Self-Counsel Press(a division of)

International Self-Counsel Press Ltd.Canada USA

SO YOU’VE BEEN APPOINTED EXECUTORTom Carter, BA, MA, LLB

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INTRODUCTION xiii

PART I: TO BE, OR NOT TO BE, AN EXECUTOR 1

1 FINDING OR CHOOSING AN EXECUTOR 31. It’s Tough to Choose a Good Executor 32. It’s Tough to Be an Executor 43. How I Discovered What Being an Executor Was All About 44. The Need Will Never Go Away 65. Who This Book Is For 6

2 THE FAQS OF LIFE FOR EXECUTORS 71. What Is an Executor? 72. What Are Sole, Joint, and Alternate Executors? 83. To Whom Am I Responsible As Executor? 84. The Will Says I’m Executor, So I Am, Right? 85. What’s Probate, and Why Do I Need It? 106. When Does My Authority As Executor Begin? 117. What Do I Have to Do As Executor? 138. What Liabilities Do I Face As Executor? 13

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CONTENTS

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9. What Are the Attributes of a Good Executor? 1410. What If I Don’t Want to Be Executor? 1511. How Do I Decide to Be an Executor or Not? 1512. Can I Change My Mind after I Start? 1613. Can I Get Help? 1714. Who Can Help Me and How Do I Find Them? 1715. Lawyers 17

15.1 Advantages of using lawyers 1815.2 Lawyers’ fees 1815.3 Finding a good estate lawyer 19

15.3a Step 1: Get the names of five good lawyers 1915.3b Step 2: Work the phone 2015.3c Step 3: Visit the prospects 21

16. Accountants 2116.1 Advantages of using accountants 2116.2 Accountants’ fees 2216.3 Finding a good estate accountant 22

17. Trust Companies 2217.1 How trust companies become executors 2217.2 When to consider a trust company 2217.3 Advantages of a trust company 2317.4 Trust company fees and fee agreements 2317.5 Finding a good trust company 23

18. The Challengers: Paralegal Services 2418.1 Advantages and disadvantages of paralegals 24

18.1a Clarify what they will do 2418.1b Keep control of the estate assets yourself 2418.1c Be clear on fees 2518.1d Finding paralegals 25

19. Specific Services 2519.1 Tax-preparation services 2519.2 Real estate agents 2519.3 Personal property appraisers, evaluation 26

specialists, and auctioneers

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CONTENTS vii

PART II: THE EIGHT DUTIES OF THE EXECUTOR 27

3 DUTY NUMBER 1: MAKE REASONABLE FUNERAL 29ARRANGEMENTS1. The Executor Makes Decisions about the Funeral 292. The Costs Must Be Reasonable 303. What If the Deceased Made Arrangements? 304. Be Careful with Headstones 31

4 DUTY NUMBER 2: FIND AND TAKE CONTROL 33OF THE ASSETS OF THE DECEASED 1. Putting on the Rubber Gloves: 33

My Trust Company Experience 2. Securing the Residence 343. Perishable Items 344. Valuables That Can Walk 355. Important Papers 356. Credit Cards 367. Safety Deposit Box Key 368. Mail 369. Insurance Policies 3610. Household Furnishings 3711. Lists and Memoranda 3712. Unspecified Items: To Sell or Not to Sell? 3813. Vehicles 3914. Contacting Banks and Financial Institutions 3915. Canada Pension Plan 4016. Businesses, Land, and Rental Properties 4117. Collections 4118. Loans Owing to the Deceased 42

5 DUTY NUMBER 3: PREPARE AN INVENTORY, 43VALUE THE ASSETS, AND KEEP AN ACCOUNT1. Open an Estate Account 432. Start an Estate Inventory 443. Take Pictures 444. Evaluating Estate Assets 44

4.1 Real estate 444.2 Vehicles 444.3 Household goods 45

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5. Five Reasons to Keep an Inventory and Accounts 455.1 For probate fees 455.2 For taxes 465.3 For the beneficiaries 46

5.3a Who are the beneficiaries? 475.3b Per capita and per stirpes 475.3c What if there are no alternative 47

beneficiaries in the will? 5.3d Special status for spouses and children 485.3e The expanding definition of spouse 49

