Have You Been Named as an Executor?
The job of acting as an Executor to an Estate is a very important and often difficult job. Generally speaking, the executor gathers up the estate assets, pays the deceased’s debts, and divides what remains of the deceased’s estate among the beneficiaries according to the Will. However, the job comes with obligations and legal liability.
Acting as an executor can be challenging, time-consuming and stressful. The executor usually has a year (called the “executor’s year”) to complete the process but it can take much longer than that, depending on the estate. Here are the basic steps:
Arranging for the funeral is usually your first responsibility. The funeral home will issue the Death Certificate, which you will need to carry on the rest of your duties.
Protect the Estate
Make sure valuables are safe and that sufficient insurance is in place. You should immediately change the locks on the apartment or house, and put any valuable things into storage. You should also cancel all of the deceased person's charge accounts and subscriptions.
Pension and Benefits
Immediately attend at Service Canada to inform them of the death and apply for any death, survivor or orphan benefits. You should also check with the deceased person's employer about any benefits available from his or her place of work. Note that any CPP or OAS benefits paid after the month in which the person died must be returned.
The Supreme Court Civil Rules and the new Wills, Estates and Succession Act (WESA) require that all beneficiaries (as well as certain family members who would be heirs if there was no will, or who are eligible to apply to the court to change the will) must be given written notice of the executor's application for an estate grant, including probate, plus a copy of the will. This is generally done by the estate’s lawyer.
Probate is the process of getting the court to rule that a will is legally valid and gives the executor the authority to act on behalf of the deceased. You will need the probate grant in order to distribute the estate assets. If probate is required, it is a good idea to hire a lawyer to assist you in this process. You’ll also have to pay the probate fees as assessed by the court registry. The deceased’s bank will usually allow you to take these funds out of the deceased’s account.
Certain assets can be passed down without requiring probate. In addition, RRSPs and insurance policies with named beneficiaries aren’t considered part of the estate and therefore don’t require probate.
Income Tax and Debt
You are responsible for filing tax returns and paying the taxes owing on behalf of the deceased person. It is a good idea to hire an accountant to help with the tax returns, as tax returns must be filed for any years for which the deceased didn’t file a return. Also, if the estate made any income (rent, interest on investments) after the date of death tax returns will have to be filed until the estate is wound up or paid out.
The estate must pay taxes and obtain a Clearance Certificate from CRA before the estate can be distributed to the beneficiaries. This certificate confirms that all income taxes or fees of the estate are paid. This is important because you could be personally liable if you don’t pay the deceased’s debts, including any taxes owed, before you distribute the estate.
Accounting and Distribution
You should submit a full accounting of the estate’s financial activities and obtain a release from each beneficiary prior to distributing the assets to them. Having all beneficiaries sign off on this accounting limits your liability and makes certain everyone involved is on the same page.
A lawyer can help you to understand the wide range of issues that arise with executor and estate administration. If you would like advice or for more information regarding such matters please contact Chahal Priddle LLP at (250) 372-3233 to set up an appointment today.