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Ten Steps to Being an Executor (view source)
Revision as of 04:33, 21 March 2019
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* If you’re named as the executor. | * If you’re named as the executor. | ||
== Step 2. Confirm the validity of the will == | |||
[[File:Being an Executor - Contents4.jpg|thumb|275px|right| link=| <span style="font-size:50%;">Image via www.istockphoto.com</span>]] | |||
Once you’re confident you have the original and most recent version of the will, you’ll have to make sure it’s valid. A will might be invalid if: | |||
* '''It was not properly signed or witnessed''': For example, a will must be signed at the end by the will-maker in front of two witnesses present at the same time. | |||
* '''The will-maker didn’t have the legal capacity to make a will''': To make a will in BC, a person must be age 16 or over and mentally capable of making a will. | |||
* '''The will-maker was under duress or subject to undue influence''': A will or a gift in a will may be invalid if the will-maker was dominated by or dependent upon another person who persuaded the will-maker to leave them something in the will. | |||
{{PLSTipsbox | |||
| text = If you have concerns about the validity of the will, or a reasonable belief that a newer will exists, it’s important to seek legal advice before taking any further steps with the estate. A court may be able to rectify — that is, correct or amend — certain flaws in a will. | |||
}} | |||
== Step 3. Protect the assets == | |||
As the executor, you’re holding assets for the beneficiaries. So it’s your responsibility to make sure the assets are safe and properly insured. For example: | |||
* Search for cash, jewelry, securities, and other valuables. Arrange for their safekeeping. | |||
* Lock up the deceased’s residence, if no one’s living in it. If it’s vacant and not being supervised, tell the police. | |||
* Check on the insurance of the home and any vehicles. Check the insurance expiry dates. If the deceased lived alone, check the vacancy provisions to ensure that the coverage continues — most home insurance is cancelled automatically if the home is vacant for more than 30 days. | |||
=== There are other things you should do right away === | |||
Other steps you should take to protect the assets include: | |||
* Notify financial institutions where the deceased held accounts on their death. | |||
* Cancel any credit cards. | |||
* Cancel any subscriptions and redirect mail to a safe location. | |||
* Apply for Canada Pension Plan death benefits. | |||
* If the deceased owned a business, arrange for its ongoing management. | |||
* If the will includes a '''trust''', take steps to ensure that the assets that form part of the trust are properly invested or kept in a safe place. | |||
{{PLSTipsbox | |||
| text = A trust is a part of the estate that is set aside in the will for a beneficiary, often a minor child, on certain terms. Many wills name the executor as the trustee as well. The trustee is responsible for: | |||
* making sure that all of the trust assets are properly invested or kept in a safe place, | |||
* filing annual trust tax returns, and | |||
* making payments to the beneficiary of the trust as instructed by the will. | |||
}} | |||
== Step 4. Arrange the funeral == | |||
The executor is responsible for making funeral arrangements and paying the funeral expenses. There are many decisions you’ll need to make, usually in a very short time period. For example: | |||
* Will the deceased be buried or cremated? | |||
* Where and when will the funeral or memorial be? | |||
* Will you publish an obituary and service announcement? | |||
People often leave instructions about what they want, either in their will or a letter. Try to honour the will-maker’s wishes, when possible. And consult their relatives. | |||
=== You should follow what the will says === | |||
Where the will sets out the will-maker’s wishes for burial or cremation, those wishes are binding on the executor, unless they’re unreasonable, impractical, or cause hardship. | |||
If you’re not willing or able to give instructions on burial or cremation, the deceased’s spouse may. If there’s any question about what the will-maker wanted, the executor has the legal authority to decide. | |||
{{PLSTipsbox | |||
| text = Take the invoices for the funeral to the bank where the deceased kept an account. If there’s enough money in the account, the bank will typically give you funds from that account to pay these expenses. | |||
}} | |||
== Step 5. Communicate with the beneficiaries == | |||
Once the funeral is over, family members and beneficiaries are often anxious to know about what happens next and when they will receive their inheritance. | |||
Once you understand the terms of the will, it’s important to communicate with the beneficiaries. Although you’re not strictly required to hold a meeting with them, doing so allows you to: | |||
* review the terms of the will and explain next steps, | |||
* set expectations around timelines for administering the estate and distributing the assets, | |||
* discuss your duties and liabilities as executor, | |||
* request approval if you want to charge a fee, | |||
* gather personal information from the beneficiaries (for example, their full name, address, and Social Insurance Number), and | |||
* discuss how the personal assets (such as photo albums or household goods) will be divided. | |||
== Step 6. List the assets and liabilities == | |||
Making an inventory of the estate is one of your most significant tasks as executor. The inventory lists the estate assets and liabilities, valued '''as at the date of death'''. | |||
Assets you may need to find include: | |||
* '''Bank accounts''': Contact the will-maker’s bank or credit union to get a picture of the account balances, outstanding loans, and investments held by the deceased when they died. You may want to pool all of the money into one account to make it easier to deal with. | |||
* '''Life insurance''': Check if the deceased had any life insurance policies, including group insurance or other plans. If so, you’re responsible for making any life insurance claims. | |||
