What is an Estate?
An estate consists of:
- all assets (property, stocks, money) and
- all liabilities (bills, debts, expenses)
that a deceased person leaves behind. Most people refer to the settling of an estate as the probate process. This means the estate is distributed after the executor pays all bills, expenses and taxes. Only then can the remaining assets be distributed to beneficiaries named in the will.
What is Probate?
Probate is a legal process that provides for the orderly transfer of a person’s assets after death. Probate confirms who is entitled to share in and administer an estate. The probate process gives notice to all persons who have an interest in the estate.
They may request a formal hearing if necessary. In Ontario, this process is called applying for a certificate of appointment of an estate trustee with the will. The old term, letters probate and executor are still commonly used. In Ontario, the Superior Court has jurisdiction over estates when someone dies with or without a will.
Why is Probate required?
Probate is usually required to transfer or sell a deceased person’s assets. Executors are responsible (when necessary) to submit the original last will to be certified as valid. Probate is usually required before banks or brokers transfer, sell or distribute a deceased person’s property.
Obtaining a certificate of appointment from the court is legal work, not executor’s work. As an executor, you should retain an experienced estate lawyer to handle this legal matter promptly.
What if I cannot find the will?
The will confirms your authority. You should still not take any action without legal advice. Note, that if there is no will, the estate administration is more complicated. No one will have authority to handle the estate until appointed by the court.
In Ontario, a person, usually a relative, must first apply to be appointed as estate trustee without a will. In most other jurisdictions, this is referred to as letters of administration. The person appointed by the court is referred to as an administrator.
What to Do When There Is No Will
Call me if you are having trouble finding a will or need to be appointed as estate trustee without a will.
I’m an executor – now what?
You should know this about being an executor:
- statistics show most people have no idea what to expect
- every estate is different
- the majority of estates progress smoothly
- be careful, some situations can become dangerous
- your first step should be to get experienced legal advice.
You do not need special skills. You can hire estate lawyers, accountants and other professionals.They can help with some estate tasks and advise you. Anything you can do now to prepare yourself will reduce your stress.
If you are handling an estate, take steps to protect yourself. It is never too early to get advice from an experienced estate lawyer. Before you make any commitments you may later regret, request a consultation.
What is executor – estate trustee?
As an executor, you are named in a person’s will as their legal personal representative. In some jurisdictions, executors are referred to as fiduciaries or personal representatives. Executors are also called estate trustees with a will in Ontario. Your authority comes from being named in a will and becomes effective when a person dies. A court then may confirm your appointment as executor.
Essential Executor Checklist
For starters, as an executor you should know:
- where the original will can be found
- who else is an executor
- where financial records are kept
- what funeral arrangements are prepaid or pre-planned
- who to contact in case of an emergency
- what estate assets must be protected
- the name of an experienced estate lawyer
What are the duties of an executor?
As an executor, you have duties that you must perform. The law imposes obligations on executors since they are in a position of trust.
Executors have a duty to:
- follow the terms of the will
- act personally
- protect estate property
- avoid conflicts of interest
- exercise proper care
- act impartially
- act for the benefit of beneficiaries
- account for your actions
- pay creditors
What are the penalties for breaching executor duties?
Executors can be required to account for all their actions. As an executor, you can:
- be sued and be responsible for legal costs
- have your executor’s fee reduced or denied
- be removed from office by court order
- have your accounting records audited in court by beneficiaries
In some cases, executors also have personal liability to:
- the tax department, beneficiaries and co-executors
- unpaid creditors of the estate
- pay for the legal costs of those who establish executor misconduct
- pay for the mistakes of any co-executor
What is Executors Disease™?
Executors Disease™ is something you get once you agree to be an executor. You may not know you have the disease until a problem surfaces. It can affect all who come in contact with you in an estate including:
- beneficiaries under the will
- a court that supervises executor’s conduct
Prevention is possible with experienced professional advice.
When should executors get advice?
Ideally before you act as an executor or at the first step in administering an estate. Serious cases of Executors Disease™ can drag executors into courtrooms with lawsuits and financial ruin. Executors Disease™ can affect executors when they make mistakes and become personally liable.
