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Why you should choose an executor of a will

14 May 2018 by National Bank
executor of a will

The executor/liquidator of a will has to handle many important tasks. It’s best to think carefully before appointing one or accepting this responsibility. Learn more about this key role in the estate settlement process.

What is an executor of a will?

The executor (or the liquidator, which is the term used in Quebec) is responsible for administering the estate of a deceased person. The executor/liquidator will ensure that the wishes expressed in the will are respected, including the sharing of the legacy. If there is no will, the executor/liquidator will distribute the estate’s assets according to the laws in effect.

The executor/liquidator may make many decisions, among them the amount of money allotted to funeral expenses. However, the executor/liquidator does not own the assets of the deceased, but merely administers them while settling the estate.

Who can be an executor/liquidator?

You can name the person of your choice, as long as he or she is of legal age. Ideally, you should make sure this person wants to take on the role.

Some estates can be very complicated to settle. This is often the case when the deceased owned a company or held significant financial assets. The situation can also be more complex with, for example, blended families.

In this case, you could name a professional, such as a notary, a lawyer or an accountant, as executor/liquidator. Most financial institutions and investment firms can also play this role.

If you do not have a will, then your legal heirs will be your executors/liquidators. They can fill this role together, or designate just one executor/liquidator by vote.

A friend or family member living abroad can also be named as executor/liquidator. This, however, could be very disadvantageous. In terms of taxation, it will be as though funds are being transferred to a foreign country. And that could trigger a much heavier tax bill.

How to choose an executor/liquidator?

The person who takes on this role must be named in your will. You can choose more than one person, but it’s unadvisable. Because two or more parties will have to make decisions unanimously, they may hit a roadblock in cases where they disagree. It’s also possible to designate a substitute executor/liquidator, who will take over if the person chosen is unable to fill the role or refuses to do so.

Be sure to choose an honest person, and someone of sound judgement. You should also take into account that person’s relationship to the heirs. If you name your children from a first marriage, is there a possibility they will be prejudiced against your new spouse? There are many situations that could lead to conflict. Try to keep these in mind when you choose an executor/liquidator.

What are the requirements?

The law imposes various obligations, such as acting in the interests of the heirs and growing the estate’s assets. Obviously, the executor/liquidator must also respect the wishes expressed in the deceased’s will. If any conflict of interest arises, the executor/liquidator must put the interests of the beneficiaries above his or her own.

Settling an estate is frequently not as simple as it seems. There are many steps to be followed, and the person in charge must be able to carry them out within the prescribed deadlines.

The executor/liquidator must:

    • Determine if there is a will and make sure it is the most recent version. In Ontario and other Canadian provinces, the executor should consult the estates division of the local court. In Quebec, the liquidator can refer to the Registers of Testamentary Dispositions and Mandates of the Chambre des notaires du Québec and the Barreau du Québec. The executor/liquidator must also go through the files, desk drawers and safety boxes of the deceased. The goal is to make sure there isn’t a more recent, unnotarized, version of the will.

    • Register as a liquidator with the Quebec Register of Personal and Movable Real Rights (RDPRM).

    • Make an inventory of the deceased’s assets and liabilities, after having requested access to all the deceased’s accounts from any financial institutions involved. Normally, this task should be performed within six months of the person’s death. If the value of the assets is significant, the executor/liquidator may want to call in an appraiser. This could reduce the risk of conflict among the beneficiaries.

    • File the tax returns of the deceased and of the estate. It’s essential to ensure that all government taxes have been paid. Before distributing any inheritances, the executor/liquidator must obtain a tax clearance certificate from the Canada Revenue Agency and/or a certificate authorizing the distribution of estate assets from Revenu Québec.

    • Pay off the deceased’s debts. Assets may be sold to accomplish this.

    • Divide the family inheritance if the deceased was married.

    • Distribute inheritances owed to specific people, as required.

    • Distribute the remaining assets to the heirs.

    • Provide account statements to the heirs. This must be done every year until the estate is fully settled.

    • Conclude the process by filing a Closure of the liquidator’s account with the RDPRM.

    Don’t hesitate to ask for help. The executor/liquidator can request the services of various professionals (accountants, tax specialists, lawyers, notaries, etc.) to provide assistance along the way. Their fees will then be paid by the estate.

    Does the executor/liquidator get paid?

    Not necessarily. But given the complexity and magnitude of the task, you could provide for remuneration in your will. You could also specify that reasonable expenses incurred while settling the estate will be paid by the estate.

    Obviously, the situation is different if the executor/liquidator is a hired professional rather than a friend or family member. In such cases, the professional will charge his or her usual fees to perform the task.

    Can you decline the role?

    Whether you were or were not consulted by the deceased, you can refuse to be the executor/liquidator. And you don’t need to justify your decision. You do, however, need to notify your co-executors or co-liquidators, as the case may be. If no one else has been named, the heirs may assume this role. They can also appoint someone else to do so. If there’s disagreement, they can refer to the courts.

    There is one exception: If you are the sole heir, you cannot refuse. However, you can authorize a professional to handle the various tasks required to settle the estate.

    If you have agreed to be the executor/liquidator, you also have the option to resign along the way. The procedure is the same as for refusing.

    What happens if the executor/liquidator is doing the job poorly?

    The executor/liquidator can be sued if they have been negligent or dishonest. Even if a mistake has been made in good faith, the heirs will have recourse against the executor/liquidator. For instance, he or should could be sued if a more recent will is discovered. Moreover, if the process is needlessly drawn out, the heirs and creditors may ask the that executor/liquidator be replaced. In cases of fraud, a complaint could be lodged with the police.

    As for the tax authorities, they may send a bill or issue a penalty if the executor/liquidator has distributed assets without first having obtained the necessary papers. At that point, he or she becomes personally responsible for any taxes the deceased may owe. And that could get very expensive.

    The role of the executor/liquidator and the intricacies of estate planning should not be taken lightly. It’s best to think carefully about the choice of an executor/liquidator or about agreeing to take on the job. Don’t hesitate to talk to a professional to guide you through the process.

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