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ExecutorKUNG FU
Master Any EstateIn Three Easy Steps
Edward Olkovich
Praise for other books by Edward Olkovich
Estate to the Heart
“Makes estate planning accessible to everyone. It reminds you that the
most important objective of estate planning is the protection of loved
ones.”
— GLENN STEPHENS
PPI Financial Group; author of
Estate Planning with Insurance
Estate Planning in Six Simple Steps
“My first reaction when this arrived was: Where have you been all my
life? I don’t know why it took so long to get a mass-market book on
this topic. Olkovich is a Toronto lawyer, but don’t hold that against
him. He can write without legalese.”
— ELLEN ROSEMAN
Columnist, Toronto Star
Choosing Executors
“I like the way Ed breaks up complicated tasks into bite-size pieces
that are easy to understand …”
— WAYNE BAXTER
CFP Senior Associate
Investment Planning Counsel
and host of Right on the Money, Toronto
Other Publications by Edward Olkovich
The Complete Idiot’s Guide
to Wills and Estates for Canadians
The Complete Idiot’s Guide
to Estate Planning in Six Simple Steps for Canadians
Estate Planning in Six Simple Steps
Estate to the Heart
How to Plan Wills and Estates for Your Loved Ones
Breakthrough Estate Planning
Finding All the Answers You’ll Ever Need
Choosing Executors
Your Formula for Success
Visit www.EstateTherapy.com for free reports on Estate Matters
Copyright © 2011 by EstateTherapy Inc.
ISBN 978-0-9731588-5-4
Published by EstateTherapy Inc.
62 Jane Street
Toronto, Ontario
M6S 3Y4
Tel: 416.537.0777
1.877.MR WILLS (1.877.679.4557)
EstateTherapy™ and Executor’s Disease™ are registered trademarks
of Mr Wills Inc.
EstateTherapy.com is an online publisher of resources on estate
matters.
For Your Protection
This book does not contain financial, legal or medical advice and is
not a substitute for professional advice. Laws change and vary in
each jurisdiction, state and province. Always consult a professional
before taking any action.
The author and publisher assume no responsibility for loss or
damages, direct or indirect, of any kind from use of this material.
No part of this publication may be reproduced or transmitted in
any way or form or by any means, mechanical or electronic,
including photocopying and recording, without permission in
writing or by email from the publisher.
Dear Friend,
If you have lost someone close to you, I offer you my condolences.
You may be reading this because you are acting as an executor.
Executors must deal with emotional, legal, tax, business and
personal issues.
You have been asked to fulfill a person’s last wishes. This is both
an honor and a challenge. You will maneuver through a series of
steps, much like the skills used in kung fu.
Executor Kung Fu is not about the martial arts. It is a guide that
will show you how to protect yourself from the bad things that can
happen to you as an executor. It shows you how to handle an estate
effectively and efficiently.
You do not, however, need to train at the level of a Bruce Lee or
Jackie Chan. You can get excellent results by using my three steps—
protect, probate and pay—which this guide describes in detail.
Executor Kung Fu will make your job easier. Inside you will find
the secrets to opening and closing an estate.
Edward Olkovich
Executor Kung Fu Master
CONTENTS
Foreword by Dr. Thomas Egan 11Preface 13How Executor Kung FuWill Help You 15
SECTION I • Start Your Journey Here1 