No one really anticipates a dispute involving their executors, but they happen fairly frequently. These quarrels can waste estate assets and, perhaps more importantly, damage relationships for years to come. This is surely not what anyone intends.
If you are making your estate plan, talk to your attorney about what can be done to avoid these problems. If you find yourself embroiled in an executor dispute, seek professional help to keep the dispute from getting out of hand. The more quickly it can be solved, the less damage it may do.
What could go wrong?
Perfectly reasonable people may act in unreasonable ways when a loved one dies. But some situations can be particularly fraught – for example, when an adult child of an earlier marriage and a second spouse are asked to serve as co-executors. A DIY Will can cause problems and a will that treats a spouse or child unequally is likely to also cause challenges. A very large or complex estate is more likely to be the subject of a dispute than a small one – more money, more problems.
There may be nothing actually wrong in any of these situations, but they deserve special care and attention from the outset.
Time, money and influence
A second broad category of potential problems involves administrative mishaps and/or the careless handling of assets. These are far more common, but no less troublesome.
The list of possible pitfalls includes:
- Undue delay in applying for probate. In NSW, executors customarily apply within six months of the date of death. Distributions should take place within a year; beyond that beneficiaries may become restless;
- Undue haste in applying for probate can cause certain assets to be overlooked;
- Disputes about the valuation of certain kinds of assets like real property or collectibles;
- Allegations about undue influence on the part of one beneficiary, especially where the distribution called for under the will is unequal or unusual;
- Disputes about the transfer of assets out of the estate during the final months or years of the deceased’s life, especially if done under a Power of Attorney; or
- Disputes about the costs of settling the estate, including fees paid to solicitors, real estate agents and appraisers.
Executors often feel honoured to be asked to administer an estate. It is unfair, however, to expect them to have the wisdom of Solomon to resolve all potential disputes.
How to avoid problems
There are several relatively simple steps individuals who are engaged in estate planning and their executors can do to avoid many of these issues.
For those making a will:
- Engage a competent estate lawyer to draft your will and review your entire estate plan to ensure that your wishes will be accomplished and your loved ones are taken care of;
- Discuss the plan with your executor and those who will benefit or who expect to benefit from your plan. Secrets and surprises are among the greatest causes of disputes; and
- Where appointing multiple executors, be mindful of the nature of their relationship with one another.
For executors:
- Keep careful financial records of estate assets and the costs of administering the estate;
- Keep a calendar of deadlines;
- Manage beneficiary expectations through frequent communication; and
- Where you believe that you either have or may appear to have a conflict of interest, consult with an attorney about the possibility of renouncing or otherwise limiting your role or involving an independent co-executor.
The attorneys at Owen Hodge Lawyers would be happy to help you avoid and resolve common executor disputes. Call us at your earliest convenience at 1800 770 780 to schedule a consultation.