Executors Disease™ is a concern for executors who:
- are vulnerable because of their grief
- are not prepared to deal with family strife
- have no concept of the risks involved in handling an estate
- do not commit sufficient time to their legal obligations
- are unaware of their duties as executors
- mismanage estate assets and cannot account for estate property
- ignore beneficiaries’ rights and delay paying an inheritance
- fail to follow legal requirements or instructions in the will
- make financial mistakes handling estate funds and investments
Prevention is the preferred treatment for Executors Disease™. Once symptoms have developed, executors are exposed to greater risks and costs.
“Executor Beware” – Why is this the new rule?
If you are an executor, there are dangers you must avoid. Common sense is not good enough. If it were, I’d be out of a job as a lawyer. You are held to higher standards as an executor.
In over 30 years of advising executors I learned that no one:
- is really prepared for the job
- understands the risks involved or
- what to do first
You may be familiar with the rule in business that says, “Buyer Beware”. Buyers must take all steps to protect themselves. In estate cases, however, the law is different. The rule to remember if you are handling an estate is “Executor Beware”. Exercise due diligence handling the estate to avoid Executors Disease™.
How do you protect yourself as executor?
Executors can be responsible for even unintentional breaches of their fiduciary duties. Here’s a simple story about Tony the Executor. Tony’s uncle’s will said that Tony could set the price for the sale of the uncle’s home. Tony, as executor, was to sell the house to a cousin, Karl. Tony told Karl to have the house appraised. Karl did that and paid the appraisal price to the estate. However, Tony had breached his executor duties to the other beneficiaries.
- he delegated a duty that was personal
- he failed to follow the terms of the will by not personally setting the price for sale
- he failed to get the best price for the estate
- he is liable if a proper appraisal confirmed Karl paid too little
- he could be liable for all losses and court costs
Don’t fall into the dangerous traps Tony did. Let my experience steer you away from such dangers. Book a consultation today. Protect yourself by finding out about your legal duties, before you make costly mistakes.
Not all lawyers are familiar with estate law. Get legal advice from an experienced estate Lawyer. Before starting work as Executor, make sure the Will is legally valid. Check to see if there are dangers such as unpaid taxes, businesses or ongoing lawsuits. These may suggest you should resign or renounce your position as Executor. You can renounce if you have not started performing any Executor duties.
It’s more difficult to resign as an Executor if you have already started administering the Estate. In order to resign you may need court approval. This may include having a court and the beneficiaries review and approve your estate accounting. If you are not sure you can handle the job as executor, you may need Executor Kung Fu.
What records should executors keep?
If you are an Executor (or Attorney acting under a Power of Attorney for property) you must keep financial records and details of all your transactions. This includes written confirmation of the advice you receive.
Normally you record all money received and all money spent on behalf of the estate.You must keep estate funds and investments separate from your own money.
What about estate investments?
Depending on the size of the investment, you need to hire an investment advisor. Get advice about the estate’s investments as soon as possible. You need a written investment plan in place if you are also an Attorney under a power of attorney for property.
Make sure your investments are prudent and backed by a written professional assessment. You can be sued for any investment losses while you are executor, so don’t gamble.
Executor Kung Foo
I have written a step-by-step guide to specifically help first-time executors. Learn more with Executor Kung Fu: Master Any Estate in Three Easy Steps. Easy to read and use in a step-by-step format, it will save you time and money.
Are you an Executor at risk?
Don’t let financial or legal mistakes haunt you. Don’t waste money getting the wrong advice.
Book an appointment today to get expert legal advice on:
- your duties as an executor
- probating a will
- interpreting the terms of the will
- dealing with estate property
- transferring real estate
- avoiding conflicts of interest
- administering an estate
- defending a will or executor
- appropriate executor fees
- any estate matter involving court
- jointly-owned assets
I handle estate litigation or estate administration problems for executors. I aim to get positive results in a quick and cost-effective manner. Contact my law firm to arrange for a consultation or appointment to review your needs.