What is the Role of an Executor?
In Ontario, Canada, an Executor, also commonly referred to as an Estate Trustee, plays a crucial role in the administration of a deceased person’s Estate according to their Will. The role of an Executor involves several important responsibilities:
Obtaining a Grant of Probate: The first step for an Executor is to apply for a grant of Probate from the Ontario Superior Court of Justice. This legal document confirms the validity of the Will and grants the Executor the authority to manage and distribute the deceased person’s assets as per the terms of the Will. Not all Estates require Probate, but it is necessary for some, especially when dealing with real estate or significant assets.
Locating and Managing Assets: The Executor is responsible for identifying, locating, and safeguarding all the assets of the deceased person. This includes bank accounts, investments, real estate, personal property, and any other assets. They must also manage these assets responsibly during the Probate process and throughout the Estate administration.
Notifying Creditors and Paying Debts: The Executor must notify known creditors and publish a notice to creditors in a local newspaper there are now online services but the point is the need to notify to give other potential creditors an opportunity to make claims. They are responsible for paying the deceased’s outstanding debts and expenses, which may include funeral costs, taxes, and any outstanding bills.
Distributing Assets to Beneficiaries: The Executor is responsible for distributing the assets of the Estate to the beneficiaries named in the Will. This should be done in accordance with the terms of the Will and after all debts, expenses, and taxes have been settled.
Filing Taxes: The Executor must prepare and file the deceased person’s final income tax return and any other necessary tax returns on behalf of the Estate. This includes paying any taxes owed by the deceased or the Estate.
Keeping Accurate Records: Executors are required to maintain detailed records of all financial transactions related to the Estate, including receipts, disbursements, and communications with beneficiaries and creditors.
Handling Legal Matters: If there are legal disputes or challenges to the will, the Executor may need to defend the Will’s validity or engage in legal proceedings as necessary. (Obvious questions: Who Pays?)
Finalizing the Estate: Once all the Estate’s debts, taxes, and administrative tasks have been completed, the Executor can distribute the remaining assets to the beneficiaries and close the Estate. But, if this occurs before a CRA Clearance Certificate the Executor is liable.
Being Accountable: Executors have a fiduciary duty to act in the best interests of the Estate and its beneficiaries. They may be held personally liable for any losses resulting from negligence or misconduct in their duties.
It’s important to note that being an Executor can be a complex and time-consuming role, and it comes with legal responsibilities. Many Executors seek legal or financial advice to help them fulfill their duties properly. Executors are often entitled to compensation for their time and effort, as determined by the Will or by applicable laws. If an Executor is unable or unwilling to carry out their responsibilities, they can renounce their role, (but that must be before they take on any activities, and an alternate Executor or a trustee appointed by the court may take over.
To learn more about Probate and the steps involved, check out our blog post
How to say no when someone asks you to be their executor
By Rob Carrick, Read in The Globe and Mail
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This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.