The MoneyTalk Executor Checklist
Being named an executor in a loved one’s Will can be a great honour. But it can also be confusing and time-consuming if you don’t know what to expect. This checklist may help you understand your duties.
Ask anyone who has fulfilled the role of being an executor, and they may tell you that what they initially thought would be an easy administration of a simple estate is rarely so. Any estate, whether vast or modest, can quickly become complicated by outdated or incomplete Will drafting, infighting between heirs, and out-of-country — or even missing! — beneficiaries.
The duties of an executor are extensive and time-consuming, says Susan Mabley, Associate Vice President, Private Trust at TD Wealth. “It can take well over a year to fulfill your duties as an executor,” she says. “If the estate has any complexity, such as a trust or foreign beneficiaries, it can take much longer.”
No two estates are the same, and estate laws can vary from province to province. But while administering an estate can be complicated and requires some legal and financial knowledge, there may be resources available. “If you can’t do it on your own, there are corporate executors who can assist,” says Mabley. “They can help with getting appraisers, collecting assets, record keeping, tax returns, and ongoing communication with beneficiaries. It will help alleviate some of the stress that often accompanies the death of someone we love.”
If you’ve been asked to be an executor (or a “liquidator” as it’s known if the estate is administered in Quebec), you may wonder what your duties could entail. Before you accept, this general checklist may help guide you through the process.
In the first weeks…
Your time may be taken up notifying family and friends of your loved one’s death and making funeral and burial arrangements. This can be an opportunity to decide if you want to act as executor: Just because you’ve been named in the Will doesn’t mean you have to accept the appointment. If you do take on the job, it’s time to start a thorough and clear record-keeping system of expenses incurred and decisions made.
Locate the Will
There may be multiple Wills, if it has been updated from time to time. For many tasks, it can be important to locate the original Will (not a copy), as well as any Codicils — a legal document that is used to make minor changes to the Will. You can seek professional advice to determine the validity of any testamentary legal documents and to help understand the terms. You may also ask for a few notarized copies of the original Will as these will be required to collect assets.
If the deceased was actively employed, you should notify their place of work and contact their human resources department. They can help you sort out any employment-related death benefits.
Deal with urgent matters
If there are pets, crops, livestock, or anything that needs to be moved for shelter, care or safety, you will need to do that as soon as possible. Secure valuable items and any real estate by having the locks changed or hiring a security company.
Obtain the death certificate and start record-keeping
You may need an official government death certificate, also called a Medical Certificate of Death, which is issued by the provincial Coroner or attending physician. This document is needed before any burial or cremation can take place. Mabley suggests you should also request at least 10 copies of a Proof of Death statement from the funeral home. These statements will be required for proving death throughout the administration of the estate, and dependent on the number of assets.
Notify government agencies and service providers
You will need to notify Service Canada in order to cancel any Old Age Security or Canada Pension Plan/Quebec Pension Plan benefits. As well, Canada Revenue Agency (CRA) should be notified to cancel any tax benefit programs, like GST/HST payments or the Canada Child Tax Benefit. You should also cancel any cell phone, internet, cable services, and any print or online subscriptions.
In the first months…
This is where the rubber can meet the road for executors. With the most urgent matters out of the way, you will need to immerse yourself in the formalities and paperwork of being an executor. If you think this might be over your head and need help, now may be the time to consider engaging a trust company to help guide and support you through the entire estate administration process.
Assemble your professional team
Being an executor comes with legal liabilities. Find trusted professionals like lawyers and accountants who can advise you along the way on required filings and tax matters.
Document assets, liabilities, debtors/creditors, and beneficiaries
Find out what is owned by the deceased as well as what is owed by them or to them. Obtain appraisals and valuations. Gather at least three years of tax returns. Obtain information on all next of kin, including children (biological or adopted), and any marriage certificates or divorce orders. Secure contact information for anyone named in the Will as a beneficiary.
Arrange for the guardianship of children
For minor children, any guardianship declared in the Will only lasts for 90 days from the date of death. During this period, the guardian must apply to a court for permanent custody.
Advertise for creditors
It can be a good idea to advertise the death. This can help to protect yourself from personal liability from potential creditors who will need to be paid out of the estate before any assets are distributed to beneficiaries. You can now do this online. If creditors come knocking after you have distributed the estate, you could be held liable for that money.
Apply for Probate
Unless assets are rolling over from one spouse to another, the estate will likely go through probate. During this process the Will is authenticated, and the executor is provided with the authority to act on behalf of the deceased. Probate will be required to access assets from financial institutions and is usually required to sell or re-register real estate assets. Often referred to as the estate administration tax, the probate fee is due at this time and is based on the value of the estate assets, though the amount can vary by province.
Open an estate bank account
A bank estate account gives the executor an account in which to collect money and make payments from. In some circumstances, you may also need to request a Trust Account Number from the CRA. This will be used for the tax filing of income earned on estate assets after the date of death.
In the months to come…
There’s light at the end of the tunnel! Once the Will has been probated, the deceased’s assets can be collected from financial institutions. Property, personal effects, furniture, and more can be sold or distributed. Throughout this time, ongoing communication with the beneficiaries is key. In some cases, beneficiaries may request that their inheritance be kept in existing securities or may want to keep real estate — it’s the executor’s responsibility to know.
File a final tax return
If the death occurred between January 1 and October 31, you have until April 30 of the following year to file the final tax return. If it occurred between November 1 and December 31, the final return will be due six months after the date of death. Tax penalties could potentially reduce the estate’s proceeds if you miss these deadlines.
Distribution of assets
Once you have paid the estate’s debts, expenses and filed the final tax return, there may be an opportunity to distribute some of the assets of the estate to the beneficiaries. However, because an executor can be held personally liable for any errors, many executors will hold back a portion of the estate to account for potential reassessments by the CRA, unexpected expenses, or any other items until the estate is fully resolved.
Obtain a clearance certificate from the CRA
It is only after a Notice of Assessment is received from the CRA (with respect to the final tax return or any additional tax returns that may be required in certain circumstances), that the application for a clearance certificate can be made. This certificate confirms that an estate of a deceased person or a corporation has paid all amounts of tax, interest and penalties. Once clearance is provided, you have the green light to distribute any remaining assets to beneficiaries knowing that there will be no future tax liability.
Yes, though in some cases your job may not be over. “There are estates that will continue to have income,” says Mabley. “For example, think of those who own rights and licenses, or where common estate planning tools like testamentary trusts are established. The job of an executor can go on for many years.”
Mabley reiterates that executors don’t need to lose sleep over the amount of work, and complexity of tasks involved in administering an estate. While there are various online resources that may be helpful to the estate administration process, an executor will often benefit from seeking professional financial and legal guidance.