(Almost) everything an executor needs to know

In a recent post, we discussed tips to help you choose an executor for your Will. In this post, we tackle some of the nitty gritty an executor is usually responsible for.

While an executor’s responsibilities technically only begin once the Will’s often long probate process is complete, the reality is most executors will become involved long before this and usually around the funeral of the person whose Will they’re executing.

Before officially becoming an executor

Whether the executor is a family member, a friend or even a third-party trustee, it’s a good idea to discuss funeral arrangements and wishes long before a person’s passing. Ideally, funeral instructions should be left in a separate agreement or memo and discussed with other family members. That way, when the time comes, there’s no confusion or disagreements related to how the person wants to the remembered.

(At this time, it’s also a good idea for the executor to ask for a list of important information — not just financial, but also the names and account numbers for home insurance, utilities and the like, a list of valuable art or collectibles, as well any agreements the executor should be made aware of like, for instance, divorce or separation agreements from a former relationship. And of course, the executor will want to make sure they have the most recent version of the Will.)

Following the funeral

Around the time of the funeral, the funeral director will likely notify CPP and OAS to ensure eligible pension amounts, including a $2,500 taxable CPP death benefit, are transferred to the surviving spouse (if applicable). Notifications will also need to be sent to the Canada Revenue Agency (CRA) as well as to Equifax and TransUnion.

Once the funeral has passed, typically the next unofficial step for an executor is to provide the lawyer handling the probate application with an inventory of assets. Some assets may be subject to joint title with a widowed spouse or with children and others may be subject to beneficiary designation. A lawyer will need a total of those assets so that they are not included in calculating the probate fee.

Although all bank and investment accounts are typically frozen, once the approximate probate fee can be calculated, the firm that handles the deceased investments will usually release funds to pay the probate fee. It’s not common for the executor or family members to be required to cover the fee until the estate is settled.

If the deceased person had previously been living in a retirement home or a rental accommodation, and there are no other properties to consider, real estate is reasonably straightforward for an executor to deal with. If, however, there’s an owned primary home or a cottage up north, the executor will want to make sure these properties are properly secured — for instance, by changing the locks and ensuring the heating stays on and pipes don’t burst in the winter. They’ll also want to make sure utilities and any mortgage or rent payments continue to be paid until the properties are sold and vacated — or come to an arrangement with the mortgage company or landlord until after the probate period.

The executor will also want to cancel about every kind of legal document like the deceased’s driver’s license, health card and passport as well as credit cards, debit cards, subscriptions and memberships. The one document that should not be cancelling right away is the deceased person’s Social Insurance Number (SIN), as this is a vital link to the tax system until after probate and the estate is settled with beneficiaries.

Next, the executor will want to be in touch or meet with the deceased’s lawyer, financial and insurance advisors and accountant to ensure everyone is on the same page about understanding the estate’s value and any unforeseen issues.

After probate — the real work begins

Once probate has been issued, the executor will be responsible for selling the deceased’s real estate holdings. It’s always a good idea to interview three agents and to get the properties valuated by an impartial evaluator to assuage any concerns from family members who may have an inaccurate sense of a property’s value.

As for investments like stocks, bonds and mutual funds, these are usually liquidated once probate is granted. An interim distribution can take place thereafter where 60 to 70% of the funds can be transferred to beneficiaries with the remainder held back for tax liability until the estate is fully settled, which can take another year or two.

Once the funds are fully distributed and all aspects of the Will are taken care of, the deceased’s Social Insurance Number can be cancelled. A release should be drafted and signed by the law firm handling the estate to confirm that the executor has completed their duties.

Tying up loose ends — and getting paid

In Ontario, the province has the right to audit the estate for up to four years following a death, so it’s a good idea to hold on to any notes and documents that could be helpful for auditing purposes, should that be necessary.

How or whether the executor is paid for their services is another topic that should be discussed long before a person’s passing. If the executor is a family member, they’ll often agree to get remunerated with a gift from the estate — if they get paid at all — rather than getting paid as an estate trustee, which is taxable. Increasingly, as estates become more complex, executors choose to hire a third-party agent. There are often specialized agencies or expert individuals who can act as the executor’s representative to handle most of the work of executing the Will. A person may even choose to directly name a corporate trustee in their Will at the outset instead of an individual as executor. While there’s obviously a cost associated with bringing in a third party, executing a Will can be complicated and time-consuming and it’s usually money well spent.

Ask us for a copy for our Executor Checklist, a helpful step-by-step document for executors and anyone planning their Will. Reach out to us anytime — we are always here to help.