Has a friend or family member asked you to act as executor of his or her Will? Are you struggling to decide who to appoint as your executor? Although many consider it an honour to be asked to play this role, the responsibilities involved can be complex and time consuming. Understanding them will assist you in choosing the person best suited to be your executor and ensure any decision you may make to act as an executor is an informed one.
The duties of an executor include among other things, the identification and collection of the assets of the estate, the safeguarding and investment of those assets pending distribution, the payment of debts and liabilities owed by the estate, the filing of appropriate tax returns for the Deceased and the estate, and the distribution of assets to beneficiaries in accordance with the provisions of the Will.
Determining whether the deceased left a will
An executor must use reasonable efforts in searching through all of the places where the Deceased kept his or her papers and records, including electronic devices, to identify his or her more recent Will.
If only a copy of the Will is found, the executor should check with the lawyer or law firm who prepared the Will, if he or she can be identified, to determine the whereabouts of the original Will. If a trust corporation is named as an executor, the executor should contact it to determine whether it holds the original Will in safekeeping.
A search of British Columbia's Division of Vital Statistics Wills Registry must also be conducted. The Will Search Certificate issued in response to an inquiry will indicate whether a Will Notice was ever filed by the Deceased. If so, the Notice will confirm the date and location of the Will.
Funeral and burial arrangements
Although funeral and burial arrangements are usually made by family members, it is the executor who has the legal authority to make those decisions. Directions contained in a Will as to the wishes of the Deceased are not legally binding on the executor, but they are generally followed. When making funeral and burial arrangements, unless the Will directs otherwise, an executor must ensure that the costs are reasonable given all the circumstances.
Identifying beneficiaries
An executor is required by the Wills, Estates and Succession Act (WESA) to mail a notice of an application to probate a Will, together with a copy of the Will, to each of the following persons:
- All executors and beneficiaries referred to in the Will
- All persons who would have been entitled to share in the estate if the Deceased had died without a Will (i.e. the next of kin)
- If any person referred to above is a minor, the parent or guardian of the minor and in some cases, the Public Guardian and Trustee of British Columbia
- If a person referred to above is mentally disordered, any committee of that person appointed by the Court to manage his or her affairs and the Public Guardian and Trustee.
Ascertaining and valuing assets
The executor will also need to:
- List the contents of all safe deposit boxes held in the name of the Deceased and obtain valuations of any securities and valuables found in them
- List and value personal effects including paintings, jewellery, furniture, furnishings, boats and automobiles
- Write to banks, trust companies, credit unions and other financial institutions where the Deceased may have had accounts
- Identify, review and secure all digital assets owned by the Deceased
- Write to insurance companies to obtain particulars with respect to any insurance policies on the life of the Deceased and submit claim forms if any proceeds are payable to the estate
- Determine whether there are any private or government pension amounts or death benefits payable and complete and submit the forms required to obtain payment
- Collect any amounts owed to the Deceased by his or her employer, including salary, holiday pay and group benefit amounts
- Make inquiries concerning any registered retirement savings plans, registered retirement income funds and tax free savings accounts owned by the Deceased, and determine whether a beneficiary designation in favour of any persons was made in respect of any such plans or whether the proceeds are payable to the estate
- Ascertain and value all business interests owned by the Deceased, including partnership interests and the shares of privately held companies
- Conduct a title search in respect of all real property owned by the Deceased and obtain particulars concerning any outstanding mortgages, other encumbrances, and related agreement
- Determine whether there are any debts owed to the Deceased.
Safeguarding assets
One of the most important duties of an executor is to secure and protect the assets of the estate pending their sale or distribution to beneficiaries. Depending upon the nature of the assets, an executor might be advised to take valuable papers, securities, jewellery or other items into his or her custody. The executor should also:
- Examine existing insurance policies on real property, household contents, automobiles, boats, and other tangible assets to determine whether the coverage is adequate
- Ensure the regular inspection of property
- If the Deceased owned a business, arrange for its ongoing management.
Debts and liabilities
The executor will also need to ascertain the debts and liabilities of the Deceased by reviewing his or her papers and records, including electronic records, and by making appropriate inquiries of third parties. These debts and liabilities may include:
- Funeral and burial expenses
- Medical expenses
- Income tax liability
- Credit card debt
- Telephone, cable, utility and other ongoing bills
- Secured and unsecured debt.
