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Saturday, January 13, 2018

A caveat was filed and now the estate is at a standstill. What can an executor do?

What happens when someone files a caveat against an estate, brings things to a screeching halt, then does nothing about it? As an executor, you do have options.

"My mom passed away in Sep 2016. I am the executor (son).I started the process with the lawyers to probate the Estate of my mom but the two sisters had put a dispute to stop the process. Two years is coming up in Sept 2018. What can I do to put a closure to this matter?"

You haven't said how your sisters "put a dispute to stop the process" but the usual method is by filing a caveat. I'll assume that's the case here. A caveat is a simple, one-page document that is filed at the court by a party who objects to the application for probate going ahead. The caveat doesn't contain a lot of information and the party who files it is not required to explain why they are filing it.

A caveat is not designed to stop things forever. Its purpose is to ensure that someone with a real issue has notice of what's happening so that person can participate and have a day in court with their issue. It is supposed to ensure that people who believe that a will is fraudulent or that the wrong person is applying as executor or one of many other problems has the opportunity to bring that information to the court.

The usual procedure when someone files a caveat against an estate is that the executor contacts them or their lawyer if they have one, and finds out about their issue with the estate.

If the person who filed the caveat does nothing, it expires after six months. It can be extended.

Assuming that the person who filed the caveat has described to you the nature of their issue, your next step might be to negotiate or mediate with them to try to resolve it. This will depend on what the issue is, of course.

If negotiation is not appropriate or doesn't work, you have another option. You may apply to the court to expunge the caveat. Basically this means that you want the judge to tell your sisters to start a court action on their issue by a certain time or the court is going to remove their caveat so you can get on with the estate.  The court isn't going to allow someone to hold the estate hostage for their own amusement or because they simply don't like you. At the risk of sounding cynical, I know that sometimes people really do throw caveats around just to upset others.

Check to see whether there is a caveat filed, or ask the lawyer to do this. If it turns out that your sisters have no real issue and are just being obstructive, they will most likely be ordered by the court to pay your legal fees. If there is a real issue and the caveat has been filed for a legitimate reason, your legal fees for anything to do with the caveat should be paid out of the estate. If this means that the estate is eaten up and the beneficiaries don't get anything, so be it.

Monday, January 8, 2018

The executor doesn't keep the estate assets so why should he keep the debts?

I frequently receive questions here on my blog as well as in person about the exposure of the executor when there are debts in an estate. Something that I see often is an estate where there is no will and nobody in the family will step up to become the administrator because they are afraid of personal liability for the deceased's debts. It's time to get some better information out to people since there seems to be a general misunderstanding about what the executor or administrator is getting into.

An executor is not personally liable for the debts of the deceased or of the estate. That's a pretty hard-and-fast rule.

Recently a reader told me that the car leased by the deceased person had to be returned and this created a bad credit situation. The reader asked me whether the bad credit would now be transferred to the executor. The answer is that no, the bad credit will not affect the executor. Why would it? The lease was not in the executor's name. The payments for the lease were not coming from the executor. All the executor did was step in to return the car after the deceased passed away.

I hear similar questions where the deceased had a credit card balance. Executors and administrators fear that if they are the ones who send the death certificate to the credit card company and tell them that there isn't going to be enough money to pay them off, that the credit card folks will somehow transfer the debt to them.

It doesn't work that way. A creditor can't just decide that someone else is liable for a bill that they are simply not liable for. That includes executors.

An executor's responsibility is to use the estate assets to pay off the estate debts. Sometimes there isn't enough money to go around and the executor has to either rank the creditors in order of priority or pay them all off in part. But the executor is certainly not expected to pony up his or own money to top up someone else's debt.

Look at it this way. The executor doesn't get to keep the assets of the estate, so why should he or she have to keep the debts? The executor only has to pay the debts personally if he or she pays the estate money out to him/herself or to beneficiaries without paying debts first.

Monday, January 1, 2018

The why and the how of undue influence allegations

I've received a few questions lately from readers who want to know more about undue influence and how that concept is used to challenge a will. This seems like a good topic to look at more closely. This one is going to be packed with legal info, so be prepared to take notes!

There are three basic elements of undue influence:
1.  Someone influenced the testator in some way, such as threats, force, trickery, lies, persuasion, shaming, isolation, control over daily living, or persistent requests. It could be a combination of more than one method.
2.  The influence overpowered the testator’s mental or emotional freedom so that the testator felt he or she had no choice but to go along with it.
3.  The testator made a will that he or she would not have made without that influence.

If you allege undue influence against a specific will in court, you have to prove that all of these elements existed. Proving one or two of them is not enough. The end result of all of these elements is that the testator ended up signing a will that was more about what the influencer wanted than what the testator wanted. In our legal system, a will like that is not valid because the testator did not make it freely and voluntarily.

