An estate administrator/trustee (hereinafter referred to as the “Executor”) is responsible for dealing with the deceased’s affairs after their death and for administering their estate.
When drafting a Will, the drafter must choose at least one person or corporation to be their Executor.
It is good practice to choose at least one alternative Executor in the event that the first choice is unable or unwilling to act.
If there is no Will the court can appoint someone to be an Estate Trustee without a Will.
Duties of an Executor
The Executor has a fiduciary duty which requires them to administer the estate solely in the interests of the beneficiaries. In broad terms, the estate trustee will have the following duties:
- Arranging and paying for the funeral;
- Collecting and appraising the assets of the estate;
- Paying the debts and taxes of the deceased;
- Accounting to the beneficiaries (keeping financial records);
- Distributing the assets of the estate; and
- If necessary, applying for probate.
Financial Record Keeping
The Executor must keep financial records of transactions, receipts and a record of the time they spent administering the estate.
This is required to satisfy the beneficiaries and the court that the estate was administered properly and that the compensation sought is reasonable.
This accounting to the beneficiaries can often be done informally, but if there are issues, these records would need to be submitted to the court for approval in a process called a “Passing of Accounts”.
An Executor must be cognizant of this duty as the beneficiaries have a legal right to request a detailed accounting of the estate.
The Executor should always keep full and accurate financial records when administering the estate. These records could include:
- Bills, receipts, invoices;
- Investment statements;
- All banking records;
- Reporting letters for real estate transactions; and
- Tax returns, notices of assessment or reassessment, and any other tax-related documents.
An Executor may need to apply to the court for a Certificate of Appointment of Estate Trustee with a Will (also known as probate) in order to deal with certain assets of the deceased.
There is no requirement in Ontario for all Wills to be probated and this will often be determined by the third-party financial institutions that hold the deceased’s assets.
The Certificate will provide assurance to the third parties to confirm that the Executor has the authority to deal with the assets of the estate.
The Certificate may also be necessary if there is an argument as to who is the proper Executor for the estate.
When an Executor probates a Will, the Ontario Estate Administration Tax will apply and be payable out of the assets of the estate.
The tax is calculated based on the value of the estate.
For the first $50,000 of the estate, the tax is $5 for each $1,000 up to the $50,000 limit.
If the value of the estate exceeds $50,000.00, the tax increases to $15 for each $1,000 by which the value of the estate exceeds $50,000.
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