An executor should seek legal advice concerning the possibility of advertising for creditors, which may provide protection from creditor claims after estate assets have been distributed.
Tax returns
In most cases, it will be necessary to prepare and file appropriate tax returns for the Deceased and the estate. An accountant who is experienced in estate administration and tax should be consulted about such filings and whether it is necessary or advisable to apply for Tax Clearance Certificates pursuant to the provisions of the Income Tax Act. If an executor or administrator distributes the assets of an estate without obtaining a Clearance Certificate, he or she may be personally liable for any unpaid taxes, interest and penalties owed by the estate.
If the Deceased owned assets' outside of Canada, it may also be necessary to prepare and file tax returns in the foreign jurisdiction where those assets are located.
Paying cash legacies and transferring specific property gifted by the will
The executor will need to realize sufficient funds to pay any cash legacies specified in the Will and will eventually be required to transfer any personal effects or other tangible property left to specific individuals. Unless the Will directs otherwise, the cost of packing, insuring and shipping property to a beneficiary should be paid by the beneficiary.
Residue of the estate
The residue of an estate is what is left after debts and liabilities have been paid, cash legacies and other specific bequests have been satisfied, and any testamentary trusts have been funded. A properly drafted Will should specify who is to share in the residue of the estate and, if more than one person, in what proportions.
Will variation rules and restrictions
Under WESA, a surviving spouse or child of a Deceased has six months from the date when the Grant of Letters Probate is issued in respect of the Deceased's Will to apply to the Supreme Court of British Columbia for a determination as to whether the Deceased made adequate provision in the Will for him or her. Upon the hearing of the application by a spouse or child, the Court can vary the terms of the Will as it considers appropriate. An executor is prohibited from making distributions from the estate until the expiration of 210 days following the issuance of the Grant of Probate unless all of the interested parties have consented to the proposed distribution.
Keeping proper accounts
An executor must account to the residuary beneficiaries named in the Will for all the assets of the estate, including all receipts and disbursements. Beneficiaries are also entitled to review invoices, cheques and other voucher material in support of the accounting. If a beneficiary is not satisfied with the accounting, he or she may require that the executor have his or her accounts reviewed by the Court.
Accordingly, it is imperative that an executor keep accurate and complete accounts of his or her dealings with the estate assets, along with supporting voucher material. An executor who cannot account for all assets, receipts and disbursements, may liable for any losses and funds not properly accounted for in respect of the administration of the estate.
Executors compensation
Under law of British Columbia, unless the Will directs otherwise or the Deceased and the executor entered into a fee agreement, an executor may be paid a fee for the time and effort spent administering the estate that does not exceed 5 per cent of the gross aggregate value, capital and income, of the estate. An executor may also claim an annual care and management fee for managing the investment of estate assets up to a maximum of 0.4 per cent of the annual average market value of the estate assets. If there is more than one executor, the executors must share these fees.
The fees referred to above represent the maximum that can be claimed, unless the Deceased directed otherwise or there is a fee agreement in place. When determining exactly how much should be paid, a Court considering the matter will take into account the following factors:
- The value of the estate
- The care and responsibility involved
- The time occupied in performing the executor's duties
- The executor's skill and ability
- The success resulting from the administration of the estate.
We can help
The lawyers in our Wealth Preservation Group regularly advise executors and administrators on all legal matters pertaining to the administration of estates and the duties imposed upon them, including:
- Searching the Division of Vital Statistics records for notices of existing Wills
- Advising on the validity of Wills
- Identifying beneficiaries and next of kin who may be entitled to share in an estate
- Advertising for creditors
- Advising on claims made against an estate
- Identifying assets, conducting title searches and advising on all property related issues
- Preparing and filing the Affidavits and other documents required as part of an application for probate or administration
- After the Grant of Probate is issued by the Court, preparing the documents necessary to transmit estate assets to the name of the executor or administrator and registering those documents with the transfer agents (in the case of securities) and the Land Title Office (in the case of real property)
- Preparing the documents required to transfer property to beneficiaries
- Assisting with the preparation of the estate accounting
- Preparing Releases in favour of the executor or administrator for the beneficiaries or next of kin to sign prior to any distribution of assets to them
- If a Court review of the executor's accounting is required, preparing and filing the necessary affidavits and documents and attending at the hearing to have the accounts and any compensation claim approved.
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