There’s an interesting duality in estates and trusts. The two distinct elements—planning and administration—can be separated by years, sometimes decades.
In fact, mistakes made at the planning stage can adversely affect the administration of the estate (see What not to do in estate planning and Don’t take these shortcuts). And despite an executor’s efforts during the planning stage, errors can still occur. Here are what I consider to be the top five mistakes executors make when it’s time to administer the estate.
1. Failing to follow the terms of the will
The primary duty of an executor is to administer the estate and distribute the deceased’s assets in accordance with the terms of the will. But executors sometimes think it’s okay to ignore provisions they disagree with, and distribute based on what they think they know the deceased would have wanted.
This approach is most frequently seen in the distribution of personal effects. For instance, although Aunt Hazel’s will may say “to distribute my personal effects equally among my nieces and nephews,” executors sometimes think it’s okay to distribute the property in the way they feel Aunt Hazel would have wanted.
This is wrong. If Aunt Hazel really wanted you to get her Tahitian pearl necklace and your cousin to receive a tchotchke from Niagara Falls, the will would have said so.
› Lesson learned: Failing to provide each beneficiary with his or her entitlement as per the terms of the will—not more and not less—may lead to a claim by a disappointed beneficiary.
2. Failing to properly interpret the will
A will is a binding legal document. Despite the efforts of many lawyers to draft it in plain English, most wills still read like legal documents. Terms such as in specie, per stirpes, per capita, issue and devise are commonly seen in wills, yet are beyond the vocabulary of the average executor.
There may even be more esoteric terms, such as hotchpot and en ventre sa mere (see “Glossary of will terms,” this page). Even if he plans on tackling the estate administration alone, without professional assistance, the executor would be well-advised to seek legal advice to interpret the will.
› Lesson learned: Failure to properly interpret the will resulting in a loss to one or more beneficiaries may lead to a claim and personal liability for the executor.
3. Going it alone
While being an executor is an honour, it’s also a demanding and time-consuming responsibility. With today’s increasingly complex family structures, estate and tax legislation, it’s a more challenging task than ever. Yet many neophyte executors, out of a notion of duty or a desire to save money, opt to go it alone.
This sense of obligation can be misplaced. The law has consistently recognized an executor’s right to retain professional assistance and to delegate certain functions to an agent or agents.
For instance, Ontario’s Trustee Act specifically authorizes trustees to obtain investment advice and delegate certain functions to agents. As a general rule, an executor may delegate administrative duties, such as securing estate assets, preparing estate accounting, and income tax preparation and filing.