Keeping the lines clear in estate administration
Why executors need to communicate with beneficiaries
One of my late husband’s favourite sayings, along with putting “a rod in pickle for your own back” (the relevance of this one will become clear later in this blog, but for a history of this saying, see The Phrase Finder and the Merriam-Webster Dictionary), was “start out how you mean to go on.” Good advice in a variety of situations, including for estate trustees (also referred to as executors) who are beginning to administer an estate.
Lack of communication is one of the top complaints clients make about their professional advisors. The same is true for beneficiary complaints about estate trustees. It can happen for a variety of reasons, and is unfortunate given the consequences and how easy it is to avoid it.
Simple and regular updates, including a reasonable but not excessive amount of detail, completed tasks, anticipated next steps, and estimated timelines are usually enough to provide the information that beneficiaries need to feel they are being kept in the loop, without placing an undue burden on the estate trustee.
Unfortunately, the importance of good communication is often overlooked by estate trustees, and beneficiaries are left in the dark for months (or even years). Beneficiaries will wonder what is going on, and question why they have received no information, which may increase suspicions that something untoward is taking place. “Lawyering up” will typically then follow, since lack of information can breed distrust.
Regular and open communication with beneficiaries should not, however, be confused with seeking beneficiaries’ guidance or approval. In some circumstances, an estate trustee may wish to seek the beneficiaries’ approval for a specific decision, but in most cases such consent is unnecessary. Beneficiaries should be clear on what input is required of them, which is often very little, and that the estate trustee does not require their approval for most, if not all, estate administration tasks.
Of course, there are certain matters which do require beneficiary approval, and if these come up in an estate administration, an estate trustee should be sure to obtain it beforehand. Examples include a proposed action that departs from the terms of the Will, any sale of an asset to the estate trustee personally or their close relatives, friends or business associates, and any delay in making distributions which the estate trustee could avoid.
It is also usually a good idea to consult beneficiaries when disposing of personal effects, particularly sentimental items. This creates goodwill and failing to do so can cause resentment and anger to an extent which should not be underestimated.
Sometimes estate trustees can take the view that their authority is sacrosanct, and they are not required to answer to anyone, including the beneficiaries or even the court, in making decisions regarding the estate administration. This will typically lead them to fail to seek beneficiary approval or input when it is either needed or advisable.
It can, and usually will, also lead to a strained and sometimes outright hostile relationship with beneficiaries. Any beneficiary who has the temerity to ask questions is viewed as meddlesome, and this attitude will, quite naturally, lead the beneficiary to further question the estate trustee or view all of their actions with suspicion. This will then unfortunately often lead to litigation.
Without some proactive, regular, and effective communications, estate trustees will almost inevitably be storing up trouble for themselves later on (this is where the “rod in pickle for their own backs” principle comes in).
Obtaining experienced professional assistance to set themselves on the right path from the beginning can be invaluable in preventing miscommunications, misinterpretations and disputes between estate trustees and beneficiaries, saving everyone time, frustration, and costs.
Susannah Roth is a partner at O’Sullivan Estate Lawyers, based in Toronto. Her practice focuses on estate administration, including cross-border and multijurisdictional administration, advising attorneys and guardians of property, executors, administrators and beneficiaries, real estate transfers and rectification, estate planning (including wills, powers of attorney, insurance and testamentary trusts), and estate litigation. This article originally appeared in the O’Sullivan Estate Lawyers blog. Used with permission.
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The foregoing is for general information purposes only and is the opinion of the writer. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.