Death can be taxing, in more ways than one. First, there’s the emotional stuff everyone must deal with. And then there’s all the financial stuff that must be waded through. When your Aunty Maud asked you all those years ago to be her executor, you had no idea your innocent “Sure,” would end up embroiling you in a forest’s worth of paperwork or the squabbling cousins.
As executor of Aunty Maud’s estate, you’ll be called upon to manage everything from her funeral arrangements to locating her assets, paying her bills, filing her tax returns (yes, there will be more than one), and divvying up the remains to the heirs, along with advising them what’s taxable and what’s not. So the job of executor carries important responsibilities. And it demands attention to detail. Mess up and you could be held personally liable.
You’ll need to present the original will and notify all the beneficiaries under the will. Having sworn an affidavit of service, which you’ll file with the court, about six to eight weeks later you’ll receive a certificate that gives you the authority to act so that anyone who needs proof—the bank, the brokerage house, the credit card company—knows you’re “legal.”
Your first step even before you’re certified should be to read the will to see if there’s anything that needs immediate action such as specifics for the funeral. While you’re not bound by Aunty Maud’s wishes, following through is preferable to being haunted. Are minor children left orphaned? If so, apply to put designated guardianships into effect quickly.
Take an inventory of the deceased’s assets and debts. You’ll be responsible for safeguarding and valuing the assets, dealing with banks, brokers, and insurance companies, and arranging for the investment or liquidation of assets.
Don’t rush to pay out Aunty Maud’s bequests too soon, no matter how much pressure your cousins are putting on you. If you do and then don’t have enough left to pay debts and taxes, the money will come out of your own pocket unless you can persuade beneficiaries to give back some money. Fat chance!
The tax man will want his pound (or six) of flesh too. You’ll have to file tax returns for any years for which returns haven’t been filed both in Canada and wherever else the deceased may have held assets. And you’ll have to file a return for each year the estate exists and earns income. Get a clearance certificate from Canada Revenue Agency to ensure no future disputes over property valuations and deductions claimed before you distributed the estate. Also make sure you’ve taken steps to uncover all debts owning. Advertisements to creditors that include a fixed date for distribution a month or two from the advertisement date followed by payment of all debts that have come to light should do it. Skip these steps and you could find yourself on the hook personally for unpaid bills or taxes.
For your time and trouble, you may bill the estate between 3-5% of the estate’s value, or more if the will specifically says so. Keep meticulous records of the time you spend and expenses you pay out of your own pocket so that if must you can prove your worth.
If the going gets tough, you don’t have to go it alone. Hire a professional to step in and be your guide. A lawyer, estate administrator or accountant can help. Be careful whom you choose. You can never give up your discretionary responsibility for how those assets are handled, so if your “helper” does a terrible job and the estate suffers losses as a result, you can be held liable for those losses. While the estate pays these blokes, it’ll be your responsibility to make sure their fees are reasonable.
Just because you’re named doesn’t mean you’re stuck with the job. You can say no.