Advocate Jan 2014

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26 VOL. 72 PART 1 JANUARY <strong>2014</strong> THE ADVOCATE Langston, who died in 2010 at age 90; and Barry Landen, Agnico’s former vice-president of investor relations, who also served for many years as Mr. Penna’s financial counsellor. A grant of probate of Mr. Penna’s will was never sought and the charities mentioned in the will were not given formal notification of their bequests. Mr. Landen arranged matters so that he was in sole control of the estate. Estate assets were misappropriated and mishandled by Mr. Landen to such an extent that Lorraine Penna received no money from the estate and the charities gave up hope of ever receiving their gifts. In 2010, 14 years after Mr. Penna’s death, Mr. Landen was found guilty of civil contempt and committed to imprisonment for 14 months. 13 Another recent case illustrates that a trusted professional is not beyond temptation when serving as an executor. A lawyer who practised law in Nelson, B.C. from 1978 to 1990 was the sole executor of the $1,062,000 estate of John Alexander George, who died in 1988. The executor properly paid out $563,000 to some beneficiaries but used the balance of estate funds to finance a personal real estate investment which failed. In a 2010 B.C. Supreme Court decision, 14 the executor was found guilty of theft and fraud. Ultimately, the beneficiaries who had not received their bequests were paid out of the B.C. Law Society Special Compensation Fund. An executor is in a position of power. The person for whom the executor acts is dead, and beneficiaries are not likely to bite the hand that feeds them. Executors may have good reputations, but their true character is revealed by the manner in which they exercise their power. A Delay in the Distribution of Property Before estate assets are distributed, executors need to take whatever time is necessary to ensure that all estate liabilities are satisfied and any claims by dependants are settled. In the case of income tax liabilities, an executor has a personal interest in obtaining a tax clearance certificate, because, if this is not done, the executor is personally liable, to the extent of any property distributed, for any tax, interest or penalties owing by the estate and the deceased. 15 The necessary delay in the distribution of estate assets has the unfortunate consequence of postponing the discovery of any misconduct by an executor. In the case of the Penna estate, the misappropriation went undetected for several years, by which time estate assets had been dissipated. Unless a will provides otherwise, an executor is entitled to an annual fee based on the value of estate assets. 16 Thus any lengthy delay in the distribution of estate assets works to the advantage of the executor. Today, the dis-
THE ADVOCATE VOL. 72 PART 1 JANUARY <strong>2014</strong> 27 tribution of an estate is not as protracted as that described in Bleak House, in which “Jarndyce and Jarndyce dragged its dreary length before the Court”. 17 but there would appear to be little incentive for an executor to act with dispatch. Loss of Privacy From seclusion in a location known only to the will-maker and possibly a few others, a will admitted to probate enters the public realm. Whereas gifts made during one’s lifetime can be kept confidential, bequests under a probated will are open to public inspection. Few wills are of interest to the public, but there are those who are given the opportunity to read a will without having to search the court registry. Wills admitted to probate are required to be circulated to specified family members and to named beneficiaries. Such circulation enables comparisons to be made that can lead to lingering animosities. A will-maker may not be concerned that his or her wealth becomes known at death, but, of course, it is the surviving family members who must deal with any after-effects of publicity. Questions about Will-makers Transfers of wealth on death can be effected by various instruments other than wills, such as life insurance policies, RRSPs, annuities with guaranteed terms and documents of joint ownership with right of survivorship. When such documents take effect, the mental capacity of the person who initiated the document is not normally called into question. By contrast, when a will comes into effect, the mental capacity of the will-maker at the time of making the will can become an issue. Beneficiaries are the focus of a will, but the will-maker, even though dead, is not exempt from review if testamentary capacity is disputed. Involvement of the Courts Of the many documents that transfer assets, a will may be the only one that requires approval by the courts. Unless an estate is very small, 18 a grant of probate is required. The involvement of the courts ensures that justice will be pursued, but, of course, the legal process brings into play centuries of precedents and practices that can trip up the unwary. A hospital carries out various tests to ensure that a newly admitted patient is properly treated, and a probate court considers various matters to ensure that a person’s last requests are carried out. One difference is that a hospital visit may be unavoidable, whereas probate can be avoided if assets are transferred outside a will.
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Because not everyone is this lucky.
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Advocate Jan 2014

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