This compilation was done my our team member Michel Chevalier. It is an excellent summary of what you need to know about considering being an executor to an estate.

My point to it all is be awfully sure you are doing the right thing by saying “yes” to being an executor.

Dan White

 

 

 

ESTATE EXECUTOR – DUTIES & LIABILITIES – MICHEL’S NOTES

People often feel honored to have been asked to become an executor of an estate and almost as often agree and find that they have gotten themselves into something far more onerous and challenging than ever they thought with a great deal of potential for trouble and strife and of course far more potential liability for themselves than they imagined when they accepted the role.

My own personal experience comes from being involved as a family member (not executor) in settling my father’s estate. He died 2 years ago leaving my mother as executor.

I thought for years that everything was all planned and lined up as they had been to a Bay Street law firm for advice. The will was ok but there wasn’t a thought out plan and as a result 2 years later ‘things’ keep popping up:

· We were able to avoid probate in Ontario as the estate was not large.

· We have family property in Quebec and have subsequently found out that even for my mother to inherit the property from my father we have to go to probate in order for ownership to be transferred to her; this is still pending

· Little loose ends keep cropping up such as my father’s name still being on title for my mother’s condo; this held up her mortgage renewal for over a month

· The estate is still not closed so I don’t know what else we might expect

The moral of this little story is that you need to have a plan that takes everything into account, not just the will. Most important, get good advice but don’t rely solely on this. Do some research, take charge of your own situation…don’t leave it all to others. In the end it is all up to you (pun intended).

EXECUTORS

Here are some additional thoughts on what is involved in becoming the executor of someone’s estate. I have followed this up with a simple checklist, which while not totally comprehensive, will provide a good idea of some of the complexity involved in winding up an estate.

The truth is, settling an estate can be a very complicated and time-consuming process. It can mean a deluge of responsibilities that could take years to carry out: managing investments, selling real estate, dealing with upset beneficiaries, even making funeral arrangements. And you may be trying to accomplish all of this while you yourself are mourning the loss of your loved one. What’s more, executors are personally liable, so it will be your responsibility to see to it that everything gets done - and gets done properly.

While many of are quick to accept the role, very few understand the full extent of what’s involved or the magnitude of the responsibility. Being an executor can be an onerous and time consuming job that takes at least a year and on average anywhere between 18 months and four years to complete. And, in some cases, it can lead to damaging family quarrels or expensive liability issues.

If you’re considering, or have accepted, a request to be an executor for someone’s estate, there are some important considerations to bear in mind.

Executor duties are numerous

Whether it’s collecting life insurance, applying for death benefits, filing a tax return or making a probate application, the range and complexity of executor responsibilities can be daunting. In fact, depending on the size of the estate, there can be upward of 70 individual tasks expected of an executor, some of which can carry a liability risk.

Estates can take a very long time to settle

An important question to ask yourself before accepting the role as an executor: Do you have the time to settle the estate? Depending on the size and complexity of the estate, an executor’s work can take anywhere from an average of 1year, to up to four years, and there is usually some pressure to have the estate settled as quickly as possible to make sure the beneficiaries realize the full value of their inheritance.

You may be working through your own grief and sorrow

Dealing with the death of a loved one is often very difficult, and the added demands of settling that person’s estate can make the situation far more trying. Be sure to ask yourself how well you think you’ll be able to carry out your duties while in mourning yourself, and don’t be afraid to raise your concerns with the person who has asked you to be his or her executor

Consider family dynamics

Don’t be shy to ask if there is existing family tension and to consider how a dispute among family members and friends may affect you. As the executor, you may have to deal with discontented beneficiaries, especially if the estate is unequally distributed. Sometimes it can help to share the load with a professional trust officer who is sensitive to the complexities of family dynamics – their presence throughout the estate settlement process can help to minimize family conflict during what is often a very emotional time.

You can say no

If you feel uneasy about being named an executor or you don’t think you’ll be able to handle the responsibility effectively, one option is to decline the role. If it’s not something you feel you can turn down, but you still have concerns about dealing with all the duties involved, another option is to seek out assistance.

Get help!

Remember, the burden doesn’t have to fall upon you alone. If you agree to be an executor, it would be well worth considering seeking professional assistance for some or all of your duties – whether that assistance is provided by a lawyer, an accountant or a trust officer for trust services company. Furthermore, although in most cases as executor you are liable for the estate settlement decisions, working with the expertise of a professional can give you confidence that your fiduciary duties are being met.

General

· Arrange the funeral and cremation or burial of the deceased.

· Obtain the death certificate and certified copies.

· Locate and review the instructions in the original will.

· Meet with the lawyer that will represent the estate in all legal matters.

· Submit an application to the provincial court for the Probate Certificate or Grant of Probate.

· Arrange probate fees or taxes to be paid to the provincial court.

· Locate all beneficiaries, including charities, and notify them that they have an interest in the estate under the terms of the will.

· Explain your role to the beneficiaries.

· Notify the spouse of any entitlement he or she may have under family law and recommend the spouse receive independent legal advice.

· Assess the rights of any dependents who were financially dependent on the deceased at the time of death.

· Keep the beneficiaries informed as to the progress of administering the estate.

· Review all personal papers of the deceased to help locate the deceased’s assets and debts, key contacts, tax information, etc.

