WHAT, YOU WANT MY PHONE NUMBER TOO?

MISTAKE #44

Not communicating effectively with the beneficiaries of the estate

THERE’S A LOT TO DO AS AN EXECUTOR. If you drop into your bank branch to request an executor’s checklist, it may list hundreds (okay, dozens) of tasks you need to get done. But sometimes how a task gets done is as important as just getting it checked off the list. This mistake is about being an effective executor, not merely an efficient one, by: (1) communicating early and often with the estate’s beneficiaries; and (2) managing expectations of the beneficiaries appropriately.

If you have ever had a customer service role, you will know that the best way to work with customers, patrons or clients is to let them know upfront how long everything will take (worst-case scenario) and advise them about delays and snags before they become anxious wondering what’s happening. In your executor role, think about this type of open communication as you work your way through the administration of the estate. Not only is this approach respectful, it also makes the process easier on you over the long haul.

communicating early and often with the beneficiaries

One of the lawyers we interviewed mentioned that she really wanted to tell us her pet peeve about estate administration. Curious, we said, “Sure, what’s your pet peeve?” thinking it would be something like forgetting to file tax returns and having the estate owe a million dollars in interest and penalties. But no, it turns out that what irritated the lawyer was that people expected to attend an event, grandly called The Reading of the Will, at which the lawyer would crack open the sealed envelope (and maybe a nice bottle of port?) and read out the contents of the late person’s will to the assembled family.

The actual reading of a will is far less dramatic, occurring, for example, as the executor stands in the cramped safety deposit box area of the bank, wedged between a desk and some storage boxes. Wherever the reading of the will occurs, one of the first things that the executor should do after he or she has reviewed the will is let the beneficiaries know what it says, to whatever extent is appropriate given the beneficiary’s particular inheritance in the will.

For example, if a beneficiary is entitled to a residual share of the estate, meaning a portion of what is left after all debts and taxes are paid, then it is appropriate that he or she receive a copy of the whole will. If the beneficiary is simply receiving a sum of money or a teapot, then it is sufficient for the executor to give him or her a copy of the clause describing the gift.

With this suggestion, we are not referring to the letter-of-the-law requirements about a beneficiary’s entitlement to a copy of the will or a clause of the will. The precise disclosure requirements and how they must be met (for example, by registered mail or personal service or whatever) vary by province. Instead, what we are recommending here is the executor adopting a non-legalistic approach, viewing the sharing of information as part of an overall open communication style as much for the long-term benefit of the executor as it is for the beneficiaries.

In other words, even though you may only be compelled by law to share the will with the beneficiaries when the application is made to the court for an order stating that the will is valid (often called getting probate), consider a different stance. If you were a beneficiary, would you rather have more information or less information, and would you prefer to have it sooner or later? Of course you would prefer more information, early on, and the executor who adopts a transparent, communicative style early in the administration will reduce or eliminate the possibility of conflict in the estate. Trust us on this.

managing beneficiaries’ expectations

Trust officers who work for trust companies administer hundreds of estates over their careers and they emphasized to us that the administration of an estate usually takes a lot longer to complete than people expect. They recommend that executors “under-promise and over-deliver” when it comes to setting expectations in the minds of the beneficiaries as to how long it will all take.

Estate work involves many third parties: every company, creditor, bank, governmental department, employer, partner, store or magazine involved with the deceased person at the time of his or her death needs to be contacted, and then that third party will no doubt need to do something to move the estate along. Applying to the court for probate, filing taxes and waiting for the clearance certificate, cleaning and selling the house, selling the business, consolidating the financial assets . . . each task usually requires a much longer waiting period than you might expect.

This means that part of your communication with the beneficiaries has to be about how long it will be until they will receive their bequest or gift under the will, or their share of the estate. The answer to that question is, “it depends.” A simple estate may wrap up in a year, the time period in which it is generally considered appropriate to administer an estate without some extenuating circumstances. However, keep in mind that the filing of the deceased’s outstanding tax returns (if any), his or her terminal tax return, and the estate’s final return can easily stretch out the time required past 12 months, as can delays caused by the requirements made by the third parties we mentioned above.

An estate in which there are disputes over the will’s validity or any of its provisions, or an estate holding complicated or unusual property, will definitely take longer than a year to administer. In these situations, you will be working with an estate lawyer who will be able to provide you with the best (most conservative) estimates as to timing to share with the beneficiaries.

it’s not “us versus them”

An executor is wise to avoid viewing the estate beneficiaries in an “us versus them” way. Clearly the executor has an important role to play in the deceased’s estate, but the beneficiaries are also important parties, and as the estate administration nears completion, the executor will be requesting the beneficiaries to sign a release, releasing him or her from liability as the executor.

As we said earlier in this mistake, good customer service professionals let people know what’s happening. As an executor, if you know there is some type of challenge or delay coming up in the estate, you and the estate lawyer should discuss communication with the beneficiaries and decide when it is appropriate to share information about the situation with them. Keep the beneficiaries well informed to the extent that you can. Long silences create suspicion, often resulting in the need to deal with hostility that has arisen simply because the beneficiaries didn’t know what was going on.

points to take away

• There are lengthy task lists of the duties of an executor but two of the most important—and sometimes unstated—jobs are to communicate effectively with the beneficiaries and to be very clear with them about the length of time that it will take to administer the estate.

• After reviewing the estate timeline with your lawyer, take the opportunity to convey information to the beneficiaries well before they begin to have questions about what is happening, what they will receive under the will and how long the whole process will take. Even if you know why the administration is going slowly (for example, due to an insurance claim delay), the beneficiaries will not know this unless you tell them.

• An open and honest approach towards the beneficiaries of the estate will often save an executor time and possibly money, if conflicts are avoided, in the long run.