Blog

Smart Beneficiaries Choose Their Battles Wisely

As a beneficiary of a deceased estate, it can be a challenging and emotional time. You may feel uneasy about not having control or trust in the executor or administrator. Seeking legal advice is a sensible course of action, but exercising patience and judgment is often the best advice for beneficiaries.

Many beneficiaries tend to think of lawyers as being combative, often engaging in lengthy and expensive legal battles. However, such an approach is often counterproductive when it comes to estate matters.

Two critical factors, legal costs and maths, should be taken into account before pursuing any legal action. A hypothetical example can help to illustrate the point.

Suppose John Smith’s estate is worth $80,000, and he has divided it equally among his four children, Steve, Bob, Jane, and Kate. Steve is the executor and is entitled to be reimbursed from the estate for his reasonable costs, including legal expenses.

Kate notices that Steve has spent $800 on a skip bin when he could have obtained the same service for $400. She is also dismayed that Steve gave away John’s furniture instead of selling it, which she thinks could have been worth about $1,000. She hires a lawyer to write to Steve, which costs her $550. As Kate is not an executor, she is not reimbursed by the estate.

The most likely outcome is that Steve instructs the estate’s lawyer to respond, disputing Kate’s claims. The estate incurs legal costs of $660.

Suppose Kate wants to pursue the matter further. In that case, she would then need to take court action, which can be a substantial expense. Even in the best-case scenario where Steve immediately agrees to reimburse the estate for the difference in the skip bin cost and the value of the furniture, Kate would still be in a worse position.  Kate’s legal costs and the costs to the estate in defending the

Item Amt $ 25% share of Estate 20,000 Less 25% of Steve’s legal costs -165 Less her legal costs -550 Plus 25% of Steve’s compensation 350 Total 19,635

As you can see from this example, arguing about estate property is often not a rewarding exercise. Executors are usually reimbursed by the estate, tipping the balance of costs in their favor. Engaging in heated and prolonged debates with the executor’s lawyers can significantly reduce the amount that beneficiaries ultimately receive.

While there may be instances where beneficiaries need to assert their interests, the costs and benefits of each issue should be balanced objectively. Dealing with all the issues at once at the end of the administration, usually through a review of accounts by the Supreme Court, can be a better option. Allowing the executor to get on with the job, even imperfectly, can maximize the amount available to be distributed to beneficiaries.

Good lawyers won’t blindly follow instructions but will provide frank and objective advice on what is and isn’t worth pursuing. As a beneficiary, it’s essential to choose your battles wisely, exercise patience, and take a pragmatic approach to estate matters.