Key Aspects To Proper Estate Administer
The death of a loved one is a tragic event, and if the individual has left a will, an executor will likely be named under the will. Most Canadians, at some point in their lives, will be asked to be an executor of an estate for a loved one. But, what does being an executor entail? What are the executor’s duties. Executors are required to follow the instructions of the testator (the person who created the will) which are detailed in the will. While this may sound like a simple task, it can be a complicated process especially if the estate is fairly large. Also, the death of a loved one is an emotional event which can lead to disputes among beneficiaries and family members. Besides the Government of Canada recommendations for Executor’s duties, there is more to do. Read on to find out the top 10 things to know about administering an estate.
1) What Is an Executor?
An executor is a person responsible for carrying out the terms of a deceased person’s will. The executor’s goal is to act in the best interests of the estate and its beneficiaries.
Executors are entitled to reasonable compensation for administering the estate. Make sure to determine the amount of compensation with beneficiaries early on and keep a record of the time you spent administering the estate. This will help avoid any disputes relating to compensation down the line.
Being an executor can involve a large amount of time and effort. Even if you are named as the executor in a will, you can refuse your appointment. In this case, the alternate executor named in the will can act or, should there be no alternate executor listed, the beneficiaries will have to agree on a new executor or the court will appoint one.
2) What Are The Key Executor’s Duties?
The executor’s duties start once the testator passes away. In Alberta, these duties are enshrined in legislation including the Trustee Act and the Estate Administration Act.
These duties can include:
- arranging the funeral;
- filing for a grant of probate;
- obtaining copies of the death certificate;
- informing beneficiaries of their interests in the estate;
- deciding how the estate will be distributed and managed;
- getting a lawyer for advice on how to administer the estate;
- identifying the deceased’s assets and liabilities; and
- satisfying outstanding debts of the estate such as tax liability.
This list is incomplete and the executor’s duties will vary according to the complexity of the testator’s estate. On average, it takes about one year to fully carry out the duties. It is advisable to get legal assistance to help you throughout the process of estate administration.
Read This To Learn The Top 10 Mistakes That Executors Make
3) Do You Have The Latest Version Of The Will?
The first step is to make sure you have the most recent version of the deceased person’s will. If you do not have the will, check with the deceased person’s family, friends or lawyer. Once you obtain the will, make sure that you are named as the executor under the will.
4) What Is A Grant Of Probate And Is It Required?
In Alberta, the executor may be required to obtain a grant of probate to prove the validity of the will. A grant of probate is issued by the court and gives the executor authority to carry out the duties in the will. While applying for probate is not always necessary, sometimes banks and institutions will require a grant of probate before funds are released to the executor. Generally, if the estate includes bank accounts with large sums of money, big investments or real estate, executors must apply for probate.
If you do require probate, you must submit a Grant of Probate application to the court. Remember, it is important that forms are filled out properly and thoroughly. It is common for a Grant of Probate to be rejected if the forms are incomplete or incorrectly filled out. Do not forget to serve the probate application to individuals such as beneficiaries, dependents, and entities that have a legal claim to the estate. Failure to follow this part of the executor’s duties can lead to personal liability on the executor if an estate is not administered properly.
Learn About When Probate Should Be Applied for Here
5) Make Funeral Or Memorial Service Arrangements
The first of many executor’s duties includes making funeral or memorial service arrangements. At times, the deceased may have left instructions on funeral arrangements in the will. However, you are not legally required to follow these instructions. If funeral costs are too high leaving little value in the estate, you may be personally liable for paying the excessive funeral costs.
6) Fill Out Registration Of Death Form And Obtain Death Certificates
Certain parties such as the Land Titles Office and financial institutions will require copies of the death certificate in order to release assets. To obtain a death certificate, the executor, or the deceased’s family members, must complete a Registration of Death form and submit it to the registry. You can obtain this form from the funeral home or the Alberta Government Vital Statistics Office.
