2019, March

You have been named as executor in a loved one's will. What does that entail?

You might feel honoured to be named the executor of a person’s estate. After all, it is an indication of the high regard and level of trust that the testator feels for you. However, it is a demanding, time consuming and often complicated role.

Acting as the executor of an estate involves dealing with all the legal, fiduciary and tax implications arising out of the person's death, as well as coping with the financial and emotional needs of beneficiaries. And if the deceased person is a loved one, the role becomes even more difficult because you will be dealing with your own grief and loss as well.

To aid you in properly carrying out the duties of an executor, we have put together a list of the duties that are most often required from an executor. But be aware that this list is not exhaustive. Other tasks may be required, depending upon how complicated the deceased's estate is, where the property is located, and the marital and family status of the deceased (e.g., divorced, step-children, disabled dependents, etc).

10 things you will be required to do as an executor

1. Find and read the will, and organize funeral arrangements. Locate the deceased's Last Will and Testament and read it over to familiarize yourself with their wishes and instructions. As soon as possible after that, arrange a meeting of the deceased's immediate family (and, if appropriate, include close friends or business associates). The meeting should discuss funeral arrangements, and identify and locate important documents and items such as banking and tax records, stocks and other securities, insurance policies, safe deposit boxes, title deeds, etc.

2. Determine the location of all estate assets and property. Make a list of everything and ensure that all assets (real property, personal property and funds) are protected and sufficiently insured. If the deceased was a business owner and there is no one available to take over managing the daily operations, you will have to hire a qualified manager on an interim basis during the estate administration period.

3. Probate the estate. You may need to consult a lawyer to help you through the process, depending on the complexity of the estate.

4. Advertise for creditors. This is essential if the deceased is the sole owner of a business. Place a notice in a local newspaper with the name of the deceased, date of death and your contact details, so that any creditors who have an interest in the estate assets have an opportunity to come forward and make a claim. If you fail to do this and a creditor turns up after all the money has been distributed, you will be responsible for paying the debt.

5. Transfer all of the deceased's property into your name. As the executor of the estate, you are entrusted with the power and authority to dispose of the estate assets. You will need to deal with financial institutions, brokers, transfer agents, and land titles offices to transfer title deeds into your name first, before you can distribute the assets to the beneficiaries.

6. Arrange for payment of all of the estate's legally enforceable debts, including funeral and probate costs. All of the debts must be paid out or the funds allocated to pay such debts, before any distributions are made to beneficiaries.

7. Prepare the deceased's final tax return. If you are not familiar with the tax laws related to estates, you may want to consult an accountant for expert advice.

8. Create any trusts provided for in the deceased's Will. A trust is a legal arrangement that requires assets to be held by a Trustee for a specified period of time - typically this will be when a minor beneficiary reaches a certain age. The income may be paid out or accumulated for distribution to the beneficiaries once the trust conditions have been satisfied.

9. Arrange for payment of legacies and distribution of the estate residue to the beneficiaries. This cannot occur until all estate debts are paid but in general, but if the estate is not overly complicated the distribution generally will occur within the first 12 months following the death of the testator.

10. Keep complete and accurate records of everything you do. You may be required to produce these records as evidence if anyone contests the will or questions your actions as an executor.

Image by Carolyn Booth from Pixabay

If you are about to make a Will for the first time, you may find that choosing an executor to administer your estate can be one of the most difficult - but possibly the most important - decision you will need to make with regards to your Will and estate planning.

Your executor (also called a "personal representative") is the person you appoint to carry out the instructions in your Will, to distribute your property according to your directions, and to wrap up your estate after you die. You can name one person to act alone, or several people to act together in this role. You also have the option to appoint a trust company or your lawyer to act as your executor, if you don't want to place that responsibility on a family member or friend. And make no mistake - it is a lot of responsibility and it's a task that can take years to accomplish.

What does an executor do?

The executor is responsible for dealing with all matters related to distributing and winding up your estate. The duties of an executor include such things as:

• meeting with the deceased person's family, legal and accounting advisors, business associates, and other interested parties to discuss the provisions of the Will and to make funeral arrangements, if necessary;
• arranging for probate of the will;
• notifying banks, brokers, debtors and creditors of the estate;
• finding and assembling all of the estate assets and property and determining their value;
• filing life insurance, pension and death benefits claims;
• reviewing all of the deceased's financial and tax records, including those for any business in which the deceased has a significant interest;
• reviewing insurance policies, titles, leases, mortgages, and contracts relating to the estate assets or to which the deceased is a party;
• collecting all income, receivables and debts owing to the deceased or the estate;
• paying all outstanding debts and liabilities of the deceased or the estate;
• estimating the amounts required for legacies, taxes, and other costs required to settle the estate and ensuring there are sufficient funds to pay them (including selling estate assets if and when necessary);
• conducting any legal claims made by the estate and defending any lawsuits against the deceased or the estate, including settling any such claims;
• preparing the final income tax return;
• managing trusts for minors (if applicable); and
• distributing the estate assets to the beneficiaries.

Things to think about when deciding who to appoint as your executor

When you name someone close to you to act as the executor of your estate after your death, it's an indication of the high esteem and trust you have for that person. And certainly you should appoint someone that you trust to manage the estate property and assets until they are all distributed according to your instructions in your Will. But you must also consider the fact that the role of an executor is a demanding, time consuming and often complicated one. It involves dealing with all the legal, fiduciary and tax implications of a death, as well as coping with the financial and emotional needs of the beneficiaries.

Choosing an executor who cannot handle all of these pressures may result in a delay in settling your estate, which in turn can result in higher fees and costs that can eat away at the estate funds. This will leave fewer assets for distribution to your beneficiaries.

Talk to the person about your plans, and find out if they are willing to act in that capacity. It is essential that you have their consent before you name them in your Will.

When choosing someone to act as your executor, consider the following questions:

1. Does the person reside in a different province, or even in a different country? If so, the court may require that a bond be posted. If that is the case, the person chosen must be willing and able to post the bond or apply to have it waived.
2. Are you setting up a trust for minor children or dependent adults in your Will? Your executor must be willing and able to administer that trust for some time, presumably until the children reach adulthood or the dependent adults pass away. If they cannot commit to that lengthy time frame, consider setting up the trust under a Trust Deed and appointing a trustee who is able to handle the long-term responsibility.
3. Will your executor be emotionally able to carry out your wishes at the time of your death? This is a very important consideration if you plan to name your spouse or an adult child as your executor, because they will be grieving your loss and assisting other friends or family members in coping with your death. The emotional stress they are experiencing must not detract from their ability to carry out their duties as your executor.

Alternative choices to provide future certainty

It is a good idea to name an alternate executor in case the person you name as your original executor is unwilling or unable to act when the time comes. Another option is to retain a trust company or a lawyer to administer your Will. They will perform all the required duties, including administration of trusts, for a fee.