The obligations and responsibilities of an executor are serious. Yet it is common for will makers to nominate a family member as the executor of the will without thinking about whether that person has the capabilities necessary to carry out their duties.
An executor must act with great care. The general rule of thumb is that a year is a reasonable time to finish things up in.
When Ursula was made the executor of her father’s will, she was very proud. But your client, her brother Angus, was worried. Ursula was a professional woman and felt that she was intelligent enough to act as executor. She also had a history of being very frugal and took great pride in her ability to save money at every turn. These were the very same characteristics that had Angus detailing his concerns to you. He wanted to invest his inheritance wisely, but he was afraid that Ursula would somehow mess the estate around.
You advised Angus that she should seek legal advice. When he suggested that she seek advice in relation to her duties as the executor, she refused. For one thing, she didn’t want to spend the money to see the lawyer. For another thing, she was sure she would be able to carry out her duties properly.
Ignorance of the law
What Ursula didn’t realise was that being an executor requires a knowledge of the law. The law is not straightforward and is poorly understood by most people. It took Ursula six months to work out that she needed to obtain a grant of probate, and how she could do that. It would have taken an experienced lawyer only a few minutes to solve this problem. Meanwhile, Angus could only watch on and wait.
Next Ursula decided that because her father had several investment properties, she would sell them. It would make everything easier to administer, she thought. So she sold three properties for $1 million, and immediately incurred an enormous tax bill. Had she sought advice, she would have known that selling assets unnecessarily and paying a lot of tax is avoidable.
Ursula had now the cost the estate both time and money. When you saw Angus after this transaction, he was very annoyed. She had just cost him a part of the inheritance. Yet nothing he could say to her would change her mind. You advised Angus he should seek his own legal advice from a specialist in Succession Law. But Angus was afraid to further upset Ursula and cost the estate more.
Ursula didn’t want to pay an accountant to finalise the estate taxes, and decided to do it herself. Because completing the tax returns is also not a straightforward task, it took Ursula another six months to complete the job. It would have taken an accountant only a few hours.
Sibling rivalry
The home in which her father had lived prior to his death had fallen into a state of disrepair. Ursula didn’t want to pay tradespeople or cleaners to fix the house up, and so she did the work herself. It took her another six months to rip up moldy carpets, replace fittings throughout the house and tidy up the garden.
By now, Angus was angry and frustrated. It was now well beyond the reasonable timeframe for an estate to be administered, and he felt helpless watching Ursula make mistakes that cost the estate dearly.
The relationship between Ursula and Angus continued to deteriorate over time. She refused to take his help when he offered to paint their father’s house, insisting that she would do it. When he asked her why it was taking so long to administer the estate, she hung up on him and refused to speak to him for several weeks.
Eventually, Angus took your advice and made an appointment with a specialist in wills and estates. When he did so, he asked the court to remove her as executor from the estate. His reason for doing so was because he had lost trust in her ability to complete the job, and that she was wasting time and money. It is likely to cost the estate further now that an estate dispute has been lodged.
Professional advice essential
In truth, it is reasonable and proper for an executor to seek legal advice when it comes to administering an estate, and to follow that advice.
Angus should have followed his financial planner’s advice to seek his own legal advice much earlier. Early intervention may have stopped the executor’s mistakes from compounding the estate’s loss.
When thinking about who to appoint as an executor, it is important for your clients to choose a person who will reasonably seek advice and do what’s in the best interests of the estate. A person who believes that they know everything or refuses to seek advice will make the process of administering the estate a nightmare.
A person will not change their personality or a lifetime of habits just because a loved one has died. It’s a mistake to think that a person like this will change.
