Seven tips for executors

Serving as an executor can mean dealing with a pile of confusing paperwork at a time of family sadness. These tips can help.

“There is an awful lot more to it than people realize – they often don’t understand how much work it really is,” says Lynne Butler, an estate lawyer, consultant, blogger and author of six books on estate planning.

Here are some helpful insights for handling the role of executor:

1. Know what you’re getting into.

Understand the number of administrative duties involved and the legal liabilities up front. An executor’s tasks can include reviewing insurance coverage, closing financial accounts, investigating and paying debts, taxes and fees and distributing assets to beneficiaries. You can be held personally liable if your mistake creates a shortfall in the estate.

Mark Goodfield, managing partner at Cunningham LLP in Toronto and author of The Blunt Bean Counter blog, finds people often under-estimate the commitment. “People just don’t realize how all-encompassing a job it is,” says Goodfield, who has acted as an executor for three estates.

2. Ask for help when you need it.

Be aware of administration costs, but keep in mind that trying to avoid them altogether could end up costing the estate more money. Attempting tax returns without an accountant, trying to settle legal disputes without a lawyer, selling assets without appraisals or investing money with no guidance could create challenges if you try to juggle everything alone. Professional advice can give you peace of mind.

3. Keep the lines of communication open.

Settling an estate can create or aggravate family tensions. “A lot of people complain that they can’t get any information from an executor,” says Butler, who has acted as an executor in her role as a lawyer. “I always tell executors not to hide what they’re doing – it makes people speculate and creates suspicion.”

4. Carry out the will as it’s written.

Sometimes executors can feel tempted to change unpopular or inconvenient parts of the will in favour of what they perceive to be fair. It’s important to remember that your role is to distribute the estate as it was set out in the will.

5. Deal with debts and taxes before paying beneficiaries.

Investigate and pay off any debts, taxes and fees before proceeding with the distributions. If you pay beneficiaries without having cleared all liabilities, you may end up on the hook for paying them personally. It’s also good to get a clearance certificate from Canada Revenue Agency, which states that any taxes owing, interest and penalties have been paid by an estate. Without a clearance certificate, you could be responsible for paying any taxes due.

 

6. Take your time – within reason.

Administering an estate will take at least 12 to 24 months – or longer if the estate is complex. Don’t feel pressured to make decisions you’re uncertain about. At the same time, it’s prudent to keep the settlement moving forward. “Every year the estate is open, another tax return is required,” says Butler.

7. Stay on top of the paperwork.

Keeping good records is of paramount importance. If beneficiaries have questions later on, it’s important to be able to back up your decisions with proper documentation.

More on wills and estate planning:

 

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Original source: Seven tips for executors by Krista Seggewiss.