How Executors Avoid Personal Liability

Introduction xiii 1 General Laws and Rules for Executors 1 1. Where Does It Say That? 1 2. An Executor Is a Type of Trustee 2 3. An Executor Is a Fiduciary 3 4. Common Law 5 5. Summary of the Executor's Responsibilities 5 6. Specific Language in a Will 6 7. The Executor's Powers Provided by the Will 7 2 An Executor Must Follow the Will 9 1. Making the Will "More Fair" 9 2. Giving Personal Items to Those Not Entitled to Them 10 Contents iv How Executors Avoid Personal Liability 3. Not Following Trust Instructions 11 4. Ignoring Parts of the Will 12 5. Acting while the Testator Is Still Alive 13 3 An Executor Must Obtain Valuations 15 1. Selling Major Assets below Market Value 16 2. Selling Household Items 17 3. Acceptable Methods of Sale 18 4. Calling on Experts 19 5. Selling to Beneficiaries and to the Executor 19 4 The Executor Must Communicate with Beneficiaries 21 1. Showing the Deceased's Will to Family Members 22 2. Proactive Communication 24 5 The Executor Must Not Mismanage Estate Assets 27 1. Mingling Estate and Personal Funds 27 2. The Executor's Estate Bank Account 28 3. Investing Excess Cash (or Not) 29 3.1 Investing foolishly 30 4. Not Protecting Assets 31 5. Paying the Wrong Creditors 32 6 The Executor Should Get Professional Help with the Estate 35 1. Be Reasonable 36 2. Asking the Court for Help 37 3. Wording in the Will 37 4. Matters in Dispute 39 7 The Executor Must Keep Proper Records 41 1. Original Paperwork 42 2. Pay Bills and Taxes before Paying Beneficiaries and Yourself 43 3. Setting up a Ledger 44 Contents v 8 The Executor Must Know the Law 47 1. Loans, Gifts, and Advances Made by the Parents 47 2. The Limitation Period for Dependent Relief Claims 51 3. Intergenerational Joint Assets 52 9 The Executor Must Remain Neutral between Beneficiaries 55 1. The Even-Hand Rule 56 2. Favouritism, or the Appearance of It 56 10 The Executor Must Finish the Estate in Reasonable Time 59 1. The Executor's Year 60 2. The Court's Position 61 3. Interim Distribution 62 11 The Executor Must Handle Lawsuits Properly 67 1. Not Prosecuting a Third Party in Time 68 1.1 Unreasonable prosecution on behalf of the estate 70 2. Improper Settlements 70 12 The Executor Must Provide a Proper Accounting 73 1. Statement of Receipts and Disbursements 75 2. Statement of Proposed Executor's Compensation 76 3. Statement of Proposed Distribution 77 4. How to Calculate Your Compensation 78 5. Which Expenses You May Claim 82 6. How and When to Pay Yourself 83 13 What Factors Are Considered by the Courts When Reviewing Cases 85 1. Size and Impact of the Error 86 2. Personal Benefit by the Executor 86 3. Good Faith 86 4. Overall Conduct 87 5. The Beneficiaries' Petition 88 6. Beneficiary Acquiescence 88 vi How Executors Avoid Personal Liability 14 Possible Consequences for an Executor Who Makes a Mistake on an Estate 91 1. Court-Imposed Deadlines 92 2. Requirement to Account to Beneficiaries 93 3. Requirement to Pass Accounts 94 4. Reduction of the Executor's Compensation 94 5. Removal of the Executor 95 6. Requirement to Repay the Estate Personally 96 6.1 Order of costs/legal fees 96 7. Contempt of Court 96 8. Criminal Charges 97 15 Issues Specific to Estate Administrators 99 1. Funeral, Burial, or Cremation Arrangements 100 2. Preparing an Inventory 100 3. Applying for the CPP Death Benefit 102 4. Advertising for Creditors 102 5. Listing the House for Sale 102 6. Intestacy 103 16 Co-executor Liability 105 1. Renunciation 106 2. Legal Protection 107 17 More Ways to Protect Yourself 109 1. Direct the Deceased's Mail to Your Address 109 2. Advertise for Creditors and Claimants 110 3. Executor's Insurance 111 4. Hire a Trust Company As Agent 113 5. Get a Tax Clearance Certificate 114 The Download Kit 117 Samples 1. Executor's Ledger (Blank) 45 2. Executor's Ledger (Filled-In) 46 3. Statement of Proposed Distribution 64 Contents vii 4. Statement of Receipts and Disbursements 76 5. Statement of Proposed Executor's Compensation 78 6. Statement of Proposed Distribution 79 7. Asking for a Tax Clearance Certificate (Form TX19) 116