When you pass away, your executor takes responsibility for managing your estate, distributing your assets, and communicating with your beneficiaries.
It can be a lot of moving parts and a lot of responsibility, but it’s all necessary for a successful estate settlement. That’s why there are things an executor cannot do, and if executor misconduct occurs, it can have serious legal consequences–and can even result in criminal charges.
In this article, we’ll discuss what is considered executor misconduct, its legal consequences, and how testators and beneficiaries can prevent it from occurring.
What is Executor Misconduct?
Executor misconduct is when the appointed executor fails to fulfill their responsibilities or abuses their position of trust. Legally, this could include any or all of the following:
- A breach of fiduciary duty to act in the best interests of the estate and beneficiaries
- A violation of probate laws and court orders during the period of their role as executor
- A failure to properly administer the estate according to the will or intestacy laws
What happens when executor misconduct occurs?
Executor and estate trustee misconduct can lead to lost, stolen, or damaged assets, reducing beneficiaries' inheritances. It can also lead to improper distribution, delays in beneficiaries receiving their inheritances, or even potential tax liabilities or penalties for the estate.
Socially, it can diminish trust between the executor and the beneficiaries or cause conflict between multiple estate stakeholders depending on the degree of executor misconduct (for example, a failure to settle debts).
Executor misconduct can also lead to legal action, court cases, and additional legal fees.
What Are Examples of Executor Misconduct?
1. The executor engages in personal use of estate assets without authorization
- Using estate funds for personal expenses or purchases
- Living in or renting out estate property without authorization
- Borrowing money from the estate without approval
2. The executor fails to communicate with beneficiaries
- Not providing regular updates on estate administration
- Refusing to answer beneficiaries' reasonable questions
- Withholding important information about estate assets or debts
3. The executor mismanages or neglects estate assets
- Failing to properly maintain or insure estate property (like a home, artwork, or jewelry)
- Making arguably poor investment decisions that deplete estate funds
- Not paying taxes or debts where necessary, resulting in penalties to the estate or beneficiaries
4. The executor acts in their own best interest instead of the best interest of the estate and heirs (conflict of interest)
- Self-dealing by selling estate assets to themselves at below the market value
- Favouring certain beneficiaries over others
- Hiring friends or family for estate services at inflated rates
5. The executor delays estate distribution without a valid reason
- Unnecessarily prolonging the probate process
- Withholding inheritances from rightful beneficiaries
- Failing to distribute assets in a timely manner as outlined in the will or based on common estate law guidelines like the executor’s year
6. The executor uses estate funds illegally
- Stealing money or assets from the estate
- Embezzling estate funds through fraudulent accounting
- Mixing personal and estate funds
Beneficiaries who suspect executor misconduct can document their concerns and consider consulting a probate attorney to review their legal options.
Legal Consequences of Executor Misconduct
The severity of legal consequences for executor misconduct typically depends on a few factors, including whether the misconduct was intentional or negligent, the extent of financial damage to the estate, the executor’s willingness to fix issues, and their overall pattern of behaviour in their role as executor.
The following is an example of the potential legal consequences for different types of executor misconduct:
How to Prevent Executor Misconduct
Step 1: Choose a trustworthy executor
When estate planning and making your will, pick someone who is responsible, ethical, and financially savvy as your executor. Make sure to discuss the role and its responsibilities with any potential executors before putting their names down.
You can also name co-executors to help spread the workload and keep executors accountable to each other. Backup executors can be named in case something happens to your first pick. In some cases, naming co-executors may slow down the estate settlement process if they’re always required to make decisions together.
Help them fulfil their responsibilities with a free estate executor checklist →
You can also consider appointing a professional executor, such as a lawyer, bank, or other professional, to take on the role. Remember that being an executor isn’t easy. A professional charges a fee, and even friends and family who are executors are entitled to compensation if it's reasonable.
There are provincial guidelines for executor compensation, but you can specify the compensation amount in your will as well.
Learn about executor fees in Ontario →
Step 2: Keep your will up-to-date
Review your will every 6-12 months. Is your will accurate for your current estate? Are your wishes still the same now as when you wrote it? If things have changed, it’s important to update your will to reflect it.
Updates are especially important if your relationship with your executor has changed or you no longer think they could handle your estate without help. With Willful, you can update your documents anytime, anywhere, for free.
Learn how to change the executor in your will →
Step 3: Prepare your beneficiaries
Inform beneficiaries of their rights and the executor's responsibilities towards their best interests. Make sure they’re aware of how and when they can ask for updates on estate audits, and let them know how they can help make the executor’s job easier.
By preparing your estate and making sure your loved ones know how estate settlement works, you’ll help them keep their stress levels low and their expectations accurate. You’ll also give them the tools they need to recognize executor misconduct.
