Choosing an Executor or Estate Trustee:

  1. You can choose more than one, so if one dies the other can continue or they can work as a team capitalizing on expertise and ability that one alone lacks
  2. Ask the person before you make your will
  3. Consider asking your spouse or one or more trusted adult children
  4. Keep your family informed of who your executor is
What Your Executor Needs to Know:
  1. where your will is kept
  2. where to find a list of assets and debts and important papers
  3. who your lawyer and advisors are
  4. funeral wishes 
  5. how you want family heirlooms and personal items dispersed
What Your Executor will be Responsible for:
Executors are responsible for carrying out your wishes as per your will. This could include gathering and distributing the assets,  investing and maintaining estate assets and making appropriate elections and filings under the Income Tax Act. The executor has responsibilities towards providing the beneficiaries with information regarding the handling of the estate and towards dispersing entitlements in a timely fashion. 

The following list contains an example of an executor’s responsibilities, but in no way is it all inclusive:

  • Dispose of the deceased’s remains and arrange funeral or memorial service
  • Notify beneficiaries
  • List safety deposit box contents
  • List and value all assets and debts at date of death
  • Arrange for safe-keeping of all real estate, including notifying insurance companies, utilities etc.
  • Secure all valuables
  • If there is a business or farm, make sure someone is managing it
  • Apply for Probate or Administration with legal help and advice
  • Apply for all pension, death benefit and life insurance
  • Notify any joint tenants and let them take care of transfer of title
  • Notify any named beneficiaries of insurance policies, RRSP’s etc.
  • Pay all debts and expenses of deceased and estate
  • File and pay income tax and get tax clearance certificate
  • May have to advise creditors and deal with any claims including any lawsuits
  • Answer enquires
  • Keep executor’s financial statements including proposed compensation schedule and final distribution schedule
  • Distribute estate
For a person dying without a will, the family will apply to the court to have an administrator appointed and then that person’s duties are similar to the executor. The advantage for the executor is that the will speaks from death, so the executor can start earlier.
 
Executor Compensation:
Normally an executor or a trust company acting as an executor will be compensated about 5% of the value of the estate  for doing the work of the executor. The complexity of an estate and other factors can cause the executor compensation to be adjusted up or down.
 

Taxes and Death Duties

Currently Canada does not have any death duties like in the past but income and capital gains taxes may have to be paid when you die. Capital gains are a tax on the increase in value of a capital property such as real estate or shares. The tax is calculated on one half of the increase in value of the asset when you die. This one half of the increase is added to your income at death and your executor pays tax on it out of your estate less any deductions or exemptions. If the real estate is your principle residence with up to 3 acres then it may be exempt from tax.
 
Remember RRSP’s and RRIF’s are taxable unless left to a spouse and they are taxed when last spouse dies. Your lawyer or accountant can advise you on taxes and even suggest ways you can reduce tax by estate planning.
 
Here are some things you can do to reduce tax with professional help:
  1. Write your will so that if your spouse survives you, assets that would otherwise be taxable can pass to your spouse or in trust so that tax is deferred until your spouse dies.
  2. Joint ownership of assets with your spouse will avoid provincial probate fees as the asset will go to your spouse as the surviving joint tenant
  3. Bequeath cash and stocks to the Church or Christian charities. You’ll get a tax exemption and any increase in value of the stock which normally would result in a taxable capital gain will be eliminated
  4. There are ways of freezing the value of your business or commercial real estate in favor of your children to reduce future capital gains tax
Ask a qualified tax adviser about other options you many have to reduce taxes, including the use of trusts, making an RRSP donation in year of your death, etc. But be wary, sometimes these things to save tax can produce other unforeseen problems and expense.
 
In my final article I’ll address a few Frequently Asked Questions about Wills and Estates.
 

This article is intended for information purposes only and should not be considered legal or tax advice. Please seek a professional for legal or tax advice.


For more information on Wills and Estate Planning in Your Province visit:

Government of Canada

Alberta

British Columbia

Manitoba (a legal guide to Farm Estate planning PDF document)

New Brunswick

Ontario

Saskatchewan (estate planning for farm families)

Yukon

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