A charity’s pursuit of $400,000 in missing estate funds should remind testators just how important it is to choose the right executor.
According to a recent CBC news story, the Heart and Stroke Foundation of Canada has launched a lawsuit to recover funds it claims were misappropriated from the estate of a Manitoba man who named the charity as the sole residual beneficiary of his estate.
The charity’s lawsuit accuses one of the co-executors of withdrawing six-figure sums from the estate bank account for his own benefit, and of transferring smaller amounts to members of his own family who were not named as beneficiaries.
It’s an extreme case, and none of the allegations have been proven in court, but there are still lessons testators can take to boost their chances of a more straightforward administration of their own estate after they’re gone.
The job of executor is an undeniably tough one, and testators often struggle to pick someone suitable because of the commitment that is required: estate trustees are often in the role for at least a year, gathering financial information, signing forms, filing taxes, paying off debts and distributing assets under the estate.
And while they are usually able to seek help from lawyers, accountants and other professionals, it’s the executor who is expected to coordinate any necessary work.
On the flipside of the coin, the responsibility associated with the position of executor can put the estate at significant risk of abuse if the testator makes the wrong choice – sadly not everyone can be trusted with this kind of power.
If nobody among your friends and family fits the bill, it may be worth approaching a trust company to administer your estate instead.
And if you intend to leave money to a charity, it’s a good idea to let your other beneficiaries know about your plans. Many people leave money to good causes or non-profits when they have no other close family, but if there are other potential heirs expecting an inheritance, the chance of an expensive estate dispute is much higher if the charitable bequest takes them by surprise.
Charities themselves usually appreciate some prior warning too, so that there are no misunderstandings about the terms of the gift.
For example, when people donate real estate, charities typically accept the bequest in cash after the property has been sold by the estate trustee. However, some property may be of use to the charity and they may prefer to keep it if consulted ahead of time.
Smaller institutions may also be more open to the views of potential donors on specific uses their money could be put to after they’re gone.
Estates are subject to different tax rules than individuals, so it can take some work to figure out the most tax efficient way to make a donation. But with the assistance of a good lawyer and accountant, you can put together an estate plan perfectly tailored to your individual situation.
Disclaimer: The content on this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this website are advised to seek specific legal advice by contacting members of Laredo Law (or their own legal counsel) regarding any specific legal issues.