Addressing Executor Misconduct: Steps for Beneficiaries
If you are a beneficiary and suspect executor misconduct, there are steps you can take to address it:
- Document concerns and evidence: Keep detailed records of any suspicious activities or transactions, maintain copies of all communications with the executor, and gather financial statements and estate documents where relevant.
- Communicate with the executor: Talk to the person(s) themselves. Express your concerns in writing and request explanations for the issues you’ve encountered. Be aware of what an executor must disclose to beneficiaries. You may also want to ask for a full accounting of estate assets and transactions.
- Consult with an estate attorney: If the executor's misconduct issues cannot be resolved after communicating with them (or due to a lack of communication on the executor’s part), seek legal advice to understand your beneficiary rights and what options are available to you.
- Request a formal accounting: If the executor is uncooperative, petition the court for a full accounting of the estate.
- Based on the results of the formal accounting;
- File for executor removal: Submit a petition to the court with evidence of misconduct and request the appointment of a new executor or administrator to handle the deceased’s estate.
- Consider mediation: Explore mediation as a potential way to resolve disputes before estate litigation
- Pursue legal action: Depending on the severity of the misconduct, you may have grounds to file a lawsuit against the executor for breach of fiduciary duty. If this is the case, seek damages for any losses to the estate caused by misconduct.
In each step, it’s important to have all relevant information and understand what legal options are available to you. Because executor misconduct can potentially escalate to criminal charges, evidence for each stage of the proceedings is crucial.
Real-Life Cases of Executor Misconduct
Case Example 1: The Self-Dealing Executor
An executor named John was appointed to manage his uncle's $2 million estate in Ontario. Over the span of the two years following his uncle’s death, John:
- Lived rent-free in the deceased's home
- Used estate funds to pay personal credit card bills
- Sold the deceased's classic car collection to himself at below-market prices
Beneficiaries of his uncle’s estate grew suspicious of delays in their inheritances and the estate settlement along with the lack of transparency. They hired an attorney who uncovered John’s misconduct through a court-ordered accounting.
Resolution:
- John was removed as executor and ordered to repay over $500,000 to the estate
- A professional executor was appointed to complete the administration of the estate
- John faced criminal charges for embezzlement
Case 2: The Negligent Executor
Emily was named executor of her father's estate, which included a small business. Emily:
- Failed to properly insure business assets
- Neglected to file tax returns for 2 years
- Did not pay outstanding creditors, resulting in lawsuits
Because of Emily’s inaction, the estate incurred significant penalties and legal costs.
Resolution:
- Emily voluntarily stepped down as executor
- A court-appointed administrator salvaged the remaining assets of the estate
- Emily was not held personally liable, as misconduct was due to negligence rather than malice
Frequently Asked Questions
Can you sue an executor of a will in Canada?
Yes, it is possible to sue an executor of a will in Canada under certain circumstances.
Beneficiaries or the court can take legal action against executors for breach of fiduciary duty if the executor fails to act in the best interests of the estate and beneficiaries.
Executor misconduct can include misuse or mismanagement of estate assets, failure to properly account for estate transactions, extended delay in estate administration without a valid reason, self-dealing or conflicts of interest, or failure to properly communicate with beneficiaries.
What are the ethics of an executor?
An executor has a fiduciary duty to act in the best interests of the estate and its beneficiaries, which means they’re required to manage the estate's assets honestly, prudently, and impartially.
They must avoid conflicts of interest, maintain accurate records, and communicate transparently with estate stakeholders, like debtors or beneficiaries. An ethical executor diligently fulfills their responsibilities, fairly distributes assets according to the will, and refrains from using their position for personal gain.
Can an executor be liable?
Yes, an executor can be held personally liable for mistakes or misconduct in administering an estate under their responsibility.
Because they have a duty to act in the best interests of the estate and its beneficiaries, executors can face legal consequences if they breach this duty through negligence, mismanagement of assets, self-dealing, or other improper actions.
Potential liabilities include being required to repay losses to the estate, removal from the executor position, and even criminal charges in cases of fraud or theft.
Is executor misconduct a criminal offence?
Executor misconduct can potentially be a criminal offence in severe cases.
The Canadian Criminal Code contains provisions that could apply to executor misconduct, such as theft (section 332), criminal breach of trust (section 336), and fraud (sections 386-388), depending on the nature and severity of the misconduct.
What happens if the executor steals?
If an executor steals from the estate, they have failed their duty towards the deceased, their estate, and their beneficiaries. They can face serious legal consequences for the theft, including removal from their position, being ordered to repay stolen funds or assets, and potentially facing criminal charges.
The executor may also be held personally liable for damages to the estate and could be subject to civil lawsuits from beneficiaries who want to recover stolen, misused, or resold assets.
Don’t leave your executor up to chance
Executor misconduct is, unfortunately, all too possible if the wrong person gets appointed to manage your estate. Take control today by choosing someone you trust to be your executor and give yourself peace of mind knowing your loved ones are protected.
