There’s nothing worse than dealing with a bad executor after the death of a loved one. They have all the control and as beneficiary you have all of the rights, or so you’re told. But what if they just won’t be reasonable? They say they’re going to tie up the estate up years. They are holding your inheritance hostage! Things are moving along at a snail’s pace, if they’re moving at all. So you ask: “If I have all of the rights, what can I do about the executor?” and we have the answer: you give them the boot!
An executor’s first and foremost duty is to the estate and all of the beneficiaries. That is the paramount rule. There are no exceptions.
The question is whether the [executor’s] acts or omissions endanger the trust property or show a want of honesty or proper capacity to execute the duties or reasonable fidelity.
There are a number of sure-fire ways to get booted as executor to an estate. Bad executors can and have been booted for all kinds of mistakes. Below, you will find 5 common reasons that executors have been booted in the past.
1. Holding up Distribution
Executors are responsible for ensuring that the estate is run as efficiently as possible. It is their job and their job alone to ensure that the estate pays the bills (such as taxes and probate fees) and brings in the cash (as much income as possible). Eventually, executors are responsible for ensuring that beneficiaries get what is rightfully theirs. If the bills don’t get paid, if the estate looses cash or if beneficiaries don’t get what is rightfully theirs, executors can be held liable.
This all has to happen within a reasonable amount of time. Two years to be exact. The Trustee Act says that a trustee must account to the courts within 2 years of the date of appointment (unless everyone agrees that they don’t have to). While this doesn’t necessary mean that a distribution should happen within two years, unless there are some pretty high bills waiting to be paid after the two year period, some kind of distribution should occur. After all, it is the beneficiaries’ money.
Failing to act reasonably in getting the estate to distribution can get the executor booted.
2. Costing the Estate Money
Executors are required to do their best to bring in cash or otherwise increase the value of the estate where possible. This means they can’t just sit on their hands and do nothing. If they think they could make money and they aren’t then they aren’t acting in the estate’s best interests, and the beneficiaries are missing out. For example, if they could be making interest on an investment and choose not to, they might be booted. Another example might be if they could sell a property for a higher amount but miss the opportunity for that sale because of the executor’s mistake, they might be booted.
Another way that an executor can cost the estate money is by hiring and firing a number of different professionals. For example, if the personal representative hires an accountant and then fires the accountant, money will have been wasted on their work. Money can also be wasted where the executor refuses to provide the accountant the information they need to do their job. The same thing can happen on occasion with lawyers, investment advisers, trust companies and realtors. Acting in this way may lead the court to find that the executor is incompetent (see Dirnberger Estate, 2016 BCSC 439)
Incompetence can get you booted.
3. Having Split Loyalties
The executor’s duties are to the beneficiaries of the estate only. They cannot have split loyalties between their own and the estate. If they act in their own self-interest, they can get booted. It is common for executors to be both beneficiaries and executors of a will. Inherently when that occurs, executors will have some self-interest in ensuring that the estate brings in as much cash as possible.
There are many ways that an executor can find him or herself in a conflict of interest:
- When the executor wants to purchase estate assets. They will personally want to pay as little as possible but at the same time they have an obligation to obtain as much as possible for the asset.
- When the executor mixes their assets with estate assets. They will be unable to account for which assets belong to whom (see Kyle Estate v. Kyle, 2016 BCSC 855).
- When the estate has a claim against the executor or a closely related person. They have a duty to prosecute that claim but may have a personal wish not to bring it (see Kyle EstateÂ or where the estate had to defend in Levi-Bandel v. McKeen, 2011 BCSC 247).
- When the executor insists on being paid before agreeing to a distribution of estate assets (see Estate of Forbes McTavish Campbell, 2015 BCSC 774 and Dirnberger).
In all of the examples above, the duties of the executor to the estate and beneficiaries is in direct conflict with their personal interests. This amounts to a want of reasonable fidelity grounds for the executor to get booted.
4. Butting Heads with the Co-Executor
Executors are people. They often had a close relationship with the deceased. They are often going through a difficult time in their lives and sometimes they don’t cope well with it. The result is that sometimes they lash out. They can be angry, frustrated or overwhelmed with the estate and the result is that they act irrationally. They yell and scream at or threaten beneficiaries. The result is never good and at times gets out of hand in the form of harassment or improper conduct.
Sometimes, executors choose to be difficult. They refuse to move the estate forward. They sit on their hands and attempt to sit on their co-executor’s hands so nothing gets done. Perhaps deep down it has something to do with preserving what is left of the deceased, but that is irrelevant. Things must be done and the estate must move forward to finality. The executor has a duty to make that happen (see Forbes and Levi-Bandel)
When the estate is ground to a halt and nothing is moving forward, sometimes the only thing that can create momentum is for the executor (or both) to get the boot.
5. Breaking the Rules
The will is the executor’s rule book. It is the law of the land, the executor’s bible, it has the final say. Period. The executor must follow the terms of the will. If the will says to do “A” and the executor does not do “A” then they can be booted. If the will says do “B” by “C” and the executor does “B” after “C” then they better have a good excuse for not doing it. And if they don’t, booted (see Kyle Estate).
If you have an executor that is holding your inheritance hostage, contact us and we can help you to get the estate unstuck.