How to Avoid Beneficiary-Executor Conflict

Posted 21 Nov 2019 by Natalie LeBlanc


The passing of a loved one is already a difficult experience to go through. Add in an unknown financial situation for that loved one, and it can reveal a host of other issues for the surviving family to contend with. When a loved one leaves behind financial assets, the disbursement of those assets sometimes causes hard feelings or outright fights between family members. But what does the bickering accomplish?

The most common types of investment accounts, RRSPs and TFSAs, allow the naming of beneficiaries to receive the funds when you pass away. It leaves little room for fighting as your wishes are recorded in writing.

Other, non-registered, accounts and financial assets, however, may be left to the Will to determine who receives what. It is here that beneficiaries of the Will sometimes think they have more power than they actually do. The person who actually administers the estate at this point is the executor/executrix, not the beneficiaries. For those that aren’t familiar with estates, this can come as a surprise.

Beneficiaries certainly have the right to ask questions about their interest in the estate, like the listing price of a house whose sale funds their inheritance, but the executor holds the power to sign off on the sale.

Carefully selecting your executor is a crucial part of avoiding conflicts amongst your beneficiaries. If your beneficiaries perceive that you are playing favourites, it sets the stage for bad relations when the time comes to make decisions about your estate.

The most straight-forward way to avoid conflict arising between beneficiaries or your executor is to have a conversation with each of them, separately or together, so everyone knows their roles, and the donor’s expectations of their process, ahead of time. This isn’t unusual, your Will shouldn’t be a surprise to your family (unless, perhaps, when your situation is unique and requires attention to other details).

Your executor will be better equipped to make smart decisions that keep everyone happy if they have professional advice guiding their process. Consider introducing your financial advisor to your executor so they can work together upon your passing to disburse your estate as you wish.

Above all else, develop a plan if you don’t have one. It will save your family time, money, and stress knowing you’ve taken care of the details and recorded what you want done.

 

Source: https://www.advisor.ca/tax/estate-planning/how-much-power-do-beneficiaries-actually-have/