Episode 64 - How Executors Can Avoid Insolvent Estate Pitfalls with John Sandrelli
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Nicole 00:00:02 Hello and welcome to Your Estate Matters presented by Heritage Trust. Your Estate Matters is a podcast dedicated to everything estates, including building and preserving your legacy. If it's estate related, we'll be talking about it. We're having the conversations today that will help Canadians protect their families, their assets and their legacies tomorrow. John, thank you so much for joining us.
Nicole 00:00:34 My pleasure. So you've spent your career in restructuring and insolvency, mostly on the corporate side. So tell us about this particular issue of insolvent estates.
John 00:00:43 As you note, Nicole, the area is not my focus day to day, but I became interested in the area when I was involved as managing partner of the Dentons office, building out our trust in estates practice by recruiting experts like yourself, so really became more knowledgeable about the the area and in those discussions, it became apparent to me that many individuals who become involved with the States do not have a full understanding of the implications when an estate is underwater. I thought I could help to educate those in the area, and I did have a couple of cases historically where I was involved in solving the states.
Nicole 00:01:16 So how common is this really? Like when you say in estates insolvent, are we talking about rare situations or is this something that ordinary people are regularly running into?
John 00:01:26 You know, it's not very common. No, but it can have significant consequences to Canadian families and they can run into major challenges and risks. And so it is an important area. Notwithstanding that it's not an everyday occurrence, given the state of the economy currently and the challenges for individuals and businesses. People are taking on more debt. I was reading the other day, actually, that total consumer debt in Canada hit a record high of 2.6 trillion by the end of 2025, and I expect it to become more common in years to come because of that circumstance.
Nicole 00:01:56 That's a big number. So let's start at the beginning. So someone passes away and a family member steps in as executor. What are the signs that they may be dealing with an insolvent estate? Like are there warning signals?
John 00:02:09 Unfortunately it's not big flashing red lights that you'd like to see obviously, and give you that indication, but there are a few warning signs.
John 00:02:16 There can be several. There could be a couple. It's very important not to ignore them, even if there's only 1 or 2. Some common examples are, you know, collection calls or demand letters that might be sitting around multiple credit cards with high balances, secured debts exceeding asset values. We'll come to that in a little bit. And again, in this environment, particularly in the Lower Mainland, we've got significant declining real estate values and high mortgages. And sometimes deflation of the values themselves can exceed the debt ultimately. So that can sometimes be an issue. CRA liabilities run filed tax returns. Sometimes we see that and also ongoing support obligations without sort of adequate support mechanisms or life insurance in place.
Nicole 00:02:58 So. Insolvency isn't always obvious right away, is it? Like sometimes it only becomes apparent after the executor starts looking into things. Can you tell us about that for sure?
John 00:03:09 you know, people may really need to look under the hood, do some diligence. You know, again, demand letters sitting around might be obvious, but other signs are not so clear.
John 00:03:18 You may have a case where, you know CRA is not pounding on the door, but tax returns might be delinquent for a number of years and have been dealt with right away. That might not emerge immediately. There is not a stop hotline, so to speak, that you can call to find out whether an estate is insolvent or not. So you really do have to take your time and look around.
Nicole 00:03:36 So say an executor starts to realize that the estate may be insolvent. What should they do right away? Like what are the immediate steps?
John 00:03:45 First thing is stop. And when I say stop, I mean don't take active steps in terms of, you know, distribution. Don't pay any creditors except reasonable funeral expenses. Those have a super party right to get covered. So that's the first thing, really. Pause. Take your time. Think it through. Second would be, you know, complete an asset inventory current appraisals. If you're talking about real estate or other valuable property, not just assessments necessarily, but also look into, you know, vehicles, RFPs, RIFFs, life insurance and note which ones might have designated beneficiaries and those that might not.
John 00:04:20 So really do a complete asset inventory. And then of course, because there is a possibility you've seen 1 or 2 warning signs about the possibility of insolvency, you want to complete a liability inventory. Mortgages. Other secured debts might exist: credit cards, taxes. There is an ability to seek information from CRA to find out what the current landscape is. On the tax side, if there was support obligations, really trying to understand those and various other costs associated with potential liabilities.
