Wednesday, February 6, 2013

The Role of the Estate Trustee (Executor)




Introduction


So, you’re named the Estate Trustee in your father’s Will. What do you do?

First of all, just remember that “Certificate of Appointment of Estate Trustee”is the new word for “probate”  in Ontario.

Jobs Of The Estate Trustee


1. Obtain the Originally signed Will


If the deceased has only a copy of the Will, the lawyer who drew up the Will likely has the original. When you retrieve the Will, make sure to get an Affidavit of Execution of the Will. You should also have the lawyer make at least 4 certified copies of the Will and Affidavit.

2. Arrange for Funeral and Burial


Determine whether there is a prepaid funeral, or any special burial instructions. Also determine whether the deceased filled out organ and tissue donation forms.

Make sure the Funeral Director provides at least 5 original Proof of Death Certificates.

Payment of funeral expenses comes ahead of any other creditor including the beneficiaries. With an account from the funeral director, the bank will authorize payment from the deceased’s account.

3. Open Estate Bank Account


Open a chequing account for the estate as soon as possible as you must give a strict accounting of all money received and disbursed. You will have to attend at the bank for most transactions until you get a Certificate of Appointment of Estate Trustee (probate) so be sure the bank is convenient for you.

You will need the originals of the Will, Affidavit of Execution and Proof of Death Certificate to open the account; have the bank make copies. You will also need two pieces of identification.

4. Notify Government Agencies, etc., of Death


All sources of revenue should be notified of the death as soon as possible. Old age security and Canada Pension plan payments are valid for the month of death; if any further payments are received they must be returned. To avoid this hassle, call Service Canada to register the death. You should also obtain the necessary forms for death benefits, if any, at this time.

Other businesses that may require contact: credit card issuers; insurance companies; investment companies; phone, cable, internet, utilities and other services;

5. Pay the Debts of the Deceased


Determine what the deceased owed at the time of death. Payments to maintain the value of an asset (real estate, automobile) can usually be taken care of by the bank but all other payments may not be permitted without the Certificate of Appointment of Estate Trustee (probate). You should consider placing an advertisement for creditors. If you do not advertise and valid debts are later discovered, you will be personally responsible for payment of such debts.

Income Tax


In most estates, you are required to file (1) a final (terminal) return, (2) a capital gains return (actually a schedule to the terminal return), and (3) an income tax and trust information return for each year or part year the estate is under administration. Depending on the circumstances of the deceased taxpayer, there may be other returns to be filed as well.

As estate trustee, you are personally responsible for all income taxes owed by the deceased to Revenue Canada to the extent of the value of the assets of the estate. If you distribute the money in an estate without obtaining tax clearance, you will be personally responsible for payment of the income tax.

6. Transferring or Selling the Assets


Prepare a complete list of ALL of the assets of the deceased and determine the fair market value of each of them as of the date of death.  If these items are to be divided among several people it would be prudent to have all the beneficiaries sign releases saying that they agree with the division of property.

Many assets will have to be converted into money. It may be best to hire professionals to sell some assets and involve a lawyer to prepare the documents that are required to complete such sales. Note, you may not be able to deal with or transfer some assets without a Certificate of Appointment of Estate Trustee (probate) for example, real estate and large investments.

7. Obtain the Certificate of Appointment of Estate Trustee (probate)


 The Certificate is issued by the Ontario Court; it certifies the death of the person and confirms the appointment of the estate trustee named in the Will. You should employ a lawyer to advise and assist you with this application. It is a daunting task; heavy on procedure and finicky paperwork.

8. Accounting to Beneficiaries


When all of the assets that are to be distributed as is have been distributed, all other assets converted into money, all debts paid, and all legacies paid, you may then distribute the residue to the beneficiaries. Before you distribute the residue have all the beneficiaries sign releases releasing you from claims.

9. Compensation


Estate Trustees are paid, normally based on a percentage of the value of the assets, as follows: 2.5% of capital receipts received and converted into cash; 2.5% of disbursements made by the estate trustee; 2.5% of income received by the estate from investments; 2.5% of revenue disbursements made by the estate trustee.

No comments:

Post a Comment