Stacy Maurier, Founding lawyer of Estate Connection Law Firm is a member of the Westend Seniors Activity Centre’s, Friends of WSAC business program. Stacy has been a guest speaker here at our centre since 2017, providing educational Toonie Talks on estate law. In January of this year she presented a Toonie Talk called “Excellent Executors”.
This month’s Stacy outlines PART 2 of her guest blog post, and tells us the top mistaks Executors make when dealing with an estate.
GUEST BLOG POST:
by Stacy Maurier, Founding Lawyer at Estate Connection Law Firm
Being an Executor isn’t easy. There’s a lot of paperwork to be done, lots of interaction with government agencies, Alberta Registries, banks, insurance companies, accountants, realtors and lawyers. And there’s always beneficiaries pressuring you to do things quicker or are questioning everything you do. It comes as no surprise that Executors make mistakes. We thought we would look at the top eight mistakes Executors make:
In our last blog post, we discussed the first four mistakes that many Executors make:
- Mistake #1 – Executors Do Not Keep Proper Records
- Mistake #2 – Executors Do Not Get Proper Valuations of the Estate Assets
- Mistake #3 – Executors Treating Estate Money as if it is Their Own
- Mistake #4 – Executors Do Not Follow the Will
The following outlines other mistakes we see Executors doing when closing an estate
Mistake #5 – Executors Try to Do Everything Cheaply
It’s certainly not a bad idea to keep estate administration costs low, but unfortunately the way many Executors go about that ends up costing the estate more money. Keeping costs low seems to translate into preceding professional help in some cases. For example, they try to do tax returns without the help of an accountant which means they miss eligible deductions and/or miss filing deadlines and incur interest. Executors will also try to sell real estate without a realtor, settle legal disputes without a lawyer, sell assets without appraisals, and invest money with no guidance. If they cost the estate money, the beneficiaries can ask that the Executor repay the estate.
Mistake #6 – Executors Keeping Secrets Or Failing To Communicate
Nothing is going to fuel speculations and suspicion on the part of beneficiaries more than being kept in the dark. An Executor must respond to reasonable inquiries from the residual beneficiaries of the estate. The easiest way to do this? Set up a separate email account to deal with all estate issues. For example, firstname.lastname@example.org. Advise beneficiaries you will provide them with a monthly report and that if someone emails you regarding the estate, you will provide a response and include all beneficiaries in the discussion. Executors need to remember, beneficiaries are entitled to regular updates and are responsible for policing the actions of the Executor. Time and time again I’ve heard stories of family members who are being completely ignored by the Executor or are presented with complicated mysterious documents by an Executor and being told to sign them without being given information of what’s going on. Failing to communicate causes friction in families and is almost always the quickest way to lead to litigation.
Mistake #7 – Executors Play Favorites
Executors need to remember they must treat all beneficiaries the same. An Executor cannot provide one beneficiary with more information or give them access to the assets because they know and trust them better than the others. When giving beneficiaries access to items within the deceased’s home, the Executor needs to make sure all the beneficiaries go into the house together and each have the opportunity to pick what they would like. Also, an Executor cannot decide to give jewelry to the daughter or tools to the son. All children must have the same opportunity to decide what, if anything, they would like from the estate.
Mistake #8 – Executors Failing To Deal With Debts And Taxes Before Paying Beneficiaries
I suppose it’s a natural human reaction to ignore unpleasant things, but this cannot apply to Executors, especially when it comes to dealing with the Canada Revenue Agency and income tax. By law, an Executor must pay all the debts of an estate. Debts include funeral expenses, money owed on credit cards, and tax liabilities. It is only after all debts are paid in full, that beneficiaries can receive their inheritance from the estate. It isn’t easy to ignore the pressure from beneficiaries, but an Executor who pays money to the beneficiaries without clearing all the debts could be on the hook for those debts personally.
Bottom line…The best way for Executors to avoid these errors is to:
- Follow the instructions laid out in the Will;
- Communicate with beneficiaries;
- Be reasonable when dealing with estate assets and not use estate funds personally;
- Make sure the Canada Revenue Agency is dealt with; and
- Get professional advice when they need it.
And finally, most estates should be completed and funds disbursed to the beneficiaries within 12-18 months. If you are a beneficiary and need assistance with dealing with an Executor, or if you are an Executor that needs some assistance with Probate and closing an estate, contact our office today (at 780-458-8228). Remember, we are here to help!