Legal Tip 387: Executor Risk When the Deceased made a Charity a Beneficiary

Discussion in 'Wills & Estate Planning' started by Terry_w, 30th Mar, 2022.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Being an executor is a risky job. They can be sued by beneficiaries if they do something wrong, or even if not necessarily wrong, but they cause the beneficiary to miss out.


    I read an interesting example in a recent paper where an executor was sued by a charity because the estate incurred tax meaning the charity missed out.


    For example the income of the estate was $250,000. The executor had the opportunity to distribute this entire income to the charity during that financial year but didn’t. This would have meant the estate had income of $250,000 which in turn meant it had a tax bill of $89,000. This is paid out of the estate. However, had the $250,000 in income been made income of the charity during that financial year they would have received the full $250,000 and not had to pay tax.

    The delay in administering the estate cost the charity $89,000. The executor was the cause of this delay so they could be sued by the charity.
     
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  2. datto

    datto Well-Known Member

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    That would not look nice for the charity if they decided to sue.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It happens a lot. In Public Trustee v Smith NSWSC they tried to get trust properties which the deceased had left via her will mistakenly.
     

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