Nicole 00:04:50 So I think there's something really important for listeners to understand. So if someone's an executor of an insolvent estate, they can be personally at risk if things go wrong. Can you explain how that happens?
John 00:05:02 Yeah. So just before I turn to that again, because of the possible risk of personal liability, and I'll explain that in a second, it's really important to understand the entire universe of the creditors. And we talked about sort of checking that under the hood and doing that diligence earlier. So a personal representative really is a fiduciary. They owe a duty to the creditors and the beneficiaries, of course.
John 00:05:22 So one who proceeds without recognizing the insolvency risks personal liability for paying creditors out of priority, distributing to beneficiaries before you deal with the creditors incurring expenses that maybe the estate can't cover. The nature of insolvency is there's not enough to go around. As a result, one has to follow a distribution scheme which for insolvency can generally be quite complex. And we talked about sort of the steps that you might want to take if you think an estate is insolvent. I guess the last thing you could do as well is to consider engaging an expert, reaching out to an insolvency trustee who are experts in the area, and can identify some of the risks for you. I guess lastly, if the insolvency is clear and the named executor does not wish to proceed, there is an option not to act. And there's renunciation under the Wills and Estates Succession Act. And you can think about taking that step again, getting some advice before probate is issued and making that determination.
Nicole 00:06:18 So let's talk about the common traps for personal liability.
Nicole 00:06:23 So what is the “at-risk distribution trap”? Can you tell people what that is?
John 00:06:27 Yeah. So we call that the “at-risk distribution trap,” which is essentially distributing money assets incorrectly. And so you've distributed to beneficiaries before creditors are satisfied. As an example, the executor becomes personally liable to repay creditors out of their own pocket up to the value of the assets that are given away. Again, Wessel referred to the Wilson Estate Succession Act as Wesa. It has a couple of protection periods built into it as well. A distribution, a restriction 210 days can protect against Wills variation claims. Separately, notices to creditors can be sent out as well, and that can be a mechanism to assist in protection as well. A practical rule, of course, is that an executor should not distribute until those notice periods expire, and again, making sure the known creditors are being addressed before the beneficiaries.
Nicole 00:07:17 And let's talk about the deemed disposition tax trap so it can catch people off guard, because it's a tax bill that didn't exist the day the person passed away.
Nicole 00:07:26 So can we talk about that?
John 00:07:28 Yeah, absolutely. So some of the listeners might be familiar with the insurance sector, of course. And they offer insurance products that can try to protect against needing to deal with tax obligations on death that arise as a result of a deemed disposition on capital property that occurs on death. So under the Income Tax Act. There's a deemed disposition. So even if that property isn't sold and it's not sold on death, there's a deemed disposition. And as a result, it can be a significant income tax or capital tax obligation. Sort of think about your non principal residence as an example. And again in the Lower Mainland we've seen incredible increases in real estate values over the course of the last several decades. That gain in value. If it's a non principal residence it's going to attract tax and so on death, there's a deemed disposition of that capital asset and that tax needs to be paid. So sometimes that's overlooked by an executor. And it's really important to consider that.
Nicole 00:08:20 Or a large RIFF that it's not rolling to a spouse.
John 00:08:24 Maybe large RIFFs for sure. And there's other, you know, other types of theme dispositions that could trigger that. And again, if CRA is not dealt with by way of either payment or ensuring that there is no obligation, you can obtain a clearance certificate from CRA, there can be personal liability for unpaid tax.
Nicole 00:08:41 So we have multiple estates where people have passed away. There's seven figures owing to the CRA. And, you know, it's not easy to sell capital assets like real estate right now. So it's actually not an uncommon issue that we have it right now on our desk, undoubtedly.
John 00:08:59 And you know, planners, financial advisors, otherwise they really try to bring that to the attention of individuals to make sure that the tax obligation can be covered either by some liquid assets or some sort of insurance product, for sure.
