Sometimes, a beneficiary simply refuses to be reasonable.
This is particularly common with respect to accounts prepared by the estate trustee. These recalcitrant beneficiaries will not sign a release, and will not approve the accounts. Often, they will threaten repeatedly to ‘take the estate trustee to court’ or ‘force them to pass accounts’, although often these threats are not acted on, regardless of what information (including detailed supporting documentation) the estate trustee provides to justify the estate accounts.
Pass your accounts!
If you are an estate trustee faced with a situation like this, the solution almost invariably is to unilaterally move forward to pass your accounts. Passing your accounts is the way to avoid being held hostage by a beneficiary. Often estate trustees are reluctant to initiate this step because of the costs and the need to retain counsel. Our advice is: chose good counsel, and move forward, because the only way to end the delay and grief is to get court approval. It is particularly important to remember that ‘delay alone costs money’ particularly where there are funds that could be employed by the beneficiaries once distributed, so it is best not to spend an inordinate amount of time trying to mollify or reach agreement with an unreasonable beneficiary.
When an estate trustee ‘passes their accounts’, the accounts are reviewed, and if appropriate, approved, by the Court. While the beneficiary might contest them, ultimately, the only person that the estate trustee needs to convince as to the reasonableness of the accounts is the Court.
When an estate trustee passes their accounts, the costs are usually borne by the estate. If no beneficiary contests the accounts, then it is unlikely that the estate can recover the costs of the passing from any one beneficiary. On the other hand, if a beneficiary contests the accounts, then the usual ‘costs rules’ apply, and if the estate trustee prevails it may be possible to recover a portion of the legal fees incurred by the estate trustee from the unreasonable beneficiary.