5.4 For the creditors 495.5 For your own protection 49

6 DUTY NUMBER 4: FIND AND PROBATE THE WILL, 51IF NECESSARY1. What If You Don’t Have the Will? 512. Calling Your Lawyer 513. What If the Lawyer Didn’t Keep the Will 524. Looking for the Will 525 What if You Don’t Find a Will 536. What If All You Have Are Copies of the Will? 537. You Have the Will but Do You Need Probate? 558. Two Kinds of Assets That Do Not Need Probate 559. How Probate Protects the Executor 58

9.1 Advertising for creditors 589.2 Issuing notices 589.3 Passing accounts 58

10. Probate Confirms the Will Is Valid 5911. Avoiding Probate in Small, Cash-Only Estates 59

7 DUTY NUMBER 5: DEAL WITH DEBTS AND 61CLAIMS AGAINST THE ESTATE1. Debts Relating to the Death 612. Debts of the Deceased 62

2.1 Looking for debts 622.2 Business or partnership debts 622.3 Medical bills and claims by caregivers 632.4 Insured debts 63

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2.5 Advertising for creditors 632.6 Challenging claims by creditors 642.7 Child or spousal support 642.8 Leases and mortgages 642.9 Lawsuits against the deceased 652.10 Unenforceable debts 652.11 Claims by spouse or children for more of the estate 652.12 Paying debts 65

2.12a Enough for the debts but not for the 66beneficiaries

2.12b Not enough for the debts 662.13 One creditor always comes first 662.14 Keeping the house going 66

3. Debts Incurred by the Executor 67

8 DUTY NUMBER 6: PAY ANY TAXES OWING BY 69THE DECEASED AND THE ESTATE1. Capital Gains Tax 692. Tax Deferrals and Rollovers 723. Tax-Free Assets 734. Tax Returns at Death 745. Returns for the Deceased 74

5.1 The terminal return 745.2 Three optional returns 80

5.2a Optional return 1: The rights and 81things return

5.2b Optional return 2: Business income 81return for partner or proprietor

5.2c Optional return 3: Testamentary trust 81income return

5.3 Claiming credits on optional returns 826. Unfiled Returns for the Years before Death 827. Returns for the Estate 82

7.1 T3 return for the estate 827.2 T3 return for any trusts in the estate 83

8. Tax and the beneficiaries 839. Clearance certificates and holdbacks 8410. Goods and Services Tax at Death 86

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9 DUTY NUMBER 7: ACCOUNT TO, AND GET 87RELEASES FROM, THE BENEFICIARIES1. Why You Must Keep Accounts 872. It’s a Self-Policing System 873. What the Beneficiaries Want 884. What the Executor Wants 885. What Unhappy Beneficiaries Can Do 896. Protect Yourself with Good Accounts 897. Beneficiaries Hate Silence 898. The Beneficiary Who Won’t Sign but Does Nothing Else 909. Your Executor Fees 9110. Avoiding Trouble over Executor Fees 9111. Calculating Your Fee 9112. Setting a Reasonable Fee 9213. Some Executors Don’t Charge a Fee 9214. Can You Charge a Fee if You Also Receive a Gift? 93

10 DUTY NUMBER 8: DISTRIBUTE TO THE BENEFICIARIES 951. Conversion to Cash or Distribution in Specie 952. Missing Beneficiaries 963. Deceased Beneficiaries 96

PART III: TWO TYPICAL ESTATES 97

11 APPLYING THE EIGHT DUTIES TO TWO 99TYPICAL ESTATES1. Estate 1: Mary Smith — Sam’s Wife and Mother of 99Their Children

1.1 The eight duties of an executor and the estate 106of Mary Smith 1.1a Duty 1: Make reasonable 106

funeral arrangements 1.1b Duty 2: Find and take control of 106

the assets of the deceased 1.1c Duty 3: Prepare an inventory, 106

value the assets, and keep an account1.1d Duty 4: Find and probate the will, 106

if necessary1.1e Duty 5: Deal with debts and other 107

legitimate claims 1.1f Duty 6: Pay any taxes owing by 107

the deceased and the estate

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1.1g Duty 7: Account to and get releases 107from the beneficiaries

1.1h Duty 8: Distribute to the beneficiaries 1072. Estate 2: Sally Smith — Sam’s Mother, an Elderly Widow 107