Nicole 00:09:10 So the third big risk is something we often call the “priority order trap”. So, you know, maybe executors might pay whoever seems most aggressive.
Nicole 00:09:20 But that's not the right approach. What would you say about that?
John 00:09:23 Exactly right Nicole. You know, that's why collection agencies exist. And for those that may have been exposed to them, they can be super aggressive. And the natural inclination when you get those calls is to pay them, to get them off your back because they are incredibly aggressive. They don't stop. And that's what their business model is, right? So as mentioned earlier, stopping and recognizing that there's not enough to go around is critical. That needs to change that inclination to sort of get them off your back. Again, as an executive, they're not your debts, right? They're the estate's debts. You think, well, let's make you pay the debt and get this off my back. But again, you can't do that. That's the potential for a personal liability. So you need to treat all appropriately, not necessarily equally. And that means you have to be focused on a priority scheme and ultimately dealing with the creditors in accordance with the legislation that applies.
Nicole 00:10:11 So let's talk about once it's clear the state's insolvent, the executor faces a fundamental choice so they can administer under BC's current law or provincial law, or they can place the state into bankruptcy under the Federal Bankruptcy and Insolvency Act. So can you explain, John, in plain terms, what this means and what the considerations are?
John 00:10:32 Sure. So we'll discuss some of the factors that go into that decision in a moment. But in essence, the decision under the provincial legislation or the federal Bankruptcy and Insolvency Act, has consequences for creditor priorities. Also costs and potential personal representative liability. So again, it's important to sort of give some consideration to that. Let's talk about some of those factors. The provincial legislation, again WESA, is generally simpler and less expensive. There's no trustee fees or other costs associated with that. The executor retains control. And that may be important particularly for a family member. You don't want to just give it off or give the estate over to the trustee and bankruptcy. You may have a personal interest in being involved.
John 00:11:16 The executor can have their expenses paid as a priority claim under that legislation, and if they spent a lot of time early on, that may be an important factor because once there's a bankruptcy, those costs can't be recovered. Under the Bankruptcy Insolvency Act. They're essentially an unsecured creditor at that point. So generally WESA is a recommended choice for smaller, simpler states, and certainly those where an executive wants to continue to be involved in the wind up in the decision making process.
Nicole 00:11:44 When then should someone consider the Bankruptcy and Insolvency Act?
John 00:11:48 Certainly complex estates with multiple assets and creditor claims, and frankly, given that a representative may wish to turn it over to somebody else, executors, particularly family members, we all have day jobs. And it's interesting right now. Actually, my father unfortunately passed away back in November, and so I'm the executor of that and spending time on his estate. And it does take time. And right now I have to do it off the side of my desk. And so there are those cases, particularly in the complex estates, where using your time may not be optimal or wise.
John 00:12:20 And so something to think about in terms of the Bankruptcy and Insolvency Act. There's also again we talked about those very aggressive creditors. Right. So the Bankruptcy and Insolvency Act creates a stay of proceedings of creditors. There's other remedies available under that legislation as well that aren't necessarily available under the provincial legislation.
Nicole 00:12:37 I think something people should understand is even if they choose to proceed under the provincial estate law, creditors could still push it into the federal bankruptcy legislation. Do you want to talk about that?
John 00:12:49 Yeah. No distinction between an estate and other businesses or individuals. There is a bankruptcy legislation in place that does allow creditors to seek to petition an estate into bankruptcy. So sometimes it can be unavoidable. Very low bar. You know, any creditor that's owed $1,000 or more can bring proceedings to put an estate into bankruptcy. It is a court process in the sense that it's not automatic. They have to file that petition and then there's a court hearing. But if that happens, the Bankruptcy Act takes over completely. A licensed insolvency trustee replaces the executor.
