An executor is an individual or institution that is named in a will whose duty is to distribute estate assets according to the testator’s wishes. Acting as an executor can be stressful and time consuming so it is a good idea for a testator to make his or her choice wisely, and for someone who is asked to be an executor to investigate and review exactly what the job entails. Often the executor is the spouse of the deceased. That tends to make the role somewhat more straightforward than it would be for a family member, friend or other acquaintance. In any event, this article covers the duties and obligations of an executor. Arranging the funeral In addition to arranging the burial or cremation and funeral services according to the deceased’s wishes the executor would be responsible in ensuring that family, friends and interested parties (especially employer) have been notified about the death. Family members will most likely assist in this including the posting of the obituary. If there are sufficient funds in the bank account of the deceased the bank will usually release funds to cover the cost of the funeral. Preparing for the task An executor may wish to consider hiring a lawyer to advise and assist. The lawyer will assist with the paper work and ensure that all the executor’s obligations are discharged properly. Accounting and legal fees related to the settling of an estate are paid by the estate. The first group of tasks that a trustee must complete are:
- Locating the will and all relevant documents. It is important to verify that the will in question is in fact the last will of the deceased;
- Locating and itemizing all accounts held in the name of the deceased as well as the balances of each;
- Open a bank account in the name of the estate to pay the estate’s debts;
- Locate and list the names, addresses and dates of birth of all the beneficiaries’ names in the will or other estate documents;
- Notify all beneficiaries of their interests. This includes charities named in the will;
- Locate and verify all life insurance policies on the life of the deceased. Any named beneficiaries of those policies will need to officially notify the insurance companies of the death of the insured. This also applies to any living benefit policies such as disability income and critical illness policies. Often these policies have an additional benefit that is paid at death otherwise you want to ensure that further premiums cease to be paid.
Consider the financial needs of the beneficiaries
- Often immediate family members (i.e. spouse and dependent children) will require immediate funds for living expenses etc. Institutions that held deposit accounts for the deceased should be contacted to determine if any funds can be made immediately available for this purpose;
- Life insurance policies or accounts with a named beneficiary (including RSP’s TFSA’s RRIF’s etc) are sources of funds that can be distributed soon after death. For this reason make sure that death certificates are received from the attending physician or the funeral director. Copies of birth certificates showing date and place of birth may be required as well;
- Any employer should be contacted to determine if the deceased had group insurance or union benefits payable to the estate or designated beneficiaries;
- Application should be made for any government benefits that may be available such as Canada Pension Plan for death and survivor benefits;
- Cancel all credit cards and subscriptions (including online subscriptions).
Protect the estate assets and pay the debts
- Prepare a listing of all assets and debts. If there is a safety deposit box, open it and make a list of all the contents;
- Some assets may require valuation and these assets often include stocks and bonds, non-registered mutual funds, registered plans, business or farm assets and personal belongings;
- Diligently try to locate all creditors and identify and verify any debts to family members as well as loans made to family members;
- Take possession, in your role as executor, of all cash, jewelry and other valuables. Make sure sufficient insurance on these assets is in place to protect against loss. This also applies to all motor vehicles, buildings, recreational property and any other assets of value that should be insured. The common-sense approach would be for the executor to exhibit the same degree of care and attention that the deceased would have during his or her lifetime;
- Set aside funds to cover the valid debts of the deceased including all taxes that may be owing. Also include a sum to cover your compensation, if applicable, as executor;
- File the deceased’s final income tax return including any returns that may be required from the estate. Often, the deceased’s or another accountant can perform this task and the fees for this are paid for by the estate;
- Once the returns have been filed and taxes owing paid, it is necessary to obtain an authorization form from the Canada Revenue Agency confirming all taxes have been paid before assets can be distributed to the heirs;
- REMEMBER – the executor can be personally liable if any distribution of the estate is made before the deceased’s debts, including income taxes, have been paid.
Prepare and submit probate documents
- Probate documents must be submitted to court in order to obtain probate. Probating the will allows the executor to handle the estate of the deceased. Fees will be assessed by the court based on a provincial schedule.
- Some assets don’t require probate. These include property held in joint tenancy.
Although it may seem like it, this is not an exhaustive list of the duties of an executor. Depending on the circumstances there may be more or less but the list above covers off the main duties and responsibilities of those who serve in the role as an executor. Like most serious endeavors, it is recommended that you always obtain professional advice to ensure that your obligations are discharged properly.