* '''Wages and benefits''': Contact the will-maker’s employer. You’ll need to check if they still owe the deceased any income. Also, figure out if the spouse or family are entitled to any benefits arising out of the deceased’s employment. | |||
* '''Government benefits''': Contact Canada Pension Plan and Old Age Security to cancel pension benefits. Determine whether the surviving spouse or children are eligible for survivor or continuing benefits. | |||
* '''Investments''': Locate all original investment certificates, stocks, or bonds, and obtain the market value as of the date of death. | |||
* '''Real estate''': List all real estate that the will-maker owned alone or with others. List any mortgages. Have appraisals done, as of the date of death, on any properties that were not jointly owned. | |||
* '''Personal possessions''': List any other assets, including cars, boats, household goods, jewelry, electronic equipment, collections such as coins or art, and other personal effects. Estimate values. Where you’re not sure, get an appraisal. | |||
Any letters you write to request this information will need to include proof of death and a copy of the will to prove your authority to act for the estate. If a third party refuses to give you information about estate assets, you might need to consult with a lawyer. | |||
{{PLSTipsbox | |||
| text = As executor, you’re responsible to account for the estate assets. Keep '''records and receipts''' of any estate expenses paid and income received. Keep copies of all letters and forms you send. | |||
}} | |||
== Step 7. If necessary, apply for probate == | |||
As the executor, you may need to apply to court to '''probate''' the will. Probate is a legal process that confirms that the will is legally valid and can be acted on. Not all wills need to be probated. | |||
If everything’s in order, the court issues a '''grant of probate'''. This document allows other parties such as banks and the Land Title Office to be sure that you’re someone who’s authorized to deal with estate assets. See the section below on “Probating the Will.” | |||
=== Probate might not be required for small estates === | |||
If the estate involves less than $25,000, probate is not typically required. It’s up to the organizations who hold the deceased’s assets whether they’ll transfer them to you without probate. Contact them to find out what they require. | |||
=== Probate isn’t required for assets passing outside of the will === | |||
Probate is only required for estate assets. Not all things owned by the will-maker form part of the estate. Certain types of assets “pass outside the will.” This means you can transfer these assets to someone without a grant of probate (though you’ll still need a copy of the death certificate). | |||
Usually, '''property owned jointly''' by the will-maker and a joint owner automatically becomes the exclusive property of the joint owner. Common examples include a joint bank account or a house owned in '''joint tenancy'''. Joint tenancy is a way that property can be owned where each owner has the same interest in and an equal right to use the property — not to be confused with holding a property as tenants in common. | |||
Certain assets where the will-maker '''designated a beneficiary''' will also pass outside the will. The beneficiary is entitled to receive the proceeds when the owner dies. Examples include a life insurance policy or a retirement benefit plan where the will-maker named a beneficiary. | |||
Many couples will hold all their assets through joint ownership or with beneficiary designations to avoid probate. | |||
=== If the will-maker owned land === | |||
If the will-maker owned land other than in joint tenancy, then probate is required. The Land Title Office will require you to provide a grant of probate to transfer the land. This is so even if the will-maker’s interest in land is less than the $25,000 threshold. | |||
== Step 8. Deal with debts and taxes == | |||
Once you have the grant of probate (if probate is required) you’ll be able to transfer the estate assets into your name as executor. Once you have access to the deceased’s money, you can settle the deceased’s debts and any expenses that you incur in the course of administering the estate. These include: | |||
* the funeral expenses, | |||
* any lawyer or accountant fees, | |||
* any amounts owing relating to their home, including utilities or strata fees, | |||
* the probate fees, | |||
* municipal and income taxes owing, and | |||
* all other claims as of the date of death. | |||
You’ll need to do this before you distribute any assets. | |||
{{PLSTipsbox | |||
| text = If the estate doesn’t have enough money to pay its debts, it’s important to get advice from a lawyer as soon as possible. You don’t want to become '''personally liable''' for the debts. | |||
}} | |||
=== Protect yourself from liability === | |||
If you don’t pay the deceased’s debts, including any taxes owed, before you distribute the estate, you could be on the hook for the deceased’s debts. | |||
To find out who the deceased owed money to, look in the deceased’s records for evidence of mortgages, loans, and accounts with outstanding charges. | |||
Depending on the circumstances, you may want to advertise for possible creditors. Advertising for creditors involves placing a notice in the ''BC Gazette'', a government publication. A creditor will have 30 days after publication of the notice to come forward with a claim against the estate. After 30 days, you may distribute the estate and you won’t be liable for any creditor claims that weren’t raised. | |||
{{PLSTipsbox | |||
| text = As executor, you must notify a surviving spouse that he or she may have a right to the spousal home. If you transfer the home without providing proper notice, you may be liable. | |||
}} | |||
=== Prepare and file income tax returns === | |||
As executor, you’re responsible for filing income tax returns for the deceased and possibly for the estate: | |||
* You must file a tax return for the deceased for the year of death. | |||
* If the deceased didn’t file a return for any year before the year of death and tax is payable, you’ll need to file a tax return for the person for those prior years as well. | |||
* If the estate earns any income before distribution to the beneficiaries, you’ll need to file a tax return for the estate for each year after the date of death. | |||
