Table of Contents
- Definition of an Executor
- What is the Administration of the Estate?
- Importance of Understanding Executor’s Duties and Responsibilities
- Understanding the Duties and Responsibilities of Executor in Canada
- The Duties of an Executor
- Collecting Documents
- Applying for Probate
- Making Funeral Arrangements
- File the Final Returns and Clear the Taxes
- Identifying Beneficiaries
- Issuing Notices to Creditors
- Publishing Ads in the Newspaper
- Safeguarding the Assets
- Distributing Assets to the Beneficiaries
- Taking Written Consent of Beneficiaries Before the Final the Distribution
- Closing the estate
- Bottomline
Executor duties are long and demanding. Their role begins right after the testator’s death and lasts for many months, or if the estate is large and legally complex, several years.
The following is a discussion of an executor’s duties and responsibilities:
Definition of an Executor
An executor is an institution, or a person appointed by a testator (will maker) or the court to carry out the detailed terms of a person’s will (ordinarily).
What is the Administration of the Estate?
It is the management of assets and liabilities of the person who has died, including the ultimate distribution and closure of their estate.
Executors have to ensure that the estate administration takes place as the wishes of the deceased demand.
Importance of Understanding Executor’s Duties and Responsibilities
People ought to know the executor’s duties because anyone can find themselves in the role of executor, testator appointing an executor, or beneficiary receiving their interests from an executor.
Understanding the Duties and Responsibilities of Executor in Canada
An executor is a temporary owner of an estate in Canada. Most inheritances in Canada require an executor.
His role is that of a custodian; in case of negligence, he can be personally liable to compensate for the loss caused.
The Duties of an Executor
- 1. Collecting Documents
It is a crucial stage immediately after the death of a person.
The executor needs the documents to file for probate and perform other necessary functions, such as interacting with financial institutions and companies.
- Where to find the documents?
- At his lawyer's office
- In the records of a surrogate court
- In the deceased’s house
- 2. Applying for Probate
The executor shall apply for probate. Probate is the certification by the court that the will (which happens to be attached to the application) is genuine and that the person applying to act as an executor is entitled to adopt this role.
- 3. Making Funeral Arrangements
An executor takes care of most of the deceased’s post-mortem duties, including arranging the funeral and informing the beneficiaries. He is entitled to compensation as agreed upon for performing these duties.
- 4. File the Final Returns and Clear the Taxes.
The next step he takes is to file the final income tax returns for the deceased. He must carefully detail the deceased’s finances for due appraisal and taxation.
At the end of this process, the executor shall apply for the certification to relieve the executor of his or her liability.
This step is crucial to unlocking the next steps of estate administration.
a. Following are some of the assets that an executor needs to mention for taxation:
- Land
- Investment and bonds
- Registered Saving funds
- Rights and Things (What the deceased was entitled to receive but had not yet received)
- Business shares and companies
- Any other plans like lifetime education plans, etc.
- 5. Identifying Beneficiaries
The executor will examine the will to identify the beneficiaries. He will also check any deeds, such as trust or joint-ownership deeds, to see if any other beneficiaries may have missed his notice.
- 6. Issuing Notices to Creditors
Similarly, the executor issues notice to the creditors so that they can claim any funds that the deceased owes them. The executor must satisfy all the creditors before the distribution or closure of the estate takes place.
- 7. Publishing Ads in the Newspaper
The executor then publishes an ad in a newspaper “with wide circulation” to inform the public at large about the individual’s death.
The purpose of this ad is that anyone who thinks he has a share in the estate or money receivable from the deceased could show up and claim the same.
A specific period is given in the notice within which the claimants can make a claim.
- a. What happens if a claimant shows up after the distribution of the estate?
Failure to publish the said notice can lead to personal liability of the executor to make compensation.
However, according to the courts, if the executor published that notice per the rules but no one claimed it within the stipulated period, the executor will have no liability.
- 8. Safeguarding the Assets
Being the custodian, trustee, or owner (for the time being) of the estate, the executor should protect the interests of the beneficiaries and safeguard the estate. Such duties can include:
- He should ensure timely payment of dues, utility bills, etc.
- If the estate owns a business, ensure that the licenses remain valid.
- Similarly, the executor should prevent anything that harms the estate's interests.
- 9. Distributing Assets to the Beneficiaries
Getting all the beneficiaries to agree can be a tough task. As Edgar A. Guest recalls his experience as an executor:
His children hate the sight of me
Although their friend I’ve tried to be
And every relative declares
I interfere with their affairs.
Now when I die, I will never ask
A friend to carry such a task.
I’ll spare him all such anguish sore
And leave a hired executor.
Anyhow, one of the executor’s most important duties is to prepare a layout for the distribution of the estate.
Following are the sources which guide him for the distribution:
- The Will
- Any document stating the non-binding wishes of the deceased.
- Court directions (if any).
- Trust deed (if present)
According to the trust deed, it can either be the executor’s discretion to distribute the assets as he likes, or there can be a binding trust deed. Similarly, there can be a condition mentioned in the deed stating the age of the children at which they should get the assets or any other condition.
- 10. Taking Written Consent of Beneficiaries Before the Final the Distribution
Regarding the consent and agreement of the beneficiaries, he should do the following:
- 1. Take all beneficiaries on board.
- 2. Build consensus among them.
- 3. Get consent: Before the distribution of the estate, the executor shall prepare a return and get it signed by all the beneficiaries, stating that they agree to the plan and will not sue against the estate.
- 11. Closing the estate
When all the work relating to the administration of the estate is finished–the estate distributed, the debts due paid over, and the final accounts sanctioned–the executor or estate trustee may give formal notice that the estate is closed. Observing this notice is different in different parts of Canada. Where the notice is necessary, like in the province of Quebec, it has to be registered in a public registry such as the Register of Personal and Movable Real Rights (RDPRM). In others, there is no legal requirement to file publicly, though the executors usually have a duty to tell the beneficiaries, the creditors and other interested parties directly and may even advertise the closure status in local newspapers or online. The objective is to bring transparency, ascertain the discharge of the executor and make the closure of the estate administration formal.
Bottomline
An executor undertakes the most important function after the death of a person. He must manage the assets, safeguard them, and distribute them to the beneficiaries as per the requirements. He is also the custodian of the rights of the beneficiaries. Nonetheless, it is equally essential for the testator to ensure that he assesses the executor well before choosing him.