Mistakes that Executors (Personal Representatives) Make in Probating Estates
Being an executor (now called personal representative in Alberta) for a spouse, sibling, child or friend’s estate can be a big task. Most people do not understand the difficulties that come with such a job. It is good for an executor to learn the roles and duties of an executor during probate and the administration of an estate. To make matters worse, many executor mistakes can attach liability to the executor him or herself. Remember, you never have to probate an estate on your own. Avoid estate executor mistakes by hiring lawyers and accountants to make things run smooth. The cost of getting the help is paid for by the estate and not you personally.
Top 10 Estate Executor Mistakes:
Below are the top 10 mistakes that are made while acting as an executor of a loved one’s estate. This is not an all inclusive list as many people do not act as executor properly. There are endless variations of these mistakes so proceed with caution and do not hesitate to contact an estates lawyer for assistance. Remember, a testator is the person who signed the will (the person who has passed away in these examples). A beneficiary is a person who receives the benefit of the will.
1) Not Following the Will Correctly
Often times, executors (knowingly or unknowingly) interpret the Will/Codicils (a codicil is document that makes a change to a will) “loosely” or by how they believe the testator actually wanted the Will to be interpreted. Forgiving loans that were not intended to be forgiven or giving property “in specie” (as is) as opposed to the proceeds of such property are typical errors that Executors make. Executors need to keep in mind that the Will is the governing document and that is not up for interpretation, unless the Will is ambiguous on a point. Furthermore, legal words of art confuse the situation – what the Executor thinks is ambiguous may not actually be so to a legal professional. As far as executor mistakes go, misinterpreting the Will can leave the Executor exposed to personal liability.
2) Lack of Communication to the Beneficiaries
An Executor is obligated to respond to reasonable inquiries by the Residual Beneficiaries. A Residual Beneficiary is a beneficiary of an estate who gets what is remaining in the estate after specific gives are made. Residual Beneficiaries are entitled to view the Will and supporting documentation lodged with the court for Probate. Failing to adequately inform Beneficiaries and not communicating things effectively to them is one of the major problems that occur while administering an Estate. Executors should ensure that documents presented to Beneficiaries contain sufficient information for the Beneficiary to understand what is going on in the process to avoid confusion and issues occurring. Generally speaking, it is an executor mistake to withhold this information in any event as there is no downside if the executor is acting appropriately.
3) Handling Estate Money Personally
Executors have to deal with money on a regular basis. They must pay bills, funeral expenses, and costs associated with maintaining the estate. Often Executors are confused what expenses are legitimate Estate expenses. As such, some executors illegitimately pay for things with Estate money. For example, executors may not make loans to family members with estate funds, even if the Testator would have wanted to make such a loan. Executors must remember that their job is to pay off the debts of the deceased’s Estate and distribute the remaining assets according to the terms of the Will. An executor cannot make up implied terms or use the funds in any way that is not beneficial to the estate.
4) Paying Out the Beneficiaries Prior to Paying the Estate’s Creditors and Debts
Executors are responsible to the estate. An executor cannot give out more money than what the total debts of the estate are. As such, it would be wise for an executor to not pay out any beneficiary’s share of the estate until the debts of the estate have been accounted for and paid off in full. Taxes and debts are prioritized in terms of the estate’s assets. Failing to pay for an estate debt prior to paying out some of the assets to beneficiaries leaves the executor potentially liable to personally pay back into the estate the amount of money owed on any debt.
5) Failing to Seek Out Legal or Professional Help to Save Money
An estate executor sometimes try and cut expenses by not seeking out help on matters that executors should seek help on. Failing to employ an accountant to ensure tax returns are filed property (with the most deductions possible) or failing to hire a realtor to sell property (with the property, for example, selling less than what it is worth) are some of the ways the estate actually loses money rather than gain. Other professionals who are routinely hired by an estate executor for an estate are lawyers to deal with probate and financial planners to ensure that all financial matters are being managed properly on behalf of the beneficiaries. Learn more about the professionals that an executor can hire on behalf of an estate. In particular, failing to employ a lawyer to guide the executor through the Grant of Probate or Grant of Administration process can result in significant delays and loss of money, simply due to the executor’s lack of knowledge.
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Help Probate & Estate Administration
It is not an easy job being an executor of a deceased’s Estate. At Kahane Law Office, we understand the challenges of such a task. We also understand that there are emotional and familial things that you have to deal with. Don’t fall prey to any of these pitfalls and leave yourself open to personal liability. Call Kahane Law Office today to arrange for a consultation. You can reach us now at 403-225-8810 in Calgary or email us directly here today to contact us.