John 00:13:23 And again, as I mentioned earlier, it’s important to understand that because if you've done a lot of work as an executor before the bankruptcy, you might not be paid for that work given the way the Bankruptcy Insolvency acts in terms of the priority scheme, if there's a realistic risk of a creditor petition, again, maybe multiple creditors being aggressive. So there's, you know, litigation that's been commenced, there's the collection agencies. There might be a bank that might be foreclosing on an asset. Realistically, a bankruptcy might happen regardless. And sometimes it's better for the executor to initiate that on their own. Because one of the things you can do when you assign an estate into the bankruptcy voluntarily, you can at least take some control over who the trustee is going to be. You know, you may have a good relationship with the trustee bankruptcy. You might know somebody, a good friend works with them, and you can trust that individual. You may have a good relationship with that trustee going forward. And that could be important in terms of how the estate's administered.
Nicole 00:14:20 So let's talk about the provincial scheme under the BC law. What is the priority list of creditors?
John 00:14:30 Under WESA generally you have the funeral and testamentary expenses, of course. And then, as I mentioned earlier, the remuneration of the personal representative comes next. So even in an insolvent estate, and when there's not enough to go around for all the creditors, there is an ability for the executor to be paid reasonable remuneration. So that's important. Legal expenses and administering the estate as well. So again, you should not be hesitant to get a lawyer involved, one who’s familiar with the area because there's an ability to pay. Now I would caution to say there needs to be enough in the estate to pay. And as I mentioned, at the outset, one of the risks of personal liability is incurring expenses that can't be paid. So you obviously need to make sure that there's sufficient assets in the estate to cover those expenses. Wages and salaries of employees, maintenance orders on separation agreements and the like as well.
John 00:15:21 And then there's another sort of waterfall that falls after that. So then a very detailed scheme of distribution under the provincial legislation. Similar but somewhat different scheme of distribution under the Bankruptcy and Insolvency Act.
Nicole 00:15:34 So maybe let's just summarize what are the important differences if it's federal.
John 00:15:38 One of the key things, at least, that the personal representative of the executive needs to understand, of course, and I touched on earlier, is the ability to get paid for your costs associated with acting prior to the bankruptcy. Really important to understand that in a bankruptcy, those expenses become unsecured claims and would share pro rata with other creditors. So that's one of the key differences for sure. So one of the other things that I touched on earlier is that in relation to the income tax obligations, and those could possibly be reversed in terms of any priority in the Bankruptcy and Insolvency Act. The other appreciation you need to understand is the scheme of distribution can be a little bit different. So for example, under the BIA, if you have an operational type business, so often even individuals could be operating their business as an individual, whether it's a retail store, small business, whatever, unpaid suppliers have rights to repossess goods, they can have a priority in a bankruptcy.
John 00:16:38 Crown claims for amounts deducted and withheld, so source deductions and withheld would have sort of a super priority claim that would survive bankruptcy. Claims by employees for unpaid wages as well preceding the bankruptcy. And that's sometimes common where we see again an individual that might have an insolvent estate on passing, but while they were alive, carrying on business that might be insolvent and therefore didn't make certain contributions. So, again, important to sort of look at the two pieces of legislation as to what might make sense in the circumstances.
Nicole 00:17:13 So what assets might be exempt from creditors? I understand there are some restrictions on RFPs and RIFFs. Is that right?
John 00:17:22 So yes, that's correct. So in the estate context, Exempt from creditors means value can be available to the beneficiaries even when the estate is insolvent. So very important to understand that nuance because again, as an executor, again, particularly if you're a family member, you may be biased, for lack of a better word, to see the beneficiaries recover something as opposed to the creditors recovering everything.
John 00:17:47 And so you need to turn your mind to the reality that even though an estate is insolvent as it can't pay all the creditors, that there still might be an ability to distribute money to the beneficiaries, or that might occur as a matter of course. So RFPs and RIFFs as an example, you know, they have designated beneficiaries. Those funds can pass directly to that person, bypassing the estate creditors entirely. If the estate is the beneficiary, the funds could still generally be exempt from creditors under the Bankruptcy Act and the Court Order Enforcement Act. That is, again, something to really appreciate and recognize that you shouldn't be distributed that money just to the creditors, even though you know the creditors aren't going to be paid in full. So you need to consider that there is a clawback on the RFP landscape. If contributions were made within 12 months, those could get clawed back for the benefit of creditors. However, again, recent case law questions whether those exemptions survive death is not crystal clear. So again, really, if there is funding available in the state, getting the necessary legal advice is usually advised.
