The executor of an estate has quite a job at hand. The process can take more than a year, and the work is often done during a period of emotional turmoil, both in grieving for the deceased and in navigating family tensions over how the estate is divided.
On top of that, experts say, executors are financially liable for their mistakes and are increasingly being held to account both by beneficiaries and by the courts.
Here are five mistakes that executors can make:
1. They don’t follow the will
Executors often choose to “rewrite” parts of the will they don’t think are fair, says Lynne Butler, senior will and estate planner of Scotia Private Client Group. For example, if three children are beneficiaries and one is getting more than the other two, an executor might decide that it is not fair. Or they will give personal belongings to grandchildren even if they were not named in the will. Not surprisingly, executors will be challenged by other beneficiaries for not following the will.
2. They don’t keep beneficiaries updated
“There’s many a lawsuit or family fight that could have been prevented if the executors had just said what they’re doing,” Ms. Butler says. That’s because when the beneficiaries aren’t being given real information, “they start speculating.” They say things like, “I don’t know what’s going on. I’m pretty sure [the executors] are taking the money.”
Executors should create an e-mail distribution list of beneficiaries and update them regularly, Ms. Butler says.
3. They’re bad bookkeepers
Executors, above all, need to be good bookkeepers, says Ian Hull, a lawyer who specializes in contentious estate litigation. They need to be comfortable with the accounting obligations that come with the role. If they make mistakes, or miss assets, they face challenges – “and that’s probably realistically the heaviest area of contentious litigation,” Mr. Hull says.
4. They don’t get valuations
Executors have to make sure that if they are selling a property or asset, they get qualified appraisals and opinions as to value, says Leanne Kaufman, vice-president of the Professional Practice Group at RBC Wealth Management. Any time an executor has to exercise discretion, it’s a possible point of challenge, she says.
5. They don’t keep arms-length relationships
If executors sell property or assets from the estate to themselves, or to someone who is related to them, that could create conflict with the beneficiaries, Ms. Kaufman says.