It’s the executor’s job to manage an estate. But how do beneficiaries control or influence the process?
Jordan Hardy, QC, partner at MLT Aikins LLP in Regina, Sask., says beneficiaries often believe they have more power over the estate distribution process than they actually do.
“Often the misconception is that, out of the gate, a beneficiary controls or can control the process,” he says. “That’s really not how it happens.”
Beneficiaries have a right to understand the bequest they may be entitled to, he says: either by being informed directly by the executor, or by obtaining a copy of the will, depending on the jurisdiction. Beneficiaries can also require an executor to account for his or her duties. But neither power is absolute.
“[Beneficiaries] don’t have any legitimate power to say to the executor, ‘OK, here’s what’s going to happen,’” Hardy says.
At most, a beneficiary could apply to have the executor removed, but courts look unkindly upon baseless accusations, Hardy says. “The court is almost always going to give the executor the benefit of the doubt. And often, it’s shown that the beneficiary has acted prematurely and improperly.”
Laura Kerr, counsel at Low Murchison Radnoff LLP in Ottawa, says beneficiaries don’t always understand that the executor serves the intentions of the will, not the beneficiaries.
“If there are more beneficiaries, or if there are creditors, then there are other people interested in the estate that the executor is also serving,” Kerr says. “Ultimately, it’s the executor who has the job of following all the steps, whether that is convenient to the beneficiaries or not. It’s the will that sets out that process, and the law of administration of estates.”
Kerr adds, “Typically executors have a very broad discretion to exercise powers in a way they think fit—and that can’t be reviewed by the beneficiaries. But the beneficiaries are the ones who need proof that the estate has been properly administered, and [that] they received what they were entitled to. In the end, it’s going to be the beneficiaries who either approve the transactions of the executor, or at least decide whether or not they’re going to make objections to the court.”
That said, beneficiaries can make life difficult for executors. This usually takes the form of “harassment” for information and details in the early stages, Kerr says, using the example of real property. “How many agents did you go to? How did you determine the listing price? How many showings were there? What were the terms of the sale? That isn’t information a beneficiary is entitled to—at least not at the initial stages.”
While executors are free to ignore such questions, Kerr often recommends they err on the side of transparency, and provide information to beneficiaries as it becomes available. “We’re trying to keep the beneficiary happy, and reduce the amount of suspicions there might otherwise be.”
Another potential flashpoint: executor fees. In most jurisdictions, fees are calculated based on a percentage of the estate, assuming an estate of average size and complexity. But executors are only entitled to such compensation if beneficiaries approve it—and that could mean additional hassles for the executor, Kerr says.
“If the beneficiaries don’t approve the fee, the executor’s only recourse is to make an application to pass accounts in court, and to deal with any objections raised by the beneficiaries on that passing of accounts—and, ultimately, to take what the court awards,” she says.
However, such a move can backfire for the beneficiaries unless the executor has acted inappropriately, Kerr says. Unless there’s reasonable cause, the beneficiary will be liable for costs.
“What you’re looking at is whether there was an appropriate reason for the beneficary [to] make the claim that created the need to pay these legal fees,” she says. “Unless the executor has actuallly acted innappropriately, the executor will normally be entitled to full indemnity from the estate for all the executor’s legal fees, if those fees are reasonable.”
How to prevent problems with beneficiaries before they begin
Think carefully before accepting the role
If the executor is aware of significant infighting and conflict among beneficiaries, or suspects the job could lead to accusations of malfeasance or negligence, it may be wise to decline.
Document, document, document
Taking meticulous notes about discussions with beneficiaries and information passed on and received, as well as writing down a rationale for decisions made, can prevent misunderstandings.
Seek professional help
Executors are entitled to professional legal and accounting advice when needed; involving an experienced professional can defuse accusations of bias and/or mishandling of estate assets.
Communicate early and often
By providing information about the progress and expected timing of distributions, executors can minimize feelings of distrust.
Treat beneficiaries equally
Giving certain beneficiaries access to additional or more detailed estate information (or the perception of such access) can cause friction and conflict.