Nicole 00:18:51 There is a recent case where a widow was a beneficiary of a RIFF, and I think the deceased owed a substantial sum to the CRA. And it was litigated and the widow was permitted to keep the refunds. But there's a lot of nuances to that.
John 00:19:08 Yeah, a lot of nuances. And again, you have to appreciate that in an insolvent context, you can sometimes expect that litigation. Right, because creditors aren't getting paid 100%. So they're going to be looking at their legal rights individuals in your example as well, you know, trying to protect their rights. So it's something that we see. It's very common in the insolvency landscape where there's not enough to go around. There's ultimately going to be litigation and people seeking to recover what they can.
Nicole 00:19:36 So what about life insurance?
John 00:19:37 Under the BC Insurance Act, if an insured has a designated spouse, child, grandchild, parent is a beneficiary and those proceeds are exempt from seizure and don't form part of the estate. So even if the estate is holding the insurance policy per se, that can flow directly to the beneficiaries again, could be subject to challenge by creditors or claimants.
John 00:19:57 So there have been cases where courts have imposed what's referred to as a constructive trust over insurance proceeds, which is essentially a claim that, you know, that party is entitled to the money because it's quote unquote, held for their benefit in trust. And so, again, you need to be certain in terms of the landscape before distributing any proceeds.
Nicole 00:20:18 And so let's talk about joint tenancy. So say a couple owns a house. Joint tenancy. The first spouse dies with an insolvent estate. What happens to that house? Does it roll to the surviving spouse? Or do creditors get a run at it?
John 00:20:32 Yeah. Important to understand because I think most people that are in a partner or spousal relationship probably own their principal residence jointly, and perhaps other pieces of real estate jointly as well. If a bankruptcy occurs before death, it does sever the joint tenancy and the deceased interest vests in the bankruptcy trustee. If it happens after death, the property passes to the surviving joint tenant by right of survivorship. But again, the bankruptcy trustee may be able to challenge that survivorship using again the resulting trust argument.
John 00:21:03 So just to give you a real life example that we see often is, sometimes when people are in the sphere of insolvency or near insolvency, you know, they might decide to transfer an interest in properties or principal residence to their spouse. And if that happens within some period of time of the bankruptcy or the insolvency, that could be challenged. So again, nothing's automatic in the insolvency world.
Nicole 00:21:29 And then I understand there's exempt assets under BC's Court Order Enforcement Act. What are those?
John 00:21:34 So some examples. Equity in a principal residence up to $12,000. not a lot, but I know and the legislation has not been amended or updated for years. But the idea in an insolvent context generally is that, you know, most of the assets are supposed to be available to repay the creditors, but there are some small exemptions available. So, as I say, you know, a little bit of money from the principle of residence, obviously, you know, clothing and furnishings and appliances up to a certain value, tools that might be used to earn income.
John 00:22:07 Interestingly, you know, one motor vehicle, but again, only up to about $5,000 in value. So there are some exemptions, but they're not a lot and they're not of tremendous value.
Nicole 00:22:18 So you talked about how sometimes when people pass away, they make gifts or transfers that have the effect of putting assets beyond the reach of creditors. So how often are those reversed?
John 00:22:28 We see a fair amount of litigation in that context because again, human nature is such that you're trying to kind of protect, you know, the assets for people when you're nearing an insolvency and you're concerned about your creditors. So both Wesa and the BIA do incorporate remedies for complex transactions or where investigative powers may be useful. The BIA is really a preferred choice, as a trustee has greater powers to investigate and compel disclosure. So again, it is not uncommon to see assets given away for little or no consideration before death. That's a red flag. There's remedies that could be available when the estate is insolvent. Other circumstances we see is preferring creditors to another.
John 00:23:14 And again, you might have a legitimate sort of arm's length creditor, but they're a good friend or a good relation, and you want to see them paid before others. And so sometimes you see those types of transactions which are challenged by the creditors that don't have the same recovery. So various rules, various presumptions and again, advice should be sought.
