Friday, January 3, 2014

Duties of an executor

Imagine for a moment you have been appointed executor of someone’s estate, and he or she passes away. Do you know what to do? Where will the deceased's things go? Where do you even start? Or, perhaps you are writing your will and you need to decide who to appoint as executor; here are some things to consider regarding this important post.

Acting as an executor can be very challenging. Just ask anyone who has been a executor in the past and many will tell you it can be very time consuming, emotionally draining, difficult and seem like it never ends.

You should give this responsibility to someone knowing that the task will be time-consuming and stressful. Once someone begins the process of dealing with the estate assets, they are legally bound to complete the job, and can only be relieved of the responsibility by a court order. No one can be forced to act as the executor.

Appointing an Executor in the First Place
When making a will, the testator (will maker) should appoint someone executor who will make responsible decisions, and who will follow any directions left in the will for the disposal or distribution of property. An executor may be a family member, close friend, or sometimes simply someone who has the ability to handle an estate (e.g., a trust company). A person appointed to handle an estate in a will is called the executor; a person not appointed in the will but handling the estate anyway is called the administrator.

Who Qualifies as a Good Executor?
The majority of Canadians appoint family over friends as the executor of their will, according to a BMO Financial Group study. Being an executor is a huge responsibility. The fate of someone else’s belongings is in the executor's hands and the executor must be capable of honoring the deceased's wishes. Choosing someone to be an executor is a major decision, essentially it making decisions on someone else’s behalf.

The duties listed above require an executor that has certain qualities and a particular mindset. An executor who will likely do a good job is someone who possesses such attributes as patience, wisdom, knowledge, discretion, and organization. These people embrace their new responsibility of being appointed executor and they take on these tasks maturely and carefully. There are a couple of things you might want to consider while making the decision to accept the executor role

However, with executor responsibilities consisting of nearly 50 tasks including tax, inheritance and family property laws, many may not appreciate the complexities that come with this duty.
“Being appointed as the executor of a loved one’s estate can be a daunting duty that involves an overwhelming number of tasks, some of which can be highly complex,” said Sara Plant, chief executive officer, BMO Trust Company. “Not only can it be an emotional period, but executors are often expected to dedicate a lot of time and take on a lot of responsibility that is often best left to a professional.”

The study showed that of the 85% who appointed a family member 40% appointed spouses and only 1% appointed a trust company as the executor of their own will.
The results of the study also revealed that, if appointed as executor, the majority of Canadians (65%) would not, or are not sure if they would hire a professional to assist them.

 According to the Canadian Bar Association, “The executor gathers up the estate assets, pays the deceased’s debts, and divides what remains of the deceased’s estate among the beneficiaries.”

Executor’s Duties

Below you will find a list of duties of an executor. This list is far from exhaustive but illustrates how important it is to choose a good executor. Remember, settling your estate is not an honour. It is work. Choose your executor carefully to ensure that he or she can handle the job.

The following is not a complete list of the duties and responsibilities of an executor or executrix, but it does provide a good overview of the principal tasks:

1. Immediately After Death
 Arrange for organ donation
Arrange for funeral:
Review Will with lawyer
Arrange for care of dependents and pets
Find and secure all assets: Home, Contents of home, Other real estate, Personal property, Business, Vehicle, Perishable goods, Access and list the contents of any Safety deposit box
Obtain insurance for any vacant real estate.

2. Find all ongoing expenses and debts
Stop all unnecessary expenses: Subscriptions (magazine, theatre), Health care (home care), Memberships (gym, club, sports, auto, professional, etc), Entertainment (cable, satellite, websites), Communication (telephone, cell phone, Internet), Insurance (auto, disability).
Forward mail
Notify all holders of assets: Bank, Broker, Investment advisor, Insurer.
Notify all service providers: Utility companies, Landlord, Property maintenance
Cancel credit and debit cards
Review all documents relating to assets: Property insurance, Mortgage, Lease, Business, Investment.
Review all documents relating to financial obligations: Contracts, Divorce or separation agreement, Court orders.

3. Soon After Death
 Institute plan for securing and managing assets until sale, disposal or distribution
Re-register or transfer ownership of all assets to the estate
Obtain valuation of all assets
Prepare inventory of assets and liabilities
Obtain probate
Schedule payment of all debts.

4. Within Weeks of Death
Meet with all beneficiaries of estate
Maintain or initiate legal actions on behalf of the estate
Defend legal actions against the estate
Advertise for creditors
Collect life insurance
Arrange for transfer of assets passing outside the estate: Registered investments, Jointly held accounts and land.

5. Remaining Estate Settlement Process
Maintain records of assets and estate administration
Sell assets, as appropriate
Collect debts
Pay debts
Litigate or settle all claims by or against the estate
File outstanding tax returns (including terminal return)
File estate tax returns
Obtain tax clearance certificate
Obtain interpretation of Will
Distribute assets according to the Will: To individuals, To charities, To trusts.
Claim executor’s fees
Obtain releases from beneficiaries.

The information in this articles was taken from:

No comments:

Post a Comment