Executor’s Insurance in Canada: An Idea Long Overdue

For 13 years I practiced in a small community in northern Ontario, and one of the things you do in such a practice is a fair bit of estate work. One of things I quickly learned was that what appeared to be sweetness and light prior to the death of a family member is something entirely different after the death of that family member. With one sibling named executor, other siblings started to question and attack that particular sibling. Siblings that were beneficiaries started arguing with each other and in many occasions it was a very unhappy experience for everyone but in particular the executor. On more than one occasion, the beneficiaries indicated that they were going to sue the executor and on a number of occasions they did so.

On one occasion both the executor and the beneficiaries thought that I was a good subject for a lawsuit. Fortunately that went nowhere.

So when I first heard that there was executor’s insurance in the marketplace, my reaction was twofold: 1) it’s about time and 2) why hadn’t that happened earlier.

If I was still in practice, it struck me that it is something that I would want to raise with clients that were executors simply because it would provide comfort to the executor if there were any problems raised during the processing of the estate by beneficiaries or others. In addition it would mean that resources of the estate would not need to be used to defend any potential attacks.

It also struck me when I first heard of it that as a secondary benefit there would be less likelihood that lawyers would get sued (people are always looking for a deep pocket) which would be both a benefit to me as a practicing lawyer and the law society.

I know that some of my colleagues might suggest that this insurance is unnecessary, because the executor has me as their advisor or because I have never had a problem estate file. While all that may be true, the reality is problem estate files do exist and it may fall in your lap at some point in the future.

All this is compounded by the fact that there is $1 trillion of wealth out there that is going to be transferred between generations as the baby boomers, to put it bluntly, start dying off. Therefore it is clear that wills and estates work will increase and the risk of executors being sued will also increase.

In conversations I have had it appears that some lawyers are contacting executor insurance providers after litigation has been commenced against the executor and are quite upset when, for obvious reasons, the insurer is not prepared to provide insurance for a matter that is already in litigation. All the more reason to recommend executors insurance to your client.

Executors insurance from what I can see is a very similar to title insurance. It is good consumer protection but also protects lawyers. It has reduced the exposure to errors and omissions claims resulting from title problems. In a similar way, executors insurance can save the lawyers from vexatious lawsuits, reporting to the Law Society, and ultimately paying deductibles.

From the first time I heard about executors insurance, I said to myself that if I was still in practice I would be suggesting to any executor clients that the estate should purchase executors insurance. It seems to me as well that every law society should be encouraging lawyers that do estate work to raise the issue of executors insurance with their clients. Obviously it is important that it be done in a way that does not take a great deal of the lawyers’ time and that the process should be simple and straightforward.

I wanted to write about executors insurance because it struck me from the very first time I became aware of it that it was something that could be so helpful to clients and at the same time place the lawyer in a very positive light in considering all potential scenarios with the for the executor of an estate.

John Hoyles, Chief Executive Officer
Canadian Bar Association

Comments

  1. John – you might have wanted to point the Slaw community to Jordan Atin‘s excellent piece on the current legal background to Executor’s Insurance on the CBA website.