Advice – Executors, Always Talk to an Estate Lawyer First

Albert didn’t bother talking to a lawyer. He wasn’t sure if he was playing it safe.

Albert was executor of his uncle’s small estate. He didn’t realize, however, the size of the estate’s liabilities. His uncle’s RRSPs were transferred directly to his designated beneficiaries. Unknown to Albert, those RRSP assets carried significant income tax liabilities.

Albert’s uncle left his $100,000 RRSP to his sister, which generated $50,000 of income tax liabilities. The uncle’s estate was responsible for the income taxes.

But Albert distributed the estate’s cash to other beneficiaries.

Albert did not have enough to pay estate expenses and income tax bills. The beneficiaries were not happy. They were asked to pay back money. If Albert had contacted an estate lawyer, he would know the RRSP was an estate income tax liability.

Invest in Legal Advice to Protect Yourself

If you are an executor, don’t forget legal fees are paid for by the estate. Legal advice can help you:

• Understand if you should accept or renounce your role as executor
• Confirm the will is legally valid
• Your rights and responsibilities as executor
• Complete court papers for probate
• Sell or transfer estate assets or property
• Protect yourself from creditors and beneficiaries and co-executor mistakes
• Avoid any potential personal liability for income taxes
• Understand the correct way to distribute the estate
• To ensure beneficiaries approve your compensation
• Close the estate with releases or court orders

Search the internet to get background information about any estate lawyer’s experience. Interview the law firm by phone before you make commitments. Ask your financial planner, banker or accountant to recommend an estate lawyer in your neighbourhood.

If you are handling your spouse’s estate, legal advice can be quite simple. Investing in professional advice has benefits that are worth the cost.

Tip: Getting proper legal advice will keep you out of trouble.