2.1 The eight duties of an executor and 118the estate of Sally Smith2.1a Duty 1: Make reasonable funeral 118

arrangements 2.1b Duty 2: Find and take control of the 118

assets of the deceased 2.1c Duty 3: Prepare an inventory, 118

value the assets, and keep an account 2.1d Duty 4: Find and probate the will 119

if necessary 2.1e Duty 5: Deal with debts and other 119

claimants against the estate 2.1f Duty 6: Pay any taxes owing by the 119

deceased and the estate 2.1g Duty 7: Account to and get releases 119

from the beneficiaries 2.1h Duty 8: Distribute to the beneficiaries 120

APPENDIX 121

GLOSSARY 125

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SAMPLES1 Income Tax and Benefit Return CCRA T1 General 2001 762 TX-19 Asking for a Clearance Certificate 853 Indemnity 1054 Renunciation 1115 Initial Inventory for Estate of Sally Smith, Deceased 1126 Final Inventory, Estate of Sally Smith, Deceased 1167 Account for Distribution Purposes, 117

Estate of Sally Smith, Deceased8 Release 120

TABLES1 Dependant Relief Laws 482 Names of Intestate Succession Laws by Province 533 Summary of Intestate Succession Laws 544 Probate Tax Rates by Province 56

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1. It’s Tough to Choose a Good ExecutorWhen I was in law practice, I did a lot of work with people who were inagony. They were trying to make their wills, and they couldn’t decidewhat to put in them. Whether the person making the will was single ormarried, had children or not, there were so many difficulties to workthrough. For some, the most painful decision was who to choose as ben-eficiaries and what to give them. Others, however, felt a more exquisitepain. They were struggling to choose the right executor — someone theycould trust, absolutely and unconditionally, to carry out their wishesafter they were gone.

As I worked with these people I discovered that they often hadstrong, preconceived ideas about how to choose an executor. People withfamilies often didn’t want to hurt anyone’s feelings; they wanted to nameeveryone as executor so no one would feel left out. Others assumed thatit was right to always name the eldest child, regardless of that child’sability to do the job. Those without family worried about burdening theirfriends with the job; they often were interested in hiring a professionalperson to do the job, but they were anxious about the extra cost thatmight involve, and about the possibility of delay in getting things done.

Sometimes the struggle to choose the right executor was so difficultthat people were brought to a standstill and the will never did get done.

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2. It’s Tough to Be an ExecutorI also worked with many executors, those who had been named in a willand were now called on to step in after the person died. These executorsknew it was an important job but they were usually in the dark aboutwhat they were supposed to do and when they were supposed to do it.Some of them didn’t even know they had been selected as executor untilafter the person died and the will came out of a lawyer’s file or a safetydeposit box. They had no chance to prepare themselves for this uniqueand demanding job.

Another thing I discovered was that most people who are named asexecutor don’t like it. They found the experience to be much more diffi-cult and time consuming than they expected. As the days and weekswore on, any honour that might have been attached to the appointmentfaded. They often wished that the dearly departed had never thought ofthem at all. That impression was confirmed by a US survey I once sawthat asked people who had been executors of an estate if they would liketo do it again. The overwhelming majority said no.

I must admit, however, that I was not terribly empathetic to theplight of my executor clients. When I helped them look after an estatemy job was relatively easy. I did the legal paperwork from the comfortof my desk while the executor handled everything else — making fu-neral arrangements, sorting through papers, disposing of foodstuffs andother perishable items, deciding what clothes to sell and what to send tocharity, holding a garage sale for unwanted furniture or sending it toauction, tracking down bank accounts and other valuable assets, can-celling utility accounts, paying outstanding bills, claiming governmentand insurance benefits, getting a house or condo cleaned up and readyfor sale, finding and working with a real estate agent and more.

3. How I Discovered What Being an Executor Was All About

I discovered that I really didn’t know anything about the physical sideof being an executor until I left law to become a trust officer with a trustcompany. Trust companies, as you will see, are often appointed executorin the wills of people who have no one else to choose and trust officersare the ones who do the executor work for the trust company. So it wasn’tlong after I joined the trust company that I got my first executor assign-ment and a first-hand taste of what being an executor was really allabout. For obvious reasons of privacy, I can’t tell you anything about theactual cases I worked on, but here is a typical, fictional case to illustrate.It’s about Fred.

