When are Beneficiaries Entitled to Receive Interest? The Rule of Convenience

Executors and beneficiaries are often aware of the executor’s year – a common law principle stating that an executor has a year from the testator’s death to finish administering the estate and distribute its assets. During the executor’s year, beneficiaries are usually not able to raise motions to speed up the process. In some cases, the estate administration takes longer than expected and beneficiaries inherit their share of the estate years after the testator’s death. Beneficiaries can sometimes use the Rule of Convenience to collect interest on their inheritance when delays occur.

The Rule of Convenience

The rule of convenience states that an inheritance which takes longer than the executor’s year to distribute could be subject to simple interest of 5% per year. However, if the will-writer acknowledges that their estate administration will likely take an extended period of time, they could include a provision stating that inheritances are not to be subject to interest if administration extends beyond the executor’s year. On the contrary, will-writers can specify that they wish to give interest to beneficiaries of their will in the event that the administration is lengthy.

Interest Payments Because of a Will Challenge

In the case of Rivard v. Morris (2018), the courts confirmed the use of the rule. A father left his two daughters with $530,000 each and the residue of the estate to his son (which was significantly larger than the $530,000). The daughters challenged the will, claiming that the son had unduly influenced the father during the will-writing process.

After a lengthy dispute that lasted multiple years and ultimately failed, the daughters filed a claim for interest under the rule of convenience.  They wanted interest to be paid from the residue of the estate (the son’s share). The Court of Appeal allowed the daughters’ hearing and found them entitled to interest on their inheritance, even though the daughters’ claim caused the will challenge and related delays. The reasoning was that the challenge was non-frivolous and it would be unfair to not grant the interest payments. The judge emphasized the importance of certainty and predictability in the decision.

What This Means for Executors

For executors of wills, it’s important to be aware of the rule of convenience as it could have a financial impact on the estate. We encourage all executors to be proactive in their estate administration. In the majority of cases, it will not be difficult to finish the estate administration within the executor’s year. In some cases, like the one above, the executor is not at fault for the delay, but the rule of convenience still requires them to pay interest from the estate. If you’re an executor expecting an estate dispute, you should anticipate potential interest payments and plan accordingly.

What This Means for Beneficiaries

For beneficiaries of an estate that is taking longer than the executor’s year to administer, you should understand your rights as a beneficiary. If the executor’s year has passed, you could be eligible to start a claim citing the rule of convenience. Beneficiaries can initiate motions to expedite the estate administration process if there are undue delays. If executors prove to be incompetent and unable to administer the estate, the Courts can remove them. Just because you’re a beneficiary with minimal authority in the estate administration doesn’t mean you don’t have legal remedies available if you’ve been wronged. For more on this, read our article on forcing an executor to act.

If you’re a beneficiary of a will that has been in the administration process beyond the executor’s year, contact an experienced estate lawyer today. We can help you to speed up the administration process and have you receive inheritance interests when necessary.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.