Where the deceased made a will, the personal representative of the estate will be the person appointed in the will as the deceased’s executor – now referred to as an “estate trustee with a will”. Where the deceased died without a will the person who serves this role is the administrator of the estate – now referred to as an “estate trustee without a will”. The role of the estate trustee is to wind up the affairs of the deceased, pay off any debts and distribute the estate to the beneficiaries of the estate.
The executor is a fiduciary and, in general, must
- act in the best interest of the beneficiaries;
- avoid conflicts of interest, for example, by refraining from transactions involving estate assets that result in a profit to the executor personally;
- exercise all discretion granted to them in a reasonable manner;
- invest trust assets in a prudent and cautious manner;
- act impartially and objectively with all beneficiaries.
The following is a summary of the typical activity performed by the estate executor, all of which activities must be performed by the executor as a fiduciary:
- Make appropriate funeral arrangements.
- Locate the will of the deceased, determine that the will is the last will of the deceased, or that the deceased had no will.
- Retain a solicitor.
- Determine the names and addresses of the beneficiaries/next of kin and notify them of their interest.
- Search for cash, securities, jewellery, etc. and arrange for safekeeping.
- Review will for any interpretation problems.
- Dispose of all perishable assets.
- Open estate bank account.
- Review insurance coverage and insure estate assets against fire and other perils.
- Make provision for the immediate needs of spouse and any other dependants.
- Collect income generated by the estate assets or payable to the deceased.
- Pay bills, mortgage payments, insurance premiums, credit cards.
- Re-direct mail and cancel health insurance coverage, driver’s license, cable, telephone, club memberships, subscriptions, credit cards and obtain any refunds which are applicable.
- Prepare inventory of original assets including safety deposit box listing, real estate, moneys on deposit at financial institutions, personalty, life insurance, any interest in an estate or trust and any other investments such as a mortgage.
- Arrange valuation of assets where necessary.
- Advertise for creditors and prepare inventory of debts.
- Ascertain any debts to family members and locate evidence regarding loan balance.
- Instruct solicitor to apply for the appropriate grant or certificate.
- Supply solicitor with information required to make the application.
- Prepare and file income tax returns for year of death and for all prior years due but not filed at the date of death.
- Make reasonable inquiries for next-of-kin if required.
- Consider any claims or potential claims against estate and obtain legal advice if necessary.
- Set aside reserve funds for estimated debts, taxes (including potential taxable capital gains on property such as a cottage) and estate trustee’s compensation.
- Make interim distribution to beneficiaries if appropriate.
- Convert investments and other assets to cash and deposit to estate account or invest estate balance in interest-earning investments pending final distribution to beneficiaries.
- Re-register assets in estate’s name, if applicable.
- Prepare transfer/deed for conveyance of real property, if required by the will.
- Arrange rollover of RRSP or RRIF to spouse if required.
- Settle and pay all legitimate claims against the estate.
- Apply for any benefits payable on death including C.P.P. death benefit, life insurance proceeds, death benefits from pension plans or annuities, and deposit to estate account.
- File T-3 income tax return.
- Obtain tax clearance from Revenue Canada, where appropriate.
- Prepare and maintain estate accounts for approval by the beneficiaries or examination by the court, where applicable.
- Prepare final releases.
- If no will, distribute assets according to rules for intestate succession.
- Dispose of or distribute personalty according to instructions in will.
- Prepare cheques and pay legacies and transfer bequests as provided in will.
- Invest assets for establishment of trusts, if the will so directs.
- Send releases to beneficiaries and request signatures, where applicable.
- Prepare cheques and pay balances to residuary beneficiares.
- Advise beneficiaries regarding inclusion of income from estate in income tax if appropriate.
- Close estate account.