When a person passes away, their estate (all their assets and liabilities) needs to be managed and distributed according to their will or, if there is no will, under Canadian law. The individual responsible for overseeing this process is called the executor of the estate. This role involves significant duties, responsibilities, and legal obligations.
In this comprehensive guide, we will explore the role of an executor in Canada, how they are appointed, their responsibilities, limitations, and answer frequently asked questions.
What Is an Executor of Estate?
An executor of estate is the person (or people) chosen to manage and settle the deceased’s affairs. The executor ensures that the deceased’s debts are paid and that their remaining assets are distributed according to the will. In cases where no will exists, they act under provincial intestacy laws.
Key Responsibilities:
- Gathering assets
- Paying off liabilities and debts
- Distributing the remaining assets to beneficiaries
This role is essential for ensuring a smooth transfer of assets after death, while also making sure the law and the deceased’s wishes are followed.
How an Executor Gets Appointed
There are two common ways an executor gets appointed:
1. By the Will
When an individual creates a will, they typically name one or more executors to handle their estate after their death. If the executor agrees to take on the role, they must legally accept the responsibility after the individual passes away.
2. Without a Will (Intestacy)
In cases where no will exists (intestate), the court appoints an executor. Typically, this is a close family member, such as a spouse or adult child. The process for court appointment varies by province but usually involves applying for a grant of administration.
| Province | Document Required |
|---|---|
| Ontario | Certificate of Appointment of Estate Trustee |
| British Columbia | Grant of Probate (with Will), Letters of Administration (without Will) |
| Alberta | Grant of Administration or Probate |
What Does the Executor of an Estate Do?
An executor has a legal duty to act in the best interests of the estate and its beneficiaries. Their responsibilities can be complex and time-consuming. Here’s an overview of the core tasks:
1. Locate the Will and Gather Information
The executor must first locate the deceased’s will, if one exists, and gather all necessary documentation, including:
- Death certificate
- Bank statements
- Titles to property
2. Notify Beneficiaries and Creditors
Once the estate is identified, the executor must notify all beneficiaries listed in the will and contact any creditors to settle outstanding debts.
3. Manage Estate Assets
The executor will manage the estate’s assets, which could include selling property, managing investments, or handling day-to-day financial transactions.
4. Pay Off Liabilities
Debts like mortgages, credit card bills, and taxes must be settled before any assets are distributed to beneficiaries.
5. Distribute Remaining Assets
After all debts are paid, the executor distributes the remaining assets to the beneficiaries according to the will (or under intestacy laws if there is no will).
What an Executor Cannot Do
While the executor holds significant power over the estate, there are several limitations on what they can do:
1. They Cannot Change the Will
The executor must follow the instructions laid out in the will and cannot make changes, even if they believe a different action is better.
2. They Cannot Favor Beneficiaries
Executors are bound by law to treat all beneficiaries fairly and equitably. Favoritism or personal gain at the expense of beneficiaries is a breach of fiduciary duty.
3. They Cannot Act Without Court Approval (in certain cases)
Some decisions, such as selling a family home, may require court approval depending on provincial laws or disputes among beneficiaries.
Can an Executor Be a Beneficiary?
Yes, an executor can also be a beneficiary. This is common in many cases where a spouse, child, or close family member is appointed as the executor. As a beneficiary, the executor must still act impartially and ensure that all beneficiaries are treated fairly.
An Executor’s To-Do Checklist
Here’s a step-by-step checklist of what an executor needs to do:
| Step | Action |
|---|---|
| 1. Obtain the Will | Locate the original will, if one exists. |
| 2. Apply for Probate | Submit the will for probate and obtain legal authority from the court. |
| 3. Identify Estate Assets | Create a detailed list of the deceased’s assets. |
| 4. Notify Beneficiaries | Inform all beneficiaries of the deceased’s passing and their inheritance. |
| 5. Settle Debts and Liabilities | Pay off any debts or obligations using estate funds. |
| 6. File Final Tax Return | Submit the deceased’s final tax return to the CRA. |
| 7. Distribute Assets | Distribute remaining assets to the beneficiaries. |
| 8. Close Estate Accounts | Once all responsibilities are complete, close any remaining estate accounts. |
How to File for Executor of Estate Without a Will
In cases where no will exists, the process differs slightly. The individual must file for letters of administration, which grants them legal authority to act as the estate’s administrator. The process includes the following steps:
1. Apply to the Court
The individual applies for court approval, typically through a probate court, to be named the estate administrator.
2. Gather the Necessary Documents
These documents include a death certificate, proof of relationships to the deceased, and financial statements of the estate.
3. Notify Heirs and Beneficiaries
Once appointed, the administrator must locate and notify the legal heirs of the deceased. Distribution of assets follows provincial intestacy laws, which outline the order of inheritance.
4. Settle Debts and Distribute Assets
Like an executor, the administrator is responsible for paying off any outstanding debts before distributing assets to the legal heirs.
Frequently Asked Questions (FAQs)
1. How long does it take to settle an estate?
The process can take anywhere from several months to over a year, depending on the complexity of the estate, any legal disputes, and the efficiency of the executor.
2. Do executors get paid in Canada?
Yes, executors are entitled to reasonable compensation for their work. The exact amount varies by province, typically around 3-5% of the estate’s value.
3. Can an executor refuse the role?
Yes, if the executor does not want the responsibility, they can refuse to act. If this happens, an alternate executor, if named, takes over. Otherwise, the court will appoint an administrator.
4. Can an executor be removed?
Yes, an executor can be removed by a court if they are not fulfilling their duties properly or if they are acting in a way that harms the estate or beneficiaries. Read more here