Nicole 00:23:34 Isn't it true that even professionals can get in trouble if they are counseling clients to defeat creditor claims?
John 00:23:41 Yeah, it's not uncommon for us. Sometimes you get approached by clients that, you know, their business might be hitting the wall, and they want to look at what we call sort of creditor proofing or entering into transactions. And again, advisors can't counsel through, you know, that you should do that or how to do that. And you've got to be very careful in terms of your involvement in that regard for sure.
Nicole 00:24:04 So let's talk about insolvent estates and how they can intersect with family law issues. So if someone who died was separated, but not divorced.
Nicole 00:24:14 Can the surviving spouse claim against the estate?
John 00:24:17 Yes. So under the Family Law Act as separate, his spouse may have a property division entitlement against the estate. That might be something that has not been totally resolved in terms of a separation or divorce. Conversely, an executor may be able to enforce a property division claim against a surviving spouse as well. So that landscape doesn't change as a result of the passing and an estate being created on bankruptcy. Family law remedies like property division claims vest in the bankruptcy trustees. So the remedies still exist, but they're just sort of advanced in a different way.
Nicole 00:24:52 And what about outstanding support obligations? Somebody dies and they've got significant obligations for spousal or child support claims. What happens to those?
John 00:25:01 I said at the beginning really trying to understand the universe of claimants, right. And so that includes if there is a form or spouse sort of thinking through, okay, what is the current landscape of the support obligations, if there are any? What are the other obligations in terms of property division.
John 00:25:15 So support arrears. Yes. Receive priority under both WESA and a certain priority in the waterfall not to the top of the chain. And certain sections of the Family Law Act also give the court authority to order support to continue after death, and so support obligations are not released and those need to be focused on by an executor for sure.
Nicole 00:25:39 And what about wills? Variation of claims? If an estate is potentially or actually insolvent, is there any point in a disappointed spouse or child making a claim?
John 00:25:49 I mean, I mean potentially, you know, they do. Again, Wills variation remedies would operate against the estate after creditor claims, administrative expenses. But again, you know, we did talk about how there might be some estate assets or exempt from creditors. So there could very well be still a net estate even in that situation. Clearly, as you say, in a significantly insolvent estate, there may be little or nothing left for variation. So that would sit at the back of the bus, so to speak.
John 00:26:17 Much like in any, you know, business situation, you know, the quote unquote, equity claims, beneficiary claims in this estate context, you know, generally sit behind creditors.
Nicole 00:26:27 So there's a third option available, isn't there. So you could administer it under provincial law you could do formal bankruptcy. But what about a bankruptcy proposal?
John 00:26:38 For our listeners a bankruptcy proposal, it's a remedy that's available where there's not a complete bankruptcy or an assignment in bankruptcy. Sort of separate this for the listeners. So a bankruptcy generally is everything vested in the trustee. Everything gets liquidated. Everything gets distributed in a proposal context. It's almost like a negotiation with the creditors. And so what you're trying to do is compromise what the obligations are. And so there may be a situation where again, estates are insolvent. You want to try to find a way to have some recovery for the beneficiaries. You can move into a proposal proceeding to negotiate a compromise with the creditors, where they receive some percentage or cents on the dollar.
John 00:27:21 Advantages would include sort of retaining control of the estate. There is a statutory stay of proceedings. So in other words, all the creditors are sort of stopped in their tracks in terms of recovery. And then you try to settle the claims at less than full value. It can be a negotiation, but there's also a way to put basically an offer, a proposal to creditors and have them vote on it. So you may have a situation where a lot of your creditors are sympathetic and they're prepared to support something. There might be a few that are not. But if you can achieve a certain majority threshold of number and two thirds in dollar value, you can sort of force that sort of resolution on all the creditors and then ultimately have something in the net estate that could be available for the beneficiaries.
Nicole 00:28:04 So it'd be important that somebody would get really good legal advice.
John 00:28:07 I imagine legal advice in the trustee landscape, which are, you know, certified trustee insolvency professionals that understand this area very well as well.
