of the baronet's son and the castle in question are from the story linked above, and are credited to Nevile Ayling/Alamy.

Sherman Hemsley estate battle rages on

I know that many people think that estate lawsuits only happen when there is plenty of money at stake. That just isn't the case. If you think you're likely safe from your kids (or previously unknown relatives who come out of the woodwork) suing each other and your estate because you don't have much to fight over, you could be wrong. I'm attaching a link to a story about Sherman Hemsley, best known to TV-watchers as George Jefferson, whose estate is worth only $50,000. His body is still in deep freeze months after his death while his survivors battle it out. Click here to read the article by Charles Ticker in www.advocatedaily.com.

Get along with your co-executor or it will cost you

Attention co-executors who are squabbling and fighting with each other. You know who you are.  You are probably siblings. Somebody made the ill-fated decision to ask you two to get along in the best interests of their estate, and it has fallen apart. One of you makes decisions about the estate without the other. One takes the other to court repeatedly on the slightest excuse, asking the court to remove the other, with accusations of lies and duplicity. One executor is bullying the other.

Well, you'd better figure out how to act like adults and get along.

In a new case from Alberta, the court slapped the bullying co-executor with big court costs. The court made it clear that co-executors have an obligation to try to resolve their differences amicably without resorting to the courts if at all possible. The estate suffers when co-executors behave badly and make the estate administration all about their personal issues. The court's message is to get along, or it will cost you. To read more about this case in a story from lawyer Chris Staples, click here.

Kinkade estate fight will be hard on the family

A general rule of wills is that the most recent valid will revokes any wills made earlier. But what happens when the validity of the more recent will is in question? This can make a huge impact if you named different beneficiaries in the recent will than you did in your earlier will. In a case like this, you can certainly expect an estate fight.

This is what has happened in the estate of Thomas Kinkade, an artist known as "the painter of light". He left not one, but three, wills. The earliest one named his former wife, while the second and third named his girlfriend. There is some controversy about whether or not the second and third wills (which were home-made and had some problems) are valid. This pits the former wife against the current girlfriend in court.

A large part of the problem in this case is that there is some evidence that Mr. Kinkade was an alcoholic and that such addiction affected his ability to make the second and third wills. This is what the court will have to determine. I can just imagine the circus this will become, once witnesses begin to testify.

It's so unfortunate that Mr. Kinkade didn't see a lawyer to have his will changed properly. All of this litigation could have been avoided. Now not only will his estate be publicly exposed and picked apart, so will his personal life. His girlfriend and his former wife will be involved in this costly, unhappy mess for a long time to come.

A sad adjunct to estate litigation is the pain, humiliation and loss of privacy for the family members left behind. It's worth it to get professional advice to protect your own family from this kind of trouble.

Click here to read more about this story from American lawyer Kyle Krull.

Judge says feuding siblings can pay their own lawyers if they want to keep fighting over the estate

I found this story to be one of those car wrecks where I couldn't look away, even though I knew what I was about to see was going to be ugly. It's the story of a father who left 75 million dollars to sons who couldn't get along. Five years after the father's death, the sons are still fighting over the estate and the legal bills are over five million dollars. The legal fees were being paid out of the estate until a judge got sick of these feuding siblings and told them they'd have to pay their own lawyers if they wanted to keep fighting (well done judge, I'm with you on that one). Click here to read this story, which applies to all of us even if our estates don't amount to 75 million.  The story and the attached photo are from http://www.capitalmagazine.ca/.

Court dings executor for costs for not remaining neutral

In BC, Sheryl Laing brought an action in court to vary a will, and was successful (Laing vs. Jarvis Estate, 2011 BCSC 1411). The executor of the estate, Kevin Jarvis, fought the court action. He wasn't a beneficiary of the estate.

When a beneficiary goes to court to ask for a ruling such as this, or on interpretation of the language of a will, the executor is not supposed to take sides. The executor's job is to present the facts and stay neutral. The executor should not favour one beneficiary over another or put his own interpretation on the meaning of the will.

In this case, Mr Jarvis clearly did not stay neutral. As mentioned, he opposed Ms Laing's court application. Once the matter was settled, Ms Laing asked that instead of taking the costs of the court action out of the estate, the costs should be paid by Mr Jarvis personally.

Another general rule of estates is that an executor is indemnified for fees and costs by the estate, so the court had to take that into consideration. However, Mr Jarvis hadn't followed the rule of neutrality that an executor is expected to follow. The court agreed with Ms Laing that Mr Jarvis had to pay the costs out of his own pocket. The costs were $9,611.04.

I like this ruling. I hear story after story about executors who do whatever they want with the estates they were chosen to look after and don't bother to follow the rules. I'm glad to see the courts sending this warning to executors everywhere.

To read the case, click here.

Choose your estate battles carefully

This new article from All About Estates describes what happened in the Land vs. Binkley Estate case from Ontario. Not to put too fine a point on it, the judge blasted the beneficiaries for making two court appearances to fight over a small amount of money when there was really no grounds for a fight. The judge made them personally responsible to pay the legal costs of the lawsuit. I hope everyone who is considering starting a pointless fight over an estate will read this article, because it contains good advice. It will also help you understand how a judge decides who pays in an estate battle. Click here.

Blame the victim ruse common in Anna Nicole Smith and other estate pursuits

This lengthy but very interesting article from examiner.com says that estate assets legitimately passed down by Will are "extorted" every day, and often people take the view of blaming the victim for the issues. While this is a depressing view and is based on an extreme case, the author has a point. Until a few years ago, for example, the cost of everybody's lawyer was paid by the estate being fought over, as if it were always the deceased's fault. Click here to read the story.