My time as the executor for my father’s estate has been quite enlightening. It’s been just over nine months now and I’ve devoted quite a bit of time to what most people would call a relatively straight forward settlement but there were (and still are) many things to do. I invested a lot chunk of time for the first month doing a lot of work related to the probate, lining up sales for major assets and then the settled into a to 2-8 hours per week type of schedule.
Some people only find out they are tasked to be an executor after the person in question has passed away while others know it in advance. I was fortunate to fall into the latter group as I was named along with my dad’s brother as co-executor. Again, I was fortunate that my uncle trusts me (and my sisters) enough to do the majority of the work on our own and offered only to intervene if we came to an impasse which has not happened.
When the person in question passes away, the executor(s) acquire a copy of the Will (hopefully the location is known) and meet with a lawyer. The lawyer tells you the next steps in the process and you need to provide him with a bunch of information to start the lengthy probate process. Probate is the court process that legally confirms the executors authority by granting executor letters of probate. You are then sent on your way with some information (usually in the form of a pamphlet or maybe even a PDF if the office is a bit more modern) that details the step by step process that one should follow when acting as an executor. A good example of a checklist that I found at RBC can be found here.
These estate executor checklists are great and all but you need to drill down into each item as there are rules and exceptions for each one. Instead of of going into that, which many other websites do, I thought I would point out 10 important lessons I learned (either by doing it right or by doing it wrong).
Stay on top of the taxes
- Many a family have been splintered due to bickering and fighting over division of estate assets. We were fortunate to have been able to go through EVERYTHING with my father before he passed and we used a camera to record every item in the house and his (or our) wishes associated with it (some given to specific people and others to go to distant family members). It is much easier to talk/negotiate and compromise with the beneficiaries when the loved one is still alive as the emotions that follow can sometimes make people act less than rational. I realize that there are a lot of people who are not comfortable about speaking about your mortality with their children but if you love them, do them a favour and prep as much as you can before you depart this terrestrial planet. While it may not be easy to do at the time, they will thank you later.
- Create an executor’s list of dates on when things are due. The deceased’s personal taxes are due 6 months after the date of death. Estate taxes are due one year + 1 day after the date of death. Probate, inventory/net worth of all assets given to the province for probate, updates to beneficiaries to ensure transparency and such. The list goes on and on. If you need to sell wine at an annual auction, find out when the auction is and prep for it otherwise, you need to sit on that case of wine for another year (not such a bad thing for wine). You get the idea.
- Double and triple check dates given to you by lawyers and accountants. The penalties for missing a tax deadline is an automatic 5% + 1% per month. Two days late on your taxes of $50,000? That will be $3,000 into the federal government’s pockets.
- I’ve been told that it takes about 2 years to complete the duties of an executor and that is if things go smoothly. The workload definitely tapers off near the end but I’ve heard of some executors who are still working on estates 8 years later because siblings cannot agree on certain things.
- Do a little bit everyday. It can be overwhelming to deal with everything all at once and though there is a benefit to keep one’s mind focused on work, you do need to take the time to grieve. Doing a little bit every day will whittle down what seems an insurmountable amount of work into easy and manageable chunks.
- Google Docs is your friend. Or Microsoft Office 365. Whatever your preference, use an online word processor or spreadsheet tool that stores your documents in the cloud. I used it for everything as it was easy to share the information with my sisters. You can keep track of the status of all the items in the estate (still at the house, given to the designated person, etc…), the status of the payouts for insurance, what needs to be done, what has been done (and when). I also used it to track which companies had been notified as well as track monthly transactions that sometimes take place outside of the estate account (paying someone to cut the lawn, etc…)
- As the executor, you are liable for any shortfalls in money for taxes. Never disperse the money until you receive your certificate of clearance. One can apply for it for once all income taxes have been filed. Once received, you are relieved of the obligation to pay the government for any taxes including Employment Insurance premiums and outstanding Canada Pension Plan contributions. Once you have the certificate, you can disperse the remainder of the money and then close the estate account and call it a day (or so I’ve been told).
- As an executor, you cannot act on behalf of the deceased unless you provide a company with the Proof of Death certificate and a copy of the probated Will which identifies you as the executor. Once you provide the organization with the proper info and they put it in their system (Revenue Canada takes 6 weeks to process this believe it or not), you can then do things like cancel services, stop automatic payments or what not. This should be done as soon as possible to avoid delays in the future when trying to get things done quickly. Wish I had done all that up front. Ahem….
- Organizing your papers. The deceased will likely have wads of paper that you will need to go through. Some of it will be personal, some of it business related. You will also receive lots of documents, receipts and forms from various organizations. Do yourself a favour, buy some kind of portable filing system and cart that thing around with you when you are meeting people related to the estate. Not only do it make you look like you know what you are doing, you will actually be able to find the latest electrical bill, the probated will and whatever else it is your are looking for. I also bought a document scanner and it has been immensely useful. It’s different than a flatbed scanner in that you feed it a stack of papers and it sucks in the papers, scans them to PDF and spits them out into a nice pile. I bought an Epson DS-560 and have been VERY happy with it.
- While being chosen as an executor is a honour, I’m not going to lie – it is also a lot of work. There is a varying amount of compensation that is given to an executor in Canada but to avoid any issues with the beneficiaries, it is important to have full transparency on the flow of money, the work that has been done and the current status of the whole process. Again, I’m fortunate that I have a fantastic relationship with my sisters and through the use of shared online documents, email and talking, we were able to quickly and easily see/update the status of each item that needs to be addressed.
So. I sincerely hope that no one has to go through this any time soon but if you do. I hope my little list will at least provide you with some guidance and help you avoid any pitfalls. Just make sure you pay the taxes on time and that you double check to make sure that the due date that you were told, is indeed the due date.