Sun
In a continuing series on consumer decisions, Michael Kane looks at what’s involved in being the executor of a will
An executor is the person named in a will to carry out the will’s directions. You may be honoured to be invited to serve as an executor, but ask a lot of questions before you agree. The task can be time-consuming and thankless. It all depends the adequacy of records, the number and location of beneficiaries, and the complexity of the “estate” — which comprises any land, house, money, investments, personal effects and other assets left by the deceased.
WHAT DOES AN EXECUTOR DO?
Your first challenge is to locate the will and read it as soon as possible. It will confirm if you were named as executor and may have instructions about the deceased’s wishes for organ donation, burial or cremation, funeral or memorial services.
Ordinarily, the family will take care of the funeral and ordering death certificates.
The executor’s next job is to locate all assets, ensure that they are safe and that sufficient insurance is in place, and arrange for probate — the process of getting a court to rule that the will is legally valid — if necessary.
You don’t need to stage a Hollywood-style “reading of the will,” but you must send a copy of the will and a copy of your Notice of Intent to Apply for Probate to all beneficiaries named in the will and anyone else who may have a legal claim to the estate, such as a common-law spouse, children, or a separated spouse.
Before distributing money and property according to the will’s instructions, you must cancel the deceased’s credit cards, accounts and subscriptions, and pay funeral costs, debts and taxes.
HOW HARD CAN IT BE?
Your job will be fairly simple if you are an executor of an estate in which there is only a house, a car, some personal belongings and a bank account, according to a free guide, Choosing An Executor, Being An Executor, from the People’s Law School at www.publiclegaled.bc.ca or 604-331-5400.
The job is more complicated if:
– There are many beneficiaries and they are difficult to locate.
– The deceased owned a business.
– The deceased had a lot of investments and debts.
– The will includes a trust.
– The will is challenged by someone who feels unfairly left out of the will.
BYPASSING THE ESTATE
Assets owned with another person, such as joint bank accounts, bypass the will. If the deceased owned land or a house in joint tenancy with another person, the survivor only has to file an application in the Land Titles Office along with the death certificate. This will register the land in the name of the surviving joint tenant.
Nor does the estate include insurance policies, registered retirement savings plans, registered retirement income funds — anything that specifically names a beneficiary.
However, the executor may be asked to provide a copy of the death certificate to insurance companies and RRSP administrators before they will pay out to the beneficiary. Sometimes they also ask for a copy of the will to make sure the deceased didn’t name a new beneficiary.
DEALING WITH PENSIONS
If the deceased paid into the Canada Pension Plan, apply to your local CPP office to tell them of the death and obtain any death, survivor or orphan benefits. You should also check with the deceased person’s employer about benefits available there.
If the deceased was receiving Old Age Security or other pensions, you need to inform those pension offices of the death.
DEATH AND TAXES
You need to file tax returns for any years for which the deceased did not file a return, and then you need to file a return for the year of death, covering the period from Jan. 1 to the date of death.
The executor must obtain a tax clearance certificate from Canada Revenue Agency before distributing the estate to the beneficiaries. It takes at least six months from filing a tax return to getting a clearance certificate, and longer if the estate is complicated, says Hugh McLellan of Vancouver lawyers McLellan Herbert.
KEEP CAREFUL RECORDS
Before distributing the assets, you should submit a full accounting of the estate’s financial activities and obtain a release from each beneficiary.
DO I GET PAID?
Any expenses incurred in settling the estate are paid by the estate. Sometimes the will states the executor’s fee, and this is the maximum the executor can receive. If the will does not list any fee, the executor may take up to five per cent of the gross value of the estate and five per cent of the income.
There is also a care and management fee up to 0.4 per cent of the average annual value of the assets if there is an ongoing trust. If the beneficiaries do not agree to the executor’s fee, the court can set it.
Sometimes the will leaves the executor a special gift for doing the job. The executor may prefer to take a gift rather than a fee because a fee is taxable but a gift (jewelry, cash, real estate, etc.) given under the will is not.
CAN I BACK OUT?
As long as you haven’t meddled in the estate, nobody can force you to be an executor. Even after probate has been granted, it may be possible to resign, according to the B.C. branch of the Canadian Bar Association. A good will always names an alternate or back-up executor.
If you decide to act as executor, you should decide whether to hire a lawyer to do the paperwork and advise you of your obligations. If you do, the estate pays the lawyer’s fees. In large or complicated estates, it’s a good idea to hire a lawyer and an accountant.
© The Vancouver Sun 2005