More & McLeod, Barristers & Solicitors
The Executor and Trustee
By: James B. More LL.B.
The executor and trustee of an estate is required to:
1. Make funeral arrangements for the deceased. The arrangements made should, if possible, be in accord with the wishes of the deceased and in keeping with the social and economic status of the deceased i.e. the arrangements should not be more lavish and expensive than expected by the beneficiaries.
2. Determine what the assets of the estate are, secure and safeguard the assets and insure any assets that are usually insured such as real estate, motor vehicles, valuable jewelry and artwork.
3. Redirect mail and cancel subscriptions.
4. Terminate any tenancy.
5. Complete claims for life insurance, company and government pensions.
6. Apply for Canada Pension Plan death benefit.
7. If the trustee has not already done so, consult with and retain a solicitor for advice as to how to proceed with the administration of the estate. The trustee and the solicitor will discuss and agree on what duties will be performed by the solicitor and what duties will be performed by the trustee, the compensation to be received by the solicitor and the trustee’s entitlement to compensation. If the solicitor is to perform some or all of the duties of the trustee the solicitor and trustee will discuss what portion of the trustees compensation will be paid to the solicitor.
A trustee with little or no experience or aptitude for financial matters may want the solicitor to perform most of the duties of the trustee.
The trustee and the solicitor will discuss whether it is necessary to obtain Letters Probate ( Certificate of Appointment of Estate Trustee With a Will ). Whether Letters Probate are required or not depends on the nature of the assets of the estate. If the deceased owned real estate in his or her name only it is usually necessary to obtain Letters Probate.
8. Determine what the debts of the estate are and make arrangements to pay those debts to the extent that there are estate assets available to pay those debts. The trustee should advertise for creditors. The solicitor will assist the trustee in doing so.
9. File income tax returns and pay all income taxes owed by the deceased and the estate of the deceased. Special tax rules apply on the death of a taxpayer that can result in a substantial tax liability. The trustee is personally liable for any unpaid income taxes and should obtain a tax clearance certificate.
10. Arrange for distribution of household and personal effects to beneficiaries.
11. Sell household and personal effects, if required.
12. Distribute the estate in accordance with the terms of the will. A "rule of thumb" is that the trustee has up to a year to distribute the estate of the deceased. It can take longer because a prudent trustee will apply for and obtain a tax clearance certificate from Canada Revenue Agency and this process is lengthy.
Pending receipt of a tax clearance certificate the trustee may make an interim distribution to the beneficiaries although the trustee is not required to do so.
The trustee must ensure that all debts including income taxes have been paid or that adequate funds have been set aside to pay such debts prior to making any distribution of the estate.
It is customary for the trustee to provide all beneficiaries with an accounting and obtain releases from all beneficiaries prior to making any distribution to the beneficiaries. The solicitor for the estate will assist the trustee in preparing this accounting and draft the releases.
13. Invest the assets of any ongoing trust such as a trust for minor children in accordance with the terms of the will and the Trustees Act.
14. Maintain proper accounting records and keep beneficiaries advised as to the status of the administration of the estate. If beneficiaries are kept informed they are far less likely to raise objections to the manner in which the estate is being administered.
A. Life insurance proceeds payable to a named beneficiary and jointly-owned property are not assets of the estate. However, the mere fact that property is registered in joint ownership does not prevent an interested party from claiming that the surviving joint owner was holding ownership of the property in trust for the estate of the deceased.
B. While the trustee derives his or her authority from the will, the court in granting Letters Probate in effect certifies that the probated will is in fact the last will and testament of the deceased. The trustee after obtaining Letters Probate may proceed with the administration of the estate knowing that the validity of the will and his or her authority derived from the will cannot be challenged at a later date.
C. Probate tax is one - half of one percent on the first $50,000.00 of the estate and one and one - half percent on the value of the estate in excess of $50,000.00. This tax is relatively insignificant when it is considered that R.R.S.P. proceeds or R.R.I.F. proceeds payable to a child or children or any person other than a spouse may be taxed at a rate close to 50 %.