Pillow talk: the executor's spouse and who really makes the decisions?

This brief but common-sense article was published by ERAssure, the folks who provide executor's insurance. It talks about how something simple, such as the executor enlisting his or her spouse to help with the estate, can cause huge problems. If you're looking after a parent's estate, don't underestimate the negative optics of having your spouse (an "outsider") looking after your parent's assets or having access to your parent's home when your siblings don't have similiar privileges.

Click here to read the article.

Executor liability insurance aims to cover increasingly risky role

Those of you who read this blog regularly are already aware that being an executor carries with it personal liability for mistakes and omissions on the part of the executor. Personal liablity goes beyond a slap on the wrist and maybe being kicked out of the executor role; it means you could end up paying out of your own pocket for mistakes you make during the administration of an estate.

This article from www.canadianunderwriter.ca talks about executor insurance. I know that most of you out there have had no exposure to executor insurance, as it's a fairly new product. Not to mention that your typical executor who works without a lawyer tends to do things as cheaply as possible, and would consider things like insurance to be "extras". But this article is interesting in terms of how executor insurance works and what it covers, so click here to check it out. You may still choose not to have this insurance, of course, but at least you'll know more about your personal liability.

Why do executors get sued?

I received a newsletter this morning from my friends over at ERAssure (Estate Risk Assurance). These are the people who offer executor's insurance, and they have first-hand knowledge of the trouble executors get into. The newsletter included a list entitled "Why do executors get sued?", and I was interested to see that the reasons very much correspond with my own experience of estate litigation.

When you read the list, which I've reproduced below, you will notice that the very first item on the list is lack of communication leading to frustrated beneficiaries. Executors take note! Every day I receive comments on this blog and emails telling me about how the executor simply won't answer questions or reveal anything. It seems to be a pretty common practice for executors. The executors who think this is ok should probably know that often they will end up in court for behaving that way.

Another point that I found interesting is that one of the problems is "perception" of favouritism or conflict of interest. To me this leads right back to communication. If there is a perception that an executor is behaving incorrectly or dishonestly, and the executor chooses not to address the concern, the perception will only be reinforced. However, if the executor addresses the perception by explaining why he is taking certain steps in a certain way, there is a pretty good chance that the issue can be resolved.

The lesson for executors here is that you can get into trouble not just for what you're doing (or not doing) but also for what the beneficiaries believe you are doing (or not doing).

I hope that by reading this list, executors will understand how important it is that they do the best job that they can, and that they remain transparent and accountable to beneficiaries.

Why do executors get sued?
- communication challenges - frustrated beneficiaries
- acrimony with beneficiaries and/or executors
- perceptions of favouritism or conflict of interest
- individuals that are treated differently in the will
- executors that had Power of Attorney for Care or Property for the deceased
- failing to properly value assets
- improper management of financial assets, like stock portfolios
- failing to protect the assets
- improper division of assets between beneficiaries
- failing to recognize debts due from or to the estate
- family law issues
- charities that may challenge the executor
- do-it-yourself real estate transactions

If you want to know more about executor's insurance, visit www.ERAssure.com. There is a lot of good information for executors on their site.

The toughest job you may have never wanted

I'd say the title to this article is an accurate description of being an executor. Few people appreciate how hard it is to be an executor. This article from the Globe and Mail talks about a new product available - insurance for executors. It's a good article, so make sure you have a peek if you've been named as an executor. Click here to read it.

I'd like to add however, that instead of going the route of buying insurance in case you make a mistake, there is also the option of hiring a trust company to act as your agent. That way you don't actually have to do the work yourself, but still retain the control of the estate. Call any trust company to find out more if you're interested in this (or email me).

The attached photo is also from the July 5, 2011 story in the Globe and Mail.

There's insurance for that?

Yes, it's true - there is insurance available for executors. It's a new concept and I haven't seen it in action yet so I can't give you an appraisal of its value based on personal or professional experience. This article from Elaine Blades in http://www.allaboutestates.ca/ will tell you more about it. Click here to read it.

I have to agree with Ms. Blades' comment that "The mere fact that the role of executor warrants specialized insurance coverage should give pause to both potential executors and the testators who appoint them." It's time that individuals realized how complex and difficult the role of executor can be, and how easily it can land an executor in legal hot water.