It's Called "Executor's Year" For A Reason
I have written before about whether accepting the responsibility of being an executor/estate trustee of an estate is an honour or a headache. On one hand, it seems like an honour that someone would entrust you to fulfill his or her final wishes and distribute property to his or her beneficiaries. On the other hand, it can be a time consuming ordeal of trying to realize assets and trying to balance competing demands from various beneficiaries.
As a general rule, however, it is important that a executor acts promptly to probate the will and move matters forward. In estate terminology, the executor's year is the year following decease during which the executor is to administer the estate. It is presumed by the end of the year, the estate will be administered, and the executor discharged of his or her duties.
While, additional time can be taken especially if the estate is complex or there are complicating factors such as ongoing litigation, executor's should attempt to discharge their duties within the year following decease. A Ontario Superior Court decision illustrates how delay on the part of one executor resulted in the executor being personally liable to the beneficiaries. (Full disclosure, I was litigation counsel for the objecting beneficiary in this matter. )
Ingrid Loveman died leaving two of her six children as executors. Her estate was divided with one child having the right of first refusal to purchase the estate's main asset, a house, at a discounted rate. If that child, who was also an executor, chose not to purchase, the remaining children could in order from oldest to youngest. The proceeds were to be distributed in shares between some of the children and grandchildren.
The executor with right of first refusal, had a year to make his election whether to purchase or not. Rather than take the initial steps to probate the will and prepare the property for sale, he did nothing. In part, this was due to his own financial concerns, being that he did not want to be responsible for two mortgages. To avoid this situation, he delayed probate until after he made his election to purchase, literally as the period for him to do so was expiring.
The delay had an unexpected consequence in that it allowed one of the grandchildren to sue the estate for Dependent's Relief. Claims for Dependent's Relief must be brought within six months of probate. By delaying probate, the executor made the estate vulnerable to the claim that was in excess of what the grandchild was entitled to inherit. Additionally, the delay caused the estate to incur the costs of retaining litigation counsel. Finally, the estate bore the costs associated with carrying the house until the executor was ready to purchase.
One of the beneficiaries, objected to the additional costs. He asserted that, had the probate occurred timely, the Dependant's Claim would have been barred by virtue of its limitation period and legal counsel would not have been necessary. Moreover, he asserted that costs involved with carrying the property for the additional time should be borne by the executors not the estate.
Those claims succeeded and the executors were required to personally reimburse the estate for the costs of litigation and carrying the property.
The Lesson: it is important to act timely to probate the will and to get on with the administration of an estate. Failure to do so, could make the estate vulnerable to claims by beneficiaries and litigation costs. Executors should set a goal of timely wrapping up the estate and discharging their responsibilities. Failure to do so can made the responsibility of estate administration not only a headache but an expensive one.
Loveman Estate, 2016 ONSC 2687 (ONSC) https://www.canlii.org/en/on/onsc/doc/2016/2016onsc2687/2016onsc2687.pdf
The content and the opinions expressed here is informational purposes only and does not constitute legal or professional advice. Nor does reading or commenting on it create a lawyer/client relationship with the author. I encourage you to contact me directly at adrianlawoffice@gmail.com if you have specific legal questions or concerns.
http://adrianlawoffice.wix.com/mysite
If you are an individual looking for assistance with a legal problem, contact Adrian Law for professional and cost-effective advice. adrianlawoffice@gmail.com
The author encourages you to share this article on social media.
Follow me on Twitter @gwendolynadrian