Being asked to be the Executor of a Will (or the Executor of an Estate) is one of the greatest possible honors you can receive. It is a huge sign of trust bestowed upon you by the friend or family member in question. At the same time, being an Executor can require an enormous amount of work—becoming almost a full-time job in some cases.
Most Executors will need the support of both lawyers and accountants to get the job done properly. The scope of the task varies, ranging from 10 hours of work to over 240 hours per year when the estate holds large investments or many rental properties. Not all estates will be wrapped up in one year either—another reason to consider how accepting the appointment will change your life.
If you decide to become the Executor of a Will, it’s important to understand the commitment that you are making. Executors bear a significant legal burden and they can be sued for mismanagement of an estate. You will want to make sure that you have all the information to ensure that you can fulfill all the duties of an Executor and avoid any issues.
At RLB, we understand the duties required of an Executor from firsthand experience. It’s important to us that you understand them too—so you know where you can get the appropriate support, if you need it!
1. Notifying the Beneficiaries
One of your first duties as an Executor will be to identify the beneficiaries in the will and arrange a meeting to notify them that they are named in the will as a beneficiary. This sounds fairly straightforward, but there are a couple of reasons why you might want professional support.
- Beneficiaries might be upset by what they receive. Having a professional there can help diffuse the situation—plus they’ll have experience dealing with similar reactions!
- Executors are also under a legal obligation to find the beneficiaries (or prove to the court that they have attempted to do so). Sometimes it is necessary to put ads out in the paper—or even hire a private detective! Our team has experience with this process; we know what is legally required and how to provide proof of a proper search.
2. Applying for Probate
Probate is the process used by the courts to approve a will as valid and confirm the appointment of the Executor. Applying for probate is not necessary in all cases, but banks will want to know a will is legal and valid before transferring assets between accounts. Usually a lawyer will help you apply for probate—but the Executor will need to gather the required information themselves. This is where help is often welcome.
In addition to applying for probate, you will need to pay a probate tax to the province in question. You will also need to file an information return with the Canada Revenue Agency (CRA) on every account plus assets valued. For example, this includes any pieces of real estate, plus items like artwork and jewellery. This can be a major task for larger estates.
3. Keeping Estate Accounts
This is the ongoing portion of the estate. The estate accounts are similar to a business’ financial statements, but with different rules. Estate accounts must differentiate between capital assets and revenue. For instance, you may have a beneficiary who is entitled to receive income from a property (revenue), but someone else who is going to receive the actual property (the capital asset).
Estate accounts require you to provide an ongoing breakdown of all the transactions that have occurred in the estate for the period in question, these statements are required to be prepared prior to submitting them to your lawyer for passing (approval of transactions) in court. Accountants are your best friends for this job!
4. Completing Tax Returns
Just like a business, if the estate keeps earning income, it has to keep paying taxes. And if you are the Executor of that estate, you are responsible for ensuring the estate pays the taxes before distributing assets to beneficiaries. The government can come after you personally for any taxes owed!
Getting the support of an accountant is a key part of completing tax returns for large estates too!
5. Maintenance of the Estate
Last but not least, the Executor is responsible for the overall maintenance of the estate. This means caring for any properties, keeping track of investments, paying bills, notifying creditors and more. One of the largest tasks in any estate are the relationships to be managed; the Executor must be on good terms with the beneficiaries, banks, lawyers and accountants. He or she must mediate communication between them and keep the whole group working together—which is often the most difficult job of all!
Being the Executor of a Will requires you to comport yourself with honesty, integrity and reliance. The role of the Executor is a high honor and it comes with the highest obligation imposed by law, so misconduct or mismanagement is looked upon harshly. Compensation varies depending on the size of the estate, but the Executor of a Will in Ontario is entitled to charge 5% of the gross aggregate value of the estate. Most of the time, the position is simply about honoring the memory of a dear friend or family member.
If you are considering accepting such a position, remember to consider the five points above and think about where you will need support. Will you have the time and the skills to take on this demanding task?