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At the trust company, the first thing we did every morning wascheck the obituaries in the local newspaper. Then we checked thosenames against our records to see if we had a will for any of those peoplein our storage vault. On this particular day, we did. Fred had died, andbecause he had appointed the trust company his executor, we had hiswill in our storage vault.

The will was about 15 years old. It left everything in trust to Fred’sonly son, who lived hundreds of miles away. Unfortunately, the rest ofthe information in the file was sketchy. We could see that he was di-vorced, lived in a small condo in an unassuming part of town and hada small bank account with the trust company. Other than that, there wasno information about assets, and we wondered why Fred had appointedus at all. Trust companies charge significant fees for the executor workthey do so they are usually appointed only when the estate is largeenough to justify those fees, and there was nothing in the file to suggestthat Fred’s estate was large.

We called the funeral home that had placed the obituary and dis-covered that the son was in town handling the arrangements. He wasstaying in a hotel, and he was desperately looking for his dad’s will. Wegot in touch with the son and arranged a meeting at the funeral home.He came in looking confused, upset, and embarrassed. As he spoke welearned why. He and his father had been on very bad terms and hadn’tseen each other, or even spoken to each other, for many years. He hadnever visited the condo and wasn’t sure in which part of town it was located. He didn’t even know that his dad had been ill. He had receiveda call from the hospital the day his father was admitted, and eventhough he had caught the next flight, by the time his taxi reached thehospital door Fred was dead.

The son said he was prepared to cover the cost of the funeral if nec-essary, but we were able to assure him that there was enough money inFred’s bank account for that. He was further relieved to learn that wehad the will, and he was as puzzled as we were about the trust — he hadno better idea of his dad’s financial situation than we did. At that point,the funeral director produced a key that he had taken from Fred’spocket. Assuming it to be for the condo, we set off to take a look.

The condo was a modest two bedroom in an undistinguished part ofthe city. Being the home of a single, ailing man, it had a lived-in look.From speaking with neighbours, we discovered that Fred was a lonerand his only social activity was going to bingo at the hall nearby. Theson said that he was overwhelmed and didn’t know where to start. Healso said he had pressing business engagements back home and wouldbe leaving right after the funeral. We told him that as executor, we

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would look after everything, and that our fees could be paid out of thesale of the condo. He agreed and a few days after the funeral we put onthe rubber gloves and set to work.

By the time we were done we had discovered assets totalling a mil-lion dollars. Fred had investments with a variety of other financial insti-tutions that had done very well. It was now obvious why Fred hadappointed a trust company as his executor, and we were happy to carryon with our responsibilities. We reported to the son, who was as aston-ished as we were, and who was happy that we were there to look aftereverything for him.

4. The Need Will Never Go AwayBeing an executor is a difficult, complex job. It requires knowledge of thelaw of wills, estates, and tax; comfort with a large amount of paperwork;willingness to work with various bureaucracies; familiarity with bank-ing and insurance; excellent conflict-resolution skills; a lot of hard phys-ical work; and the wisdom to recognize not only when you need helpbut also where to go to get it. Many of us hope it is a job that we willnever have to do.

Unfortunately, as difficult or upsetting as the job of executor may be,the need for executors will never go away, because loved ones die. Andas the population of this country gets older and passes on, two thingsare sure to happen — more of us will make our wills and more of us willdiscover that we have been named executor of the estate in a friend orfamily member’s will.

5. Who This Book Is For In Canada, the law of wills and estates is a provincial responsibility,which means that each province or territory sets its own rules and reg-ulations for executors. A book of this size can’t begin to provide specificdetails of procedures, requirements, and forms for each province or ter-ritory. However, even though those rules and regulations are not identi-cal across the country, and the precise number and nature of tasks thathave to be done vary according to the size and complexity of the estate,the basic idea is the same.

If you are mourning the death of a loved one who chose you as hisor her executor, if you are trying to choose someone to be your executorin your will, or if you just want to inform yourself for that day in the fu-ture when you wake up and discover you are now an executor, read on.You’ll learn what you must do, what pitfalls you can avoid, when youshould consider getting help and how to find it.

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