Death, Disputes and Disarray
The passing of a loved one is a difficult time, however to then be appointed as executor of the estate can add to the heartache and difficulties.
Disputes between beneficiaries are all too common and when an executor is also a beneficiary, it just adds to the challenges of the role. Let alone sorting out the record keeping in the estate. While not limited to age, the financial records maintained by the elderly can leave those around them struggling to understand what assets and liabilities they actually have.
That’s where we come in.
Engaging a forensic accountant is often the best option to assist with a smooth realisation and distribution of the estate. The forensic accountant can independently review the records and verify the assets and liabilities of the estate.
As an executor, if you were presented with the proverbial “shoebox” of records, could you be sure you were able to identify all of the available assets (and liabilities)? Obviously engaging a legal practitioner to provide the necessary guidance in legal compliance and requirements is beneficial. A forensic accountant will work hand-in-hand with a legal practitioner to review the financial information. The forensic accountant can piece together incomplete records and is skilled in reviewing records to locate difficult to find or hidden assets.
Forensic accountants are engaged for potential disputes between the beneficiaries. Even if the executor is not a beneficiary, it is beneficial to have an independent party confirm the assets, verify the value of those assets, determine the liabilities then to verify the eventual distribution. Of course, it will not guarantee that the parties in dispute will be accepting of the result; however it often assists in possible future litigation when the executor acts in accordance with an independent expert’s recommendations.
A few years ago, we were involved in a dispute between beneficiaries. There were two beneficiaries of the deceased estate, however only one of them was the sole executor of the will. The executor realised the assets of the estate, and paid some of the proceeds directly into their private account. Both private expenses and expenses of the estate were paid from the asset proceeds. When the other beneficiary realised the funds were not paid to an account in the name of the estate, legal proceedings were commenced.
The Court ordered the appointment of an independent expert to determine the actual value of the assets of the estate and to determine which expenses were paid from the proceeds of the sale of those assets for the benefit of one beneficiary only. It was determined that the executor had received their entitlement and the balance of the funds that remained represented the entitlement of the beneficiary. It is not clear if it was intentional or from a lack of understanding.
We say to you, in matters of death and money—if in doubt, don’t. We’re happy to help.