John Mitchell died on June 6, 2009. A year later his beneficiaries were up in arms. Why? They thought the process was taking too long and wanted their money.
His executor was a nephew named Fred. He tried to move things along as quickly as possible. First of all, he had to take care of dozens upon dozens of important details. Some were urgent, like finding the will and making funeral arrangements. Others were less so. Those included emptying out the apartment and asking for a refund of the damage deposit, cancelling credit cards, distributing heirlooms, advising OAS to stop payments, and going through all of the deceased's papers. Some were important but could wait for later in the process. Those included applying for probate and filing a year-of-death tax return. The deceased had an electric mobility scooter and the executor had to make arrangements for it to be sold on consignment.
It all took time. It took a month or two before the beneficiaries started asking questions. The estate was divided among the extended family and there were more than 10 people expecting money.
The lawyers that Fred hired could not prepare the application for probate until the assets were identified, inventoried and valued. That took letters to and from several banks and financial services companies. It was six months before the lawyers were able to obtain a grant of probate from the courthouse. Until that grant document was in hand, many of the banks and other asset holders refused to deal with Fred.
By the time six months had passed, one or two of the beneficiaries were harassing Fred by sending a steady stream of snarky emails.
It takes time to have the assets liquidated. Each bank and other asset holder had its own set of forms. They kept sending them back, asking Fred for more or better paperwork.
By the time a year had passed, one of the beneficiaries was building a new garage and did not have the money to pay the contractor. He assumed the inheritance would be received in time to pay for it. Another had financed the purchase of a boat and was complaining bitterly about the interest payments. The two of them turned the heat up for the executor as hot as they could make it.
Most of the work on the estate had been done by that time. The executor was waiting for the final word on the taxes. The government processes final tax filings carefully, and it takes time. The scooter was still for sale.
By the time a year and one half had elapsed, one of the beneficiaries (the one with the half-finished garage) threatened to sue Fred.
At that stage the executor prepared "accounts" for review by all 10 beneficiaries. Accounts are a detailed statement of all of the money collected and paid out during estate administration. Each beneficiary was asked to approve the accounts before the money would be sent out. Some of them dragged their heels.
It took two years before everything was done, everyone signed and all of the money went out.
Names, dates and details have been changed to conceal the identity of the family. The story is true and one that repeats itself over and over again in different families.
Handling an estate takes longer than people think it will.
There are lessons in this for executors. First, get on the taxes, hard and fast -- they take the longest. Second, manage the expectations of your beneficiaries. When they ask you how long the estate will take, say "two years from beginning to end -- but I will try to get it done faster if I can." Third, try to surprise the beneficiaries with an interim distribution. That step involves distributing some percentage of the estate midstream. That might mean distributing half of it at one year.
There are lessons here for beneficiaries, too. Don't spend the money until you have it. Also, remember the job is big and thankless. Cut the executor some slack.
John E. S. Poyser is a Winnipeg lawyer with the Wealth and Estate Law Group. Contact him at 947-6801 or email@example.com