Serving as an executor can be a lot more challenging than is initially expected. People often underestimate the amount of work that goes into the role. This article will provide executors with helpful tips for carrying out their obligations successfully.

1. Understand an executor’s duties

The executor of an estate is the representative of the estate of a deceased person. Being an executor can be difficult, time-consuming and stressful. The executor is responsible for everything from obtaining a copy of the Will to communicating with beneficiaries and creditors. While not an exhaustive list, here are some of the duties of executors – review insurance coverage, close financial accounts, pay debts, taxes and fees and distribute assets to the beneficiaries. In some cases, an executor can be found personally liable for the debts of an estate. It is important that a person appointed as an executor educate themselves about what is involved before taking on the role, in order to ensure that they are comfortable with everything that is required, as once an individual begins to act as an executor is it is difficult to leave the role.

2. Locate important documents

One of the first obligations that an executor has is to locate and read the original and most recent Will of the deceased. In an ideal situation, the testator will have informed the executor as to the location of the Will and other important documents. If this has not been done, the executor will have to conduct a search for the Will. The executor should also obtain the original death certificate of the testator and certified copies which may be required by third parties such as Financial Institutions to confirm the executor’s appointment and enable them to act on behalf of the testator’s accounts and other assets.

3. Communicate

Settling an estate can often create tension amongst family members. Executors will be required to speak regularly with beneficiaries and family members to ensure that they understand the process and balance any potential conflicts of interest. It is important to be as transparent as possible and keep the lines of communication open. Family members should be told what actions are being taken to settle and distribute the estate, and what their interests are in the estate.

4. Carry out the Will as it is written

It is crucial that the executor abide by the terms of the Will. While this may seem obvious, sometimes executors may feel tempted to change an unpopular part of the Will in favour of what they believe to be fair or efficient. At other times, family members or beneficiaries of the Will may encourage the executor to alter a certain provision in their favour. It is important to remember that the executor’s role is to distribute the estate strictly as it was set out in the Will.

5. Pay debts and taxes before paying beneficiaries

One of the most important responsibilities of an executor is paying off any outstanding debts, taxes and fees. Sometimes, executors feel pressure by family members and/or beneficiaries of the will to distribute their interests right away, but if an executor pays a beneficiary before clearing all liabilities, they may be held personally responsible for doing so.

It is best practice to obtain a Clearance Certificate from Canada Revenue Agency which confirms that any taxes owing, interests and penalties have been paid by the estate. Doing so, provides the executor with clearance to distribute the estate assets with the knowledge that tax obligations have been satisfied. Executors who fail to obtain a Clearance Certificate may be held liable for paying any outstanding taxes up to the value of the estate (and possibly beyond in the event the executor was found to be grossly negligent).

6. Take your time – within reason

Administering an estate is time consuming. It can often take more than a year and could stretch out even longer depending on the complexity of the Will and nature of the various assets. An executor must strike the correct balance between ensuring that they take the time to understand the issues involved in the administration of the estate, while keeping estate settlement moving forward. Executors should be aware of the concept commonly referred to as the “executor’s year” during which time there is an expectation that the executor gather the deceased’s assets and administer the estate in a manner so that at least any cash bequests can be made within the year of death. It is possible that interest may accrue to cash bequests not made within the executor’s year unless the Will specifically disallows the application of interest.

7. Maintain records

Keeping good records is crucial. If beneficiaries have questions, the executor must be able to back up and support their decisions with the correct documentation. Since the executor is accountable to the beneficiaries for the assets of the deceased, it is vital that accurate records are maintained when dealing with the distribution of the estate, as well as records of all debts, expenses and taxes. Further, it may be necessary to submit the records to the court for approval known as the “Passing of Accounts” therefore detailed accurate records are essential.

8. Seek professional advice

Once you obtain the necessary documents, an executor will have a better understanding of just how complicated administering an estate may be. At this point, they may wish to seek advice from professionals whose expertise will assist in preventing costly mistakes. Executor duties often require consulting multiple professionals, including lawyers and accountants. In most cases, it is not appropriate to undertake the process of estate administration without the involvement of professionals.

9. Delegate where appropriate

An executor is not obliged to do everything personally. Executors are entitled to outsource many of the necessary tasks of estate administration. It is expected and encouraged that executors seek advice from professionals and other advisors. Delegation should be limited to appropriate tasks.

10. Protect yourself

Executors have a number of different responsibilities when managing the distribution of an estate. For peace of mind, there are two principal ways executors can protect themselves from personal liability:

(1) Executor Insurance: executor insurance will protect trustees who face any legal issues relating to decisions made in the course of estate administration.

(2) Obtain Releases from Beneficiaries: releases operate to discharge an executor from personal liability. They are typically presented to the beneficiaries at the time of distribution. The release should contain an acknowledgment that the beneficiaries received a full and adequate accounting of the administration of the estate and are satisfied with the information that was provided

For further information, or assistance with estate administration, please consult a TEP.