Take Control Of An Estate As Executor

Change is inevitable, and certain life situations present challenges. The passing of a parent or family member can be a difficult time, especially if you have the added responsibilities and duties of managing the estate as an executor. Franklin Templeton Investments‘ Own Your Future program is designed to help you and your family prepare so that you are able to take control of your financial well-being.

What is an executor?

An executor is the person or trust company who is designated in a person’s will to administer his or her estate after death. The executor carries out the person’s wishes as stated in the will. Before taking on the responsibility, it is important to understand what duties are required of an executor, who an executor works with and the role of professional advice. Understanding these elements can help you decide if you have the necessary time and skills to look after an estate settlement.

What are the duties of an executor?

As executor, you have a large number of duties that need to be executed with skill and care.

Depending on the size and complexity of the estate, your duties may include, but are not limited to:

Preliminary executory duties

  • Read and interpret the will
  • Ensure appropriate funeral arrangements are made
  • Become familiar with the deceased’s financial affairs

Protecting estate assets

  • Take possession and control of all assets
  • Redirect mail, cancel subscriptions, etc.
  • Protect real estate
  • Review insurance required on estate assets
  • Ensure estate money is invested appropriately
  • Ensure dividends, interest, rent, etc., are collected
  • Ensure active business interests are under skilled management

Assembling complete inventory of assets and liabilities

  • Write to bankers, brokers, business associates, etc., to obtain detailed information
  • Complete clams for life insurance and company and government pensions
  • Determine date of death and adjusted cost base values of all investments
  • Determine fair market value of real estate, cars, household and personal effects
  • Determine value of private company business interests
  • Advertise for creditors and claimants
  • Determine value of all liabilities, including taxable capital gains
  • Prepare inventory of assets and liabilities

Obtaining probate from court

  • Instruct solicitor to apply for probate
  • Pay probate fees to court
  • Obtain copies of Grant of Probate to deal with estate assets

Administering estate

  • Register assets in estate’s name
  • Deliver household and personal effects bequeathed to beneficiaries
  • Convert assets to cash to pay off debts and taxes if necessary
  • Close out bank, brokerage accounts and safety deposit boxes; collect insurance proceeds
  • Manage succession of private business interests
  • Transfer, wind up or sell privately held companies in accordance with the will and partnership agreements
  • Arrange for selling real estate, as well as any remaining assets, according to instructions in the will
  • Obtain clearance from the Canada Revenue Agency

Distributing estate

  • Register assets in estate’s name
  • Discharge mortgages and other debts
  • Pay specific bequests to recipients
  • Submit full accounting to beneficiaries and obtain releases
  • Establish trusts in accordance with instructions in the will
  • Act as a trustee according to the instructions the will

With whom does the executor work with?

The executor is integral to the settlement of the estate and works with many different third parties, including the Canada Revenue Agency, lenders, financial institutions, lawyers and many others. Here is an overview of some of the entities that the executor may work with:

What should I know about being an executor?

  • Executors are personally liable for their actions when handling an estate, and can be sued by beneficiaries if they make a mistake.
  • It takes approximately one year to administer most estates.
  • Serving as an executor can be an onerous burden that demands a lot of your personal time.
  • Most of an executor’s work must be done during normal business hours, and may conflict with your own work schedule.
  • Since very few people have served previously as an executor, most personal executors learn while on the job.
  • Every executor, personal or professional, is entitled to the same compensation for administering an estate.
  • Many people who have acted as an executor previously say that they would not willingly accept the role again.

What steps should I take to manage an estate?

Consult an advisor

Talk to your current advisor and see if he or she has experience in dealing with clients acting as executors. You need to feel confident that you have an advisor who is qualified to provide the guidance you will require. If not, you will need to find someone with expertise in trust and estate matters.

Take care of immediate cash needs

You need to acquire a thorough understanding of your role as the estate’s executor and identify all the assets and liabilities belonging to the estate. You will then need to look after immediate expenses, including:

  • Existing debt
  • Any levies or taxes incurred

Maintain the assets of the estate

There are two areas that you will have to address:

  • As trustee for the assets, you have an obligation to preserve and maintain all assets, which includes investing them appropriately for growth and payout as required by the will. You will need to determine who will be most capable of managing the assets. Is it your current financial advisor, or another financial advisor who can deal with the complexities of this trust?
  • Determine if you will commingle your inheritance with your existing family assets or keep it separate. You should also review and update your financial plan, will and estate plan to ensure your inheritance will be properly accounted for in your estate. Working with a trusted financial advisor and seeking legal counsel increase your chances of making sound decisions today that will have a positive impact on everyone’s future.

Develop a long-term plan

Working closely with your advisor, you can create an investment plan that incorporates your family’s current financial situation, risk tolerance and investment objectives. Consider engaging a professional trustee service such as Fiduciary Trust Canada, a subsidiary of Franklin Templeton Investments Corp., to serve as sole trustee or co-trustee. Your advisor can tell you more about Fiduciary Trust Canada’s integrated discretionary investment management and trustee and estate services designed to help ensure the smooth and effective transfer of wealth now and for years to come.