Civil contempt and the wayward trustee

Here is yet another story about an executor who chose not to follow the rules, including court orders directing him to pass his accounts. Yes, he ended up in jail for refusing to pass his accounts, but this article by Jason de Vries of http://www.allaboutestates.ca/ describes what the beneficiaries had to go through to achieve that. It sure takes persistence to bring some of these wayward executors to heel.

Seniors in prison will lose government benefits

Today's National Post reports that the federal government is about to pass a new law that states that seniors in federal prisons (and therefore serving at least two years' incarceration) are going to lose their government benefits. The logic behind it is that OAS and GIS are intended to cover the very basic needs of a senior, but while they are in prison their very basic needs of accommodation, food, heat etc are already being paid for out of public funds. The federal government is negotiating with the provinces to see whether they will follow suit for senior prisoners in provincial jails (usually serving less than two years). Click here to read the story.

Can an incarcerated person be an executor?

In determining whether an incarcerated person is the right person to be your executor, there are two major factors to consider.

The first is the law. In this case I'm citing section 16(2)(a) of Alberta's Trustee Act, but similar legislation exists in other parts of Canada as well. The Act says that the court may substitute a new trustee (which in this case includes an executor) when the named trustee has been convicted of an indictable offence. An indictable offence, generally, is a more serious offence.

Note that the wording is "may" appoint a new trustee, not "must" appoint a new trustee, so it isn't automatic. Also, remember that not every incarcerated person has been convicted of an indictable offence so the rule doesn't apply to everyone behind bars. However, a person who named an incarcerated executor would be taking the chance that an application for probate would be rejected by the court, or that a beneficiary would ask the court to replace the executor.

The second thing to consider is the practicality of the arrangement. Being an executor is a heck of a lot of work and usually involves numerous meetings with lawyers, accountants, bankers, court registries, land titles clerks, realtors, appraisers and beneficiaries. Documents must be signed in person. Though not impossible, this is considerably harder to achieve for a person who is incarcerated. The estate will take longer to wrap up.

This is one of those areas where you have to make theory and reality work together.

Does an incarcerated person forfeit his or her inheritance?

Executors of estates can easily get bogged down whenever there is a beneficiary named in the Will who is in an unusual or unexpected situation. One of the situations in which it isn't always obvious how an executor should proceed is that of one of the beneficiaries of the estate being in jail. For the sake of this post, let's assume that the beneficiary in question is going to be in prison for many years to come.

If the person is incarcerated, is he going to forfeit his inheritance?

No, he or she is not going to lose the inheritance just because of the fact that he or she is prison. If the Will says that no beneficiary who is incarcerated shall inherit, then the answer is different.

In some provinces, there is a requirement that an executor who is applying for probate of a Will must give notice in writing to each beneficiary of the estate. If a person is incarcerated, he or she still has to be sent a notice in the same way that any other beneficiary would be notified.