The Duties of an Executor

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.   If you have a will, most likely your executor is your spouse.  If you have no spouse, or if your spouse is not the best choice to be an executor, then you will have to select someone who is.  You do have the option of naming an institution (e.g. trust company) to fulfill this duty but unless there are compelling reasons to make that choice, most likely you would select a family member or trusted friend (or advisor) to perform this role.

If you are looking to appoint an executor, having an understanding of what the role entails is helpful.  If you have been asked to be an executor knowing what your responsibilities, obligations and risks in discharging your duties are before you take on the task is vital.

The executor's role starts upon the death of the testator.  If we were to itemize many of the duties of the executor in chronological order, the list could appear as follows:

Initial phase

Arranging the funeral - Organizing the burial or cremation and funeral services according to the deceased's wishes contained in the will and ensuring that family friends and interested parties have been notified;

Locating and verifying the will and all relevant documents;

Locating and itemizing all accounts (including balances) held in the name of the deceased - This would include arranging for necessary immediate funds for the family from the institutions that held deposit accounts in the name of the deceased.  It would also involve cancelling all credit cards and subscriptions;

Itemize and verify all life insurance policies or other accounts with a named beneficiary - This would include RSP's, TFSA's, RRIF's, etc. which could also be a source of funds for the surviving spouse or children.  The balances of these vehicles which have a named beneficiary flow outside of the will and are not subject to probate.  Any disability and/or critical illness policies should also be reviewed to determine if there are any death benefits contained in the contract;

Make sure notice is given to the deceased's employer - This is especially important if the deceased was a member of an employee benefit plan which included death or survivor benefits;

Application for government plan provisions such as Canada Pension Plan - CPP may provide both death and survivor benefits;

Open a bank account in the name of the estate - To pay the expenses and debts of the estate;

Notify all beneficiaries on their interests - This would also include any named charities;

Consider hiring a lawyer to advise and assist -   A lawyer will assist with the paper work and ensure that the executor's obligations are discharged properly. All account and legal fees related to the settling of an estate are paid by the estate.

Protecting estate assets and paying off debts

Prepare a listing of all assets and liabilities - If there is a safety deposit box, open it and make a list of the contents;

Have assets valued - Some assets may require valuation and this includes stocks, bonds and other investments, business or farm assets and personal belongings;

Diligently try to locate all creditors - Verify any debts to family members as well as loans made to family members;

Take possession of assets - In your role as executor take into your possession all cash, jewellery and other valuables.  Make sure sufficient insurance is held on these assets to protect against loss.  This would also apply to all motor vehicles, buildings, recreational property and other assets of value that should be insured;

Deal with the principal residence - If the property was not held in joint tenancy, the executor will satisfy the testator's wishes according to the will and submit documents accordingly;

File the deceased's final income tax return - This would also include any returns required for the estate.  This task would most likely be performed by the deceased's accountant or another accountant retained by the estate;

Ensure estate liquidity - Set aside funds to cover the valid debts of the deceased including all taxes that may be owing.  If applicable, include a sum to cover your compensation as executor;

Obtain clearance from the Canada Revenue Agency - It is necessary to obtain an authorization document from the CRA confirming all taxes have been paid before assets can be distributed to the heirs.  This is extremely important as the executor can be personally liable if any distribution of the state is made before the deceased's debts, including income taxes have been paid;

Exercise prudent judgment and care - In order to reduce risk and exposure in your role as an executor exhibit the same degree of care and attention that the deceased would have exercised during his or her lifetime. Also, treat the estate assets and obligations with no less care than they were you own.

Preparing and submitting probate documents

Hopefully, after completing all of the tasks listed above, you will be ready for the final stage as your role as an executor.  In case you were wondering how long you have to complete settling the estate, the new rules on the Graduated Rate Estate (which taxes estates on graduated rates instead of top rates of tax) provide 3 years to finish the task.

Probating the will - Probating the will allows the executor to effectively discharge his or her role in settling the estate.  Probate documents must be submitted to the court.   Fees for probate are assessed by the court based on a provincial schedule.   Some assets do not require probate and these include assets which are held in joint tenancy or which flow by way of a beneficiary designation.

Distributing the assets to the heirs - Once letters of probate are received from the court the executor is now free to distribute the estate assets according to the will.  Sometimes, this process may be complicated by any wills variation act which may be brought against the estate.  Hopefully, this will not occur and the end result will be exactly what the testator envisioned in the drafting of the will.

Like most serious endeavours it is always recommended that you obtain professional advice to ensure that your obligations as an executor are discharged properly.  Knowing in advance exactly what those obligations are will allow you to make an informed decision if you are ever asked to act as an executor.