What Happens When Co-Executors Disagree?

Conor Kopczynski

When a person passes away, their Will often names a personal representative, also called an executor, to handle their estate. In some cases, the Will names multiple executors (or co-executors) to share in this responsibility. A potential issue that arises when appointing co-executors is that they may not agree on every decision, causing disputes amongst themselves. Understanding what happens when co-executors disagree can help families avoid delays in estate administration.

What is the Role of an Executor?

An executor is responsible for managing the deceased’s estate. This includes:

1. Identifying the estate assets and liabilities;
2. Administering and managing the estate;
3. Satisfying debts and obligations of the estate; and
4. Distributing and accounting for the administration of the estate.

When there are multiple executors, they must work together to make these decisions, as required by section 37 of the Estate Administration Act:

Concurrence of personal representatives

37 If there are 2 or more personal representatives, they must act unanimously unless the will directs otherwise or the Court orders otherwise.

Common Causes of Disagreements Among Co-Executors

There are several reasons why co-executors may disagree on an issue. Some common disagreements include:

1. Valuation of assets: Executors must assign values to estate assets, like property, investments, or personal belongings. Disagreements over these values can be a cause of conflict. This was seen in the recent case of Brodylo Estate, 2023 ABCA 314, described in further detail below.
2. How to manage or sell assets: Executors may have different opinions on whether to sell or retain certain assets, especially if the family members have emotional attachments.
3. Communications with beneficiaries: Executors might disagree about how much information to share with beneficiaries or how to handle specific requests from them.
4. Conflicting personal interests: Executors who are also beneficiaries may prioritize their own interests, leading to disputes with others who have different priorities.

The Role of a Majority Rule Clause

To prevent or resolve disagreements, some wills include a “majority rule” clause. This clause allows the majority of executors to make decisions if there’s no unanimous agreement. For example, if there are three co-executors, a majority rule clause would allow two of them to decide on an issue, even if the third disagrees.

While a majority rule clause may seem like a practical solution, it doesn’t always work as intended. Executors still have legal responsibilities to one another and to the estate’s beneficiaries. The majority cannot ignore these duties just because they have a majority vote.

Veto Powers

Another option to prevent or resolve disagreements is to include a “veto power” clause. This allows one executor to make a decision should the co-executors be unable to reach a decision unanimously.

For example, if there are two co-executors, a veto clause would allow one of them to decide on an issue, even if the other disagrees.

Like with a majority rule clause, an executor with veto power still must uphold their responsibilities to their co-executor and the beneficiaries of the estate, and cannot use this power to simply act in a unilateral manner.

Can the Court Intervene?

If co-executors cannot resolve their disputes, they may need to seek help from the courts. The court has the power to provide “advice and directions” to help resolve specific issues. In serious cases, the court can even remove an executor who is not fulfilling their duties or acting in bad faith.

In the Brodylo Estate case, the Alberta Court of Appeal reaffirmed that even with a majority rule clause, all co-executors must be fully informed and have the opportunity to make decisions based on accurate information. In this case, one co-executor refused to approve the probate application because she believed the asset values were inflated and was not given enough information to support the values. The Court sided with her stating that majority rule cannot override the fiduciary duty co-executors owe to one another.

How to Avoid Co-Executor Disputes

There are several steps that can be taken to help avoid disputes between co-executors:

1. Appoint the right people: When planning your will, carefully consider who you’re appointing as executors. Choose individuals who you believe will be able to work together.
2. Provide clear instructions: Make your wishes as clear as possible in the will, especially regarding how major assets are to be dealt with. The more detailed your instructions, the less room there is for disagreement.
3. Consider appointing a neutral third party: If you’re concerned that family members may not get along, you can appoint an independent third party, such as a trust company, to serve as executor.

Conclusion

While appointing co-executors can be a good way to share the responsibilities of estate administration, it can also lead to disagreements. Executors should stive to communicate openly, fulfill their legal duties, and seek professional help if needed. By carefully planning and providing clear guidance, you can minimize the risk of conflict and ensure your estate is administered smoothly.

The lawyers at Vogel LLP regularly assist clients with the appointment of executors under a will and resolving disputes of co-executors when they arise, including through alternative dispute resolution and Court intervention.