So your bff is going for a cruise up the Amazon, and has finally decided to make a will. She wants to honour you by appointing you executor. Party time? Or time to run for the hills?
I say unless you know this person very well, and you know she is very organized (and has no crazy relatives) get your sneakers on.
The task of executor (or administrator) can be a very thankless one. Often, the beneficiaries get really antsy for their share, and don’t understand why it’s taking so long. They become convinced the executor (that’s you!) must either not be doing their job, or be doing it poorly, and surely you are just holding back the money out of spite.
If someone wants to do you “the honour” of appointing you as their executor, here is what you need to know. Of course, if the “someone” is your significant other, a lot of this doesn’t apply, unless your spouse is one of those very secretive people who doesn’t tell anyone anything. In that case you have bigger problems anyway.
As executor, your job will be to gather together all the estate assets, pay the debts, and divvy up the rest among the beneficiaries. Sounds simple, right? No so fast.
The first thing you need to do if you think you are the executor, is find the original will. It might be at the deceased’s home, or in a safety deposit box or at a lawyer’s office. Or it could be somewhere else altogether. Maybe you are really lucky and you already have it! The ease, or lack thereof, of finding the will is often a sign of what’s to come; it is an excellent indicator of the level of organization (or not), of the deceased’s affairs. You may not want to take this on (unless of course it’s your spouse).
Ok, so lets say you are “it”. Now is probably a good time to talk to a lawyer, at least for some initial advice. If the estate is large or complicated, it may be advisable to get both a lawyer and an accountant to help. The cost of the services will normally be paid by the estate. There may be issues with the will (ambiguous wording, a “hole” in the distribution, a likelihood someone will contest it, etc.) Better you should know up front.
But first, did you know that the funeral is your responsibility? Time to talk to the rellies. Did the deceased tell you anything about what she wanted? It may not be the same as what the relatives want.
At the same time, your job is to ensure that the estate assets are protected. Cancel the credit cards, subscriptions, the apartment rental agreement, change the locks, and put valuables in a safe place. Deal with the social media accounts. Secure valuables. Even if valuables are left to a relative, don’t give them away yet. This may not turn out to be the most recent will, or even a valid will, and someone may yet successfully overturn it. Then you’d be responsible for missing items.
Notify the banks where the deceased held accounts, and don’t forget about the mortgage payments! Also, if there is real estate, make sure insurance is in place, and that the insurer knows the place is vacant, if that’s the case.
Usually, you need “Probate” of the will to actually sell or transfer the deceased’s estate. You get this by applying to the court, using a specific set of documents. Your lawyer will prepare these for you. You have to notify all the beneficiaries, as well as anyone who would receive something if there was no valid will. Who that might be is not always easy to figure out.
Actually, you might luck out and not have to apply for probate. It depends on the type of assets in the estate. For example, probate isn’t required for jointly owned real estate, joint bank accounts or vehicles owned jointly. Just make sure there isn’t also something in the estate that you must have probate for, such as an apartment owned solely by the deceased, or Canada Savings Bonds.
Once you have probate, you now need to liquidate the parts of the estate that aren’t specifically left to a beneficiary. That means hiring an estate liquidator, a realtor, or putting everything on Craigs List. Ultimately it’s up to you to get a reasonable price for the estate assets.
You’ll have to figure out if the deceased had any pension plans (including CPP) since it is your job to notify them of the death and apply for any death benefits. Then you’ll need to deal with CRA. One thing that executors find difficult and beneficiaries have a hard time believing, is the length of time it can take to get final confirmation from CRA that no more taxes are owed. This is an important step because the CRA can potentially impose taxes that you don’t know about. That’s where an accountant can be a big help.
As the executor, you could be personally liable if you don’t pay the debts (including taxes) before you distribute the estate. You should talk to a lawyer about this if you have any doubts. Remember, too that you are responsible if you distribute the assets to the wrong people and could be sued, so make sure you are aware of the Wills Variation Act and what it means to the particular estate you are handing.
There’s more! But before distributing the assets, you need to do an accounting of the estate’s financial transactions and obtain a release from each beneficiary. You should claim for all expenses you’ve paid out of your own pocket. You might also want to claim a fee for acting as executor. This fee can be up to 5% of the estate and is taxable income. If you want to claim a fee, the amount you claim should be included in the accounting that you send to the beneficiaries.
So let’s recap the honour that’s been bestowed upon you: you get to be a detective, an estate agent, a cleaning service, a funeral organizer, a liquidator, a mediator and a complaints service. You get to deal with CRA, even! For that you might get 5% of the estate, on which you get to pay taxes. Are you still sure you want to do it?