The $800,000 estate conflict
Last week, reasons for judgement were released in a preliminary application in the case Morelli v. Morelli. There are five brothers in the family, three of whom launched action against the Estate of their deceased mother (who died in 2010).
Another brother launched an action under the Wills Variation Act, because he was disinherited.
In this application, the brothers sought to have the Executor (also one of the brothers) removed, or “passed over,” because of a conflict.The (Executor) brother and his wife had made an agreement with the (now deceased) mother, for the right to purchase her home, in which they also lived. However, they were in default under that Agreement.
One of the main questions in this case is whether the Agreement is valid. If not, the home will fall into the Estate, which will increase the Estate’s value by $800,000.
The question, however, was whether the named Executor, being the person who entered the agreement with his late mother, was in conflict. The Court found, properly (in my view), that he is.
First, he was (with his wife) in default under the Agreement, having not made any of the required payments in some years.
Second, the large question is whether the Estate ought to resist enforcing the agreement. The agreement enables the named Executor to purchase the property at a price of $285,000, where the present value of the property exceeds $1 million.
The Executor did say that, had he been permitted to act, he would have honoured the agreement’s terms (which is not a surprise).
Generally, the Court does not easily interfere with a Will Maker’s choice of Executor. This is a significant aspect of any Will.
But where an Executor cannot act in the Estate’s best interests, (s)he must be replaced. The Agreement may be held to be valid later on, but before that decision is reached, it is inappropriate for the named Executor to act.
This ad ran in the Richmond Review on January 31, 2014.