* If the will establishes a '''trust''', you must file a tax return for the trust. | |||
If the deceased had assets or income in another country, you may need to file a foreign income tax return as well. | |||
After the income tax is reported, assessed and paid, apply for a '''clearance certificate'''. For your own protection, you should have this certificate before you begin to distribute the estate. For more information, see the Canada Revenue Agency publication ''Preparing Returns for Deceased Persons'', available at canada.ca/tax or by calling 1-800-959-8281. | |||
== Step 9. Account to the beneficiaries == | |||
Before you distribute the estate, you must give the beneficiaries an accounting of your administration of the estate and they must agree with it. | |||
Prepare a final statement of assets, debts, income, expenses, and distribution for the beneficiaries to approve. If they refuse to approve it, you will need to have the accounts reviewed by the court so that your administration is approved. This process is called the “'''passing of accounts'''.” | |||
In the accounting, set out any executor’s fee you’re charging and any expenses you’re claiming. If the beneficiaries don’t agree with your proposed fee, you’ll need to get your accounts reviewed by a registrar of the court, who will set the fee. | |||
{{PLSTipsbox | |||
| text = You should '''ask the beneficiaries to sign a release''' when they approve your statement of accounts. In the release, the beneficiary agrees, in consideration for receiving their gift from the estate, not to make any claims against you related to your work as executor. | |||
}} | |||
== Step 10. Distribute the estate == | |||
Once you ensure that all debts, expenses, and taxes have been paid, that all claims against the estate have been satisfied, and that your accounts have been approved by the beneficiaries or the court, you can distribute the remainder of the estate. | |||
If probate is required, the law says that you can’t distribute the estate until 210 days after probate is granted and no claim is made against the estate. If every person who has a potential claim on the estate signs a form saying they won’t challenge the will, you can go ahead and distribute sooner. There are certain people who can’t provide consent to early distribution, such as a minor child. | |||
=== The will can be challenged by the deceased’s spouse or children === | |||
In general, the will-maker is free to leave their estate to whomever they want. However, the law requires that the will-maker adequately provide for their spouse and children through the will. A spouse or child can apply to court for a share of the estate that is fair in the circumstances. | |||
A spouse includes a common-law spouse. This is a person the will-maker lived with in a marriage-like relationship for at least the two years prior to their death. | |||
=== The process of distribution === | |||
Estate assets are transferred first to the executor, and then to the beneficiary. These steps are often done at the same time. The Land Title Office has the forms for transferring '''real estate'''. Autoplan handles transfers of '''motor vehicles'''. | |||
First, distribute any '''specific gifts''' of money or property. Sometimes the will-maker attaches a separate list with the will that says who should receive particular items. That list may or may not be binding on the executor, depending on what the will says and the form of the separate list. | |||
If any cash and belongings remain after you distribute the specific gifts, divide what remains — known as the '''residue''' — as the will says. For example, the will may say to distribute the residue equally amongst the will-maker’s children. If the will doesn’t have a residue clause, you must distribute the residue as if there was no will. This is called “intestacy.” If this situation occurs, it’s best to seek legal advice. | |||
=== A witness may be able to receive a gift === | |||
Check if anyone receiving a gift under the will is a witness. They ''may'' be able to inherit under a will. The witness has to apply to court and show that the will-maker intended to make the gift ''even though'' the beneficiary was a witness. If the court isn’t satisfied, the gift to the witness is void. Either way, the remainder of the will won’t be affected. | |||
{{Being an Executor Navbox}} | |||
{{Creative Commons for PLS | |||
|title = Being an Executor | |||
|author = | |||
}} | |||
__NOGLOSSARY__ | |||
== You can name more than one person to act as executor == | |||
Two or more people can be appointed to act jointly as your executors. Generally, they’ll | |||
have to make decisions and act together. They’ll have to agree on many things, such as the selling price of your home or who gets the family photo albums. If one of them dies, the other may be able to act alone, if your will allows it. | |||
If you choose three executors, your will should be clear on what happens if they disagree. You can include in the will a “majority rule clause.” In that case, if there’s a disagreement, the executors can vote and the majority decides. Or you may insist all decisions be made unanimously. | |||
{{PLSTipsbox | |||
| text = If you’re thinking of appointing more than one executor, consider if they’d be a good team. You should discuss your wishes with all of them, preferably together. | |||
}} | |||
== How you can make the job easier for your executor == | |||
You can help your executor by taking these steps: | |||
* '''Register your will''', and tell your executor where the original will is kept. It should be easy for them to access. | |||
* '''Keep an up-to-date, detailed record''' of everything you own and owe. For example, record your bank accounts, retirement benefit plans, insurance policies, real estate, and pension benefits. Note any items owned in '''joint tenancy''' or that name a specific '''beneficiary'''. The executor won’t have to manage these assets. | |||
* '''Explain your plans''' to family members, the beneficiaries, or anyone who may be legally entitled to a share of the estate. Talking with them now may prevent problems later. | |||
* '''Review your will''' and your choice of executor every few years, and consider updating it when your circumstances change. | |||