7) Inform Parties Of The Estate Distribution
The executor is required to inform all parties who may legally have a claim to the deceased person’s estate upon the death of the individual. These parties may include:
- beneficiaries of the estate;
- co-owners or beneficiaries of assets;
- landlord and insurer of the deceased’s home;
- financial institutions and banks that the deceased dealt with;
- government agencies such as the Canada Revenue Agency and Canada Pension Plan;
- insurers of the deceased’s home and vehicle;
- internet, phone and utility providers; and
- subscription providers.
8) List Estate’s Assets & Debts and Pay Outstanding Taxes & Debts
As an executor, executor’s duties dictate that you are responsible for listing and determining the value of the deceased individual’s assets and debts. You can do this by reviewing documents such as tax returns, obtaining property title documents, speaking with insurers about insurance policies, and contacting former employees to obtain information about pensions.
Assets of the deceased can include:
- employment benefits;
- life insurance policies, pensions, and death benefits that are payable to the deceased’s estate;
- unpaid wages;
- contents of a safety deposit box; and
- the property that is left after debts are paid.
Remember that some assets will not form part of the estate. For example, if the testator owned property in joint tenancy with another owner, the property will pass directly to the other owner. Also, life insurance policies that have a named beneficiary will pass directly to that beneficiary.
Executors should record any outstanding debts and when they must be paid. Remember to record interest rates, payment frequency and registration information. The executor is responsible for ensuring that the testator’s debts are paid prior to distributing the estate.
The executor is also responsible for determining how much tax the deceased owes and that taxes are paid out before distributing the estate to beneficiaries. A tax return must be filed with Revenue Canada for all income earned in the year the deceased passed away. Once the tax return is filed and taxes are paid, the executor must obtain a clearance certificate from Revenue Canada as proof.
At this stage, you should meet with a wills and estates lawyer to address any issues with probate and make sure all assets and debts are accounted for.
9) Make Sure The Deceased Person’s Assets Are Managed And Safe
While this may sound straight forward, it can be a challenging task. For example, if the deceased person has a business, the executor must ensure that a someone is running the business properly. If the deceased was renting a property, it is also the executor’s responsibility to communicate with the landlord and make sure someone is supervising the vacant property.
Because the executor is responsible for any damages or losses of the assets, the executor should visit the deceased’s home and make sure that:
- arrangements are made to keep the deceased person’s home, vehicle, and valuables safe;
- credit cards, utilities and insurance policies are canceled;
- mail is redirected; and
- cash, credit cards, and other valuables in the home are kept in a safety deposit box.
10) Do I Have To Advertise The Estate Distribution For Creditors?
Legally, no. But, executors may choose to place an advertisement for two reasons.
Firstly, to reduce the risk that a creditor (person that the deceased owes money to) will launch a claim after the estate has been distributed. Secondly, to limit the executor’s liability. If the executor distributes the estate to beneficiaries before paying any known creditor or outstanding taxes, the executor can be held responsible for paying such debts.
If the estate is valued at over $100,000 or less, an advertisement should be placed once. Advertisements can be placed in newspapers in the area where the deceased person lived. If the estate is valued at over $100,000, an advertisement should be placed at least twice spaced at least a week apart.
Bonus: Distribute The Estate’s Property to Beneficiaries and Accounting
The last of the executor’s duties involve creating a financial statement with the proposed compensation and distribution schedule. The accounting will be reviewed by the beneficiaries. As the executor, you should ask the beneficiaries to sign a release stating that they are satisfied with the accounting prior to distributing the estate. This will help protect you in the event a dispute arises later on. Executors must then distribute the estate’s remaining assets to beneficiaries in accordance with the will.
Legal Help With Executor’s Duties
Administering an estate can be a difficult and lengthy procedure. Let us help you make the process easier. As an executor, if you choose to hire a lawyer to help you with executor’s duties, the estate will pay for the legal fees. Contact Kahane Law to learn more (or read this most about various professionals that can help executors) about how we can help you seamlessly navigate through the estate administration process and help you probate the estate.
You can reach us locally in Calgary at 403-225-8810 or toll-free at 1-877-225-8817, or email us directly here.