In an ideal world, estates would have clearly written, legally drafted and current wills.
In the real world, things aren’t always as neat. Sometimes, a beneficiary comes forward with a will newer than the one the executor’s using. What then?
Richard Niedermayer of Stewart McKelvey in Halifax says it’s uncommon for a second will to appear long after the executor starts her job. “If someone has an alternate will, or a newer version in their possession, they typically bring that forward right off the bat,” he notes. “And you get into the question right then as to which is the more current or more accurate will. It’s less common for it to pop out of the woodwork three months later.”
If a newer will appears, Niedermayer says, the executor should remain neutral and refrain from making any assumptions about which will is legitimate. “The executor’s obligation is to put the administration process on hold and then request the court’s review of this second document to say if it’s a valid document,” Niedermayer says. “Ultimately, it’s the judge’s decision.”
It’s not just formally executed wills that can create ambiguity. For instance, documents that are “other writings” can take the form of a letter that acts as a codicil to an existing will, a note written to a child or other beneficiary, or even an email written with testamentary intent.
In Nova Scotia, that type of document could “amend a previously executed will, if it is intended to be a testamentary document by the deceased,” Niedermayer says. (Some other provinces, including B.C., Alberta and Quebec, have similar provisions. The situation in Ontario is unclear.)
Executors who ignore such documents do so at their own peril. “If the executor has discharged or distributed assets that she shouldn’t have, then there is a personal liability on that executor,” Niedermayer says. “There are tax issues as well: an executor who acts can be personally liable for income taxes, for example, if they make distributions when the estate is effectively in challenge.”
He adds, “The responsibility on the executor is to get that good advice. If there’s any legitimate question about [the will], presumably the estate’s solicitor would give them advice and say, ‘I don’t know—it’s possible. Let’s put it before the court and see what the court says.’ ”
Have the assets been distributed?
So are newer wills always trouble for executors? Peter Lillico, partner at Lillico Bazuk Galloway Halka in Peterborough, Ont., says if they appear at the start of the estate administration process, there may not be a problem.
“[Maybe] there’s a condominium that’s been sold, and the money is sitting in a lawyer’s trust account,” says Lillico. “[Or] investments that have been liquidated or [are] in the process of being liquidated, and presumably debts have been paid, like a funeral bill or a Visa bill. And at that point, if a new will shows up, there’s [likely] no harm” because no funds have been distributed to beneficiaries. (Lillico says each province has its own provisions.)
However, if the executor has started passing assets to beneficiaries, or the newer will states an asset should be passed directly without being liquidated first, that’s another story. “The can of worms is: a new will shows up, and the estate is already distributed,” Lillico explains. “The old will says everything equally among my three children, and the new will says half goes to charity and the other half goes to my girlfriend. That leaves the new executor with the responsibility to try—as best as she can—to recover the assets.” In some cases, that process may involve suing former beneficiaries to recover the assets. One caveat: if a different executor is named in the second will, then the first executor in the first will doesn’t have to chase any assets (but the second one does).
As Lillico explains, the question for executors is whether they’ve performed their due diligence to ensure the last will is really the last. “Executors are liable if they act in bad faith, [or] if they are negligent,” he says. “If they didn’t bother to look for a new will, didn’t ask the lawyer if there was an updated will, [or] didn’t look through the papers to see if there was an updated will, then, conceivably, they could be considered to be negligent [and], conceivably, could be responsible for some costs.”
The best protection for executors, Lillico suggests, is to make sure they probate the will. “The executor who acted with the authority of the probated will is ok. But [he or she] could have personal liability if they are acting on the basis of an un-probated will.”
James Dolan is a Vancouver-based financial writer.