Nicole 00:28:16 So what if the executor themselves goes bankrupt in the middle of administering the estate?
John 00:28:21 Well, thankfully for the beneficiaries, the estate assets held by the executor are not subject to seizure by the executors personal creditors. And that's clear under both the provincial and the bankruptcy legislation excludes property held in trust and recall. When we started, I talked about an executor being a fiduciary. In a sense, they're a trustee as well. And so debts of the executor do not have any claim against those assets.
Nicole 00:28:46 So what if a beneficiary is bankrupt? Can a parent protect the inheritance from their child's creditors for example?
John 00:28:55 Really good question. And again really good planning is required in terms of setting up your will to deal with that potential situation. So discretionary trusts can protect inheritances. And there's other ways to try to deal with that circumstance. And so really important to get, you know, the Wills and estates expert advice. Well before you might be considering an estate situation because you can definitely look after the beneficiaries in that way.
Nicole 00:29:24 Let's say a listener has just been named executor, and they're starting to worry that the estate might not be able to pay all its debts. What's the first and most important thing they should do?
John 00:29:33 Hire an expert? Again, it's a bit, you know, as a lawyer that does a little bit of work in this space. Perhaps it's self-serving, but really it is important. And you have to think about it from the perspective of, as an executor, you are a fiduciary for the beneficiaries and the creditors. It's not, “your money.” So using some of the estate assets wisely to get the necessary expert advice, not only protect you, but also potentially maximize the recovery in this state is very good advice.
Nicole 00:30:01 So who might that expert be, like an insolvency lawyer or a trustee? Or who should they talk to?
John 00:30:07 you know, wills and estates lawyers generally, you know, will have within their organization somebody in the field of insolvency as well and could work hand in glove with those individuals.
John 00:30:17 but yeah, as well the sort of the insolvency trustee community. So all the major accounting firms and small boutiques as well have specialties. And so it really would be the legal or the trustee advisory profession, for sure.
Nicole 00:30:30 So on a related note, what's the most common mistake? Is it not getting the advice or is there something else.
John 00:30:36 Not stopping to think through as we started at the beginning? So that's probably the biggest mistake. And I'd say the second mistake would be, again, not getting that advice when you're facing an insolvent state.
Nicole 00:30:46 It sounds like if an executor isn't comfortable, that they should just simply step aside and appoint a trustee. Or what do you think?
John 00:30:52 I mean, again, be patient and understand. You know, what you're getting into for sure. So again, take the time and just recognize what's involved. So you may have a real desire to be involved, but understand what it's going to take to be involved. Recognize that there's going to be time involved.
John 00:31:09 There could be risk associated with it. And then just making an informed decision. And there's really, you know, there's no harm in making a decision to walk away because, even though you obviously you were consulted usually by the individual to become the executor before it happens. But there's no harm in making a decision that given the circumstances you're in, perhaps at the time of your life and given the complexities that you might not have appreciated in terms of the insolvency, to turn things over to a bankruptcy trustee or potentially just renounce altogether.
Nicole 00:31:40 So if listeners could take one thing away, what would you say it would be?
John 00:31:44 Be patient. Understand what you're getting into before probate. Get the necessary advice, and then just make an informed decision that's really in your best interests. Recognizing the obligation that you decided to take on.
Nicole 00:31:58 Well, thank you, John. It's been a great and very practical and informative conversation.
John 00:32:03 My pleasure. Thanks very much, Nicole.
Nicole 00:32:06 This podcast is for informational purposes only and should not be considered individual, legal, financial or tax advice.
Nicole 00:32:13 Make sure to consult the advisor of your choice to advise you on your own circumstances. Thank you for joining us for this episode of Your Estate Matters. If you like this podcast, make sure to follow it on your podcast platform of choice. Whether you're planning your own estate or you're acting as executor for somebody else's heritage, trust can help partner with Heritage Trust to protect your family, your assets, and your legacy. If you'd like more information about Heritage Trust, please visit our website at Heritage Trust. This podcast is produced by Podfather Creative.
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