Administration Problems: Delay
Jul 27, 2017
In my last entry, I wrote about the “typical” estate administration. In that entry, I noted that making an interim distribution to the beneficiaries early in the process goes a long way towards ensuring an administration runs smoothly. Sometimes making such a distribution is not possible in the circumstances of a particular estate, but informing the beneficiaries of the reason for the delay can also be helpful.
My views on this point are informed in part by my experience in advising executor clients. But they are also informed by another aspect of my practice: Advising clients who are the beneficiaries of problematic estates. The most common complaint among such beneficiaries? The executor is taking too long.
The approach that I take with any particular beneficiary client making this complaint depends on the particular circumstances of the estate. However, my starting point is often to write a letter to the executor. In that letter, I may ask the executor to provide some sort of informal accounting of how he or she has managed the estate to date, as well as a plan for the distribution of the estate. Requesting a more formal accounting at this stage might be onerous or overwhelming for the executor, and may not ultimately be necessary from my client’s perspective. The primary goal is often to kick the executor in gear. A letter from a lawyer may grab an executor’s attention more effectively than a letter from the beneficiary. And asking for bank statements and tax returns is something that should be relatively straightforward for the executor to produce.
Often a first letter is all that is required to get things moving at a pace more satisfactory to the beneficiaries. It may be necessary to keep the pressure on the executor by checking in regularly, but at least things are moving.
If the executor fails to provide the informal accounting or to otherwise advance the administration, it may next be necessary to seek a court order requiring the executor to “pass the accounts” of the estate. A passing of accounts is a formal court process whereby an executor presents his or her books to the beneficiaries and the Court. Executors and beneficiaries often agree to dispense with a passing of accounts given the expense and delay such a proceeding entails. But in the case of a dilatory executor, the act of preparing accounts, and filing them with the Court, may drive home the significance of the duties and obligations of his or her position.
A more extreme course of action when dealing with an inattentive executor is to begin a court application seeking to remove the executor from his or her position. A court may be hesitant to take such a step unless the circumstances clearly warrant removal, the rationale being that the deceased’s choice of executor should not be easily swept aside. Accordingly, beneficiaries seeking a removal will ideally have built an evidentiary basis to support the relief they seek. The steps identified above can help in this regard: A history of failing to respond to beneficiaries, failing to answer lawyers’ letters, and failing to pass accounts when required by a Court (or presenting accounts that show deficiencies or misappropriations) may help convince a judge that an executor must be removed in order to ensure the orderly administration of the estate.
A Court application to remove an executor is a serious proceeding. In my practice, it often isn’t necessary to go that far to get an administration moving. However, I would generally suggest to any beneficiary experiencing difficulties with an executor that he or she retain his or her own lawyer so that this lawyer can provide an expert opinion on the best way to proceed in the circumstances of that particular estate