My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a tax partner and the managing partner of Cunningham LLP in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog do not reflect the position of Cunningham LLP. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Monday, December 23, 2013

An Executor’s Nightmare

This is my last blog post of 2013. I would like to wish my readers a Merry Christmas and/or Happy Holidays and a Happy New Year. See you in January.

An Executor’s Nightmare


What is an executor’s nightmare? How about becoming the executor of two estates at once! That is what could happen if your spouse passed away while administering his or her Uncle Charlie’s estate. If you are your spouse’s executor, not only will you have to administer your spouse’s estate, but you may have to assume the executorship of Uncle Charlie’s estate. All this, while mourning the loss of your spouse.

As extreme as this seems, if Uncle Charlie did not provide for an alternate executor in his will, then subsection 46(2) of Ontario's Trustee Act permits you, as your spouse’s "personal representative" to act as executor under Charlie's will.  (Note: This post discusses Ontario. I am not sure if the law is the same in each province).

However, if Uncle Charlie named an alternate executor in the event of the death of his executor (i.e. your spouse) and his will was drafted such that the alternate could step in and perform those duties, then you can step aside.

Katy Basi, an estate lawyer and frequent contributor to this blog says "It is critical to ensure that you have a series of alternate executors/trustees appointed in your will, especially if your will creates trusts which could continue for a number of years after your death. If your last named executor/trustee dies, and the administration of your estate is not complete, or trusts are still ongoing, then the "personal representative" of your deceased executor/trustee may take over. This person could be a stranger to you, but Ontario's Trustee Act can swing into action and make it so."

Katy also notes that you have the ability to renounce your acceptance as the successor executor for Uncle Charlie without court approval, as long as you have not started acting as executor of Uncle Charlie’s estate or “intermeddling” in any way in Charlie’s estate. If you had started to act, you would need court approval to resign.

Finally, Katy says that if there are no named alternates, and you renounce as successor executor, then effectively there is no named executor and someone would have to apply to the court to be appointed as "administrator" (similar to the case of an intestate estate). Family members usually have first priority, but the court has discretion and may appoint a trust company or other non-family member under special circumstances. The consent of the beneficiaries entitled to the majority of the estate remaining at that time is often required for the application to be acceptable to the court. The court will need to approve the application, and the applicant cannot act until they get this approval, usually in the form of a probate certificate naming the applicant as "Successor Estate Trustee".

What should become clear from today’s post are two things:

1. If you are informed you have been named an executor, ensure the person naming you as executor has alternate replacements in their will, and that the will permits these alternates to act not only if you are deceased, but also if you are unwilling or unable to perform your duties as executor.  

2. Ensure your own will has alternate replacement provisions drafted with similar care.

The above blog post is for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Readers are advised to seek specific legal advice regarding any specific legal issues.

 

2 comments:

  1. Just getting into such a situation myself. This is one case where I am leaving aside my DIY philosophy. To your list Mark, I would add, "find and keep records, documents, paperwork"

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    1. CI, that is sad to hear. I hope you are not taking on both executor ships and if you are, I hope when u say u are leaving aside your DIY philosophy that means you are hiring a trust company or ensuring you have professional help, one estate is difficult enough to deal with, I could not imagine 2 at a time.

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