Deal with Government Benefit Programs

· Cancel Old Age Security benefits.

· Contact the Income Security Office to stop CPP cheques, or the Quebec Pension Plan Office for QPP cheques.

· Apply to CPP/QPP for any death benefits the deceased qualifies for.

· Apply to CPP/QPP for any surviving spouse and dependent pension benefits.

· Contact Human Resources Development Canada to cancel the deceased’s Social Insurance Number (SIN).

· Contact social security office in the U.S. to stop benefits.

· Apply to the social security office in the U.S. for any death or survivor benefits.

· If deceased is retired from the military, contact the appropriate veteran’s office to receive any application benefits.

Obtain all Benefits Payable to the Estate

· Contact all service clubs and veterans clubs for death benefits that may be payable to the estate.

· Obtain all unpaid wages and other benefits from the deceased’s former employer.

· Contact all of the deceased’s employers (current and former) to determine if any pension or survivor benefits exist.

· Apply for any amounts payable to the estate under life insurance policies.

· Determine the options available for any remaining pension plans or annuities, and determine if the monthly income should continue, or the commuted value be paid out.

Manage the Assets of the Estate

· Prepare a detailed inventory of the deceased’s assets, including the contents of the deceased’s safety deposit box.

· Locate all bank accounts of the deceased, and determine the balance on deposit for each account. Notify the financial institutions of the death.

· Search for any unclaimed bank accounts.

· Open a bank account for the estate and transfer the deceased’s bank accounts to the estate bank account.

· Re-register the accounts and assets of the deceased into the name of the estate, for example, “The estate of…”

· Obtain statements showing the value of the deceased’s investments as of the date of death.

· Obtain statements showing the value of the deceased’s RRSPs/RRIFs as of the date of death.

· Cancel any pre-authorized savings programs (PACs) or systematic withdrawal programs (SWIP), as well as any pending securities trades.

· Review the investment strategy, and adjust if necessary.

· Arrange for the storage of assets requiring it, and advise insurers of any physical assets of the deceased. Arrange for any insurance coverage required.

· Review all real estate documents including, deeds, mortgages and issues.

· Arrange for valuations of any assets of the estate, such as personal property, real estate, cars, etc.

· Cancel the deceased’s driver’s license, newspaper and magazine subscriptions, telephone, cable TV, internet subscription, as well as memberships to any clubs.

· Arrange with the post office for mail to be redirected, if necessary, and notify all interested parties of the change of address.

· Obtain deeds for real estate, and arrange to sell the real estate, if necessary.

· Obtain share certificates for bonds, stocks, or GICs not held at a financial institution.

· Transfer or cancel any insurance policies on the house, car, boat, etc., where appropriate.

· Sell any estate assets that must be sold, and those which the personal representative chooses to sell (provided this power is given to the executor in the will).

· Close the safety deposit box.

Settle the Bills of the Estate

· Identify all the liabilities of the deceased.

· Determine the outstanding balances of all personal debts.

· q q q Arrange for publication of the notice of “Advertisement for Creditors and Others” in a local paper to locate parties who may have a claim against some or all of the estate and would be paid prior to a distribution to any of the beneficiaries.

· q q q Settle all just claims and debts of the deceased, including credit cards, consumer debt and mortgages.

· Cancel credit cards.

· Settle the bills of the estate; creditors, funeral expenses, and other expenses.

· Determine if there are sufficient assets in the estate to pay all liabilities and income tax before making any interim distribution to the beneficiaries, so you do not take on any personal liability for the tax bill.

File the Tax Returns

· Prepare and file the tax returns for any years prior to the date of death that have not yet been filed.

· Identify opportunities and make the appropriate elections to reduce the tax bill of the deceased, including using the spousal rollover, applying capital losses, and contributing to a spousal RRSP.

· Prepare and file the final tax return for the deceased, as well as any optional returns.

· File any tax returns required for assets held outside of Canada, including those required by the IRS.

· File estate tax returns (T3) for each year the estate exists, if necessary.

· Pay all income tax due or obtain an income tax refund, as applicable.

· Obtain the tax clearance certificate from the Canada Revenue Agency.

Distribute the Assets of the Estate

· Assess any immediate need for cash that the surviving spouse may have.

· Distribute the assets and property of the estate to the beneficiaries according to the instructions in the will and restrictions on the distribution of the estate.

· For accounts registered jointly with rights of survivorship, request the account be transferred to the surviving tenant.

· Arrange to have the RRSP/RRIF transferred or rolled over to named beneficiaries.

· After the tax clearance certificate is obtained, transfer title, and distribute any remaining assets or property in the estate.

· Discuss any “in kind” distributions with the beneficiaries.

· Complete the paperwork necessary to transfer stocks and other securities.

· Establish any testamentary trusts, according to the instructions in the will.

· Obtain receipts and/or release forms from all beneficiaries.

Other

· Prepare an accounting of the estate.

· Calculate the fees payable to the executor.

· Obtain reimbursement for all necessary and reasonable expenses incurred in the administration of the estate (with receipts).

· Pay legal fees and all other outstanding fees related to the administration of the estate.

· Pass accounts before a provincial court judge, if necessary.

· Close the estate bank account.

The above list of duties is for information purposes only and is not to be considered tax,

financial, or legal advice.