Here are some examples of situations in which a person was unduly influenced to make a will that he or should would not have made otherwise:
- An elderly mother is persuaded by her youngest (adult) daughter to make a will that leaves out all of the other children. The youngest daughter does this by telling her mother repeatedly that the other children don’t really care about their mother the way the youngest daughter does and by presenting the actions or words of the other children in falsely negative ways.
- A disabled, elderly man is told by his caregiver that unless he makes a will leaving a significant sum to the caregiver, the caregiver is going to put him into a home where he will be alone and mistreated.
- A son takes his elderly mother to a lawyer and directs his mother to make a will leaving her house, which is almost her entire estate, to the son. He rushes her through the process, and answers questions for her when the lawyer asks them. She doesn’t want to get her son into trouble and is confused as to what is going on, so she just signs the will.

As you can see from looking at these examples, the evidence will include a lot of testimony from family members about what other people did or didn't do. There will be quite a bit of blame and finger-pointing.

There are two major steps in the process of proving undue influence. The first is a chambers application. Chambers is an open courtroom but the procedure is not a full trial. The purpose of the chambers application is very specific: you are there to prove that there is a genuine issue of undue influence that must be heard by a trial judge.

A trial is a long, stressful, expensive process. The reason you go through chambers first is so that the court can weed out the cases that should not be going to trial. The chambers judge is not deciding whether or not you have a good chance of winning; he or she is only deciding whether there is a real issue to go to trial. This step is necessary because, as you can imagine, estate litigation is an emotional powder keg. Sometimes people are challenging wills because they think the will is unfair or they are greedy or they just really hate the people who are getting the estate. People can be emotional rather than rational when it comes to their reasons for challenging an estate. None of those things mean the testator was unduly influenced, so the judge will try to rule out the cases that are being brought for no good legal reason.

If you lose the chambers application, you are not permitted to sue the estate for undue influence. If you win the chambers application, your matter will be given a trial date.

The second major step is the trial itself. This is where the witnesses are called and documents are examined and the trial judge hears all of the evidence. At the end of the trial, the judge will decide whether or not the testator was unduly influenced into making a will that he or she did not really want. 

You will find that it could well take years to get through both of these steps. Leading up to the trial, you will be involved in taking affidavits, examinations for discovery, filing documents, and possibly many other steps. Be sure you can make this kind of commitment if you're thinking of challenging a will.

Friday, December 29, 2017

UK's National Trust to inherit millions from businessman who has dementia and cannot change his will

Have you ever thought about what might happen if you don't keep your will up to date?

In 1990, Michael Collins, described as a millionaire property tycoon, made a will leaving his estate to the National Trust, a British charitable organization that acquires and preserves historic and natural properties. He and his wife, Christine Collins, did not have children and they intended to leave their entire estate to the charity when they both pass on.

Christine Collins died in 2014. Michael Collins is now 78 years old, has dementia, and is no longer capable of handling financial or legal affairs. This means he cannot make a new will. In accordance with Mr. Collins' current will, when he dies the National Trust will inherit about 5.5 million UK pounds (about $9,300,000 Canadian).

So what's the problem? Mr. Collins' friends and family say that he now hates the National Trust. He and Mrs. Collins apparently had a dispute with the National Trust back in 2005 when they clashed over plans for a bird sanctuary. After that, Mrs. Collins apparently switched her interest from the National Trust to the local Opera House and the local theatre. However, they never did change their wills.

In 2007, Christine Collins tried to get the court to agree to a new will on behalf of her husband, who by then had dementia and couldn't change it himself. The court would not agree. Mrs. Collins died in 2014 and her assets all went to her husband.

The report on this case in The Telegraph (click here to read it) quotes several of the Collins' friends expressing outrage that the funds are eventually going to go to the National Trust when it's not what the Collinses want.  But does nobody see the danger of allowing the court to dismiss a completely valid will based on the fact that "everybody knows" it's not what the testator wants? What a slippery slope that would be, if the court started listening to what everyone else thinks about someone's will. No will on earth would ever make it through probate.

As mentioned, in 2007 Mrs. Collins tried to get the court to make a statutory will for her husband. This is allowed in only one or two jurisdictions in Canada. The idea of it is to allow a legal representative to approach the court and create a will for a person with a mental disability. My understanding of this type of law is to ensure that the family of a disabled person are protected and that no assets are left undistributed. I have never heard of it being used to displace a will made by a person when he or she was mentally fully capable because other people didn't think it was applicable any more. I'm not surprised in the least that this did not work.

If it really is the case that Mr. Collins hates the National Trust - and there is really no evidence of that - then he should have changed his will sometime after he had a falling-out with them. It's up to each of us to keep our documents up to date; it's not up to the courts to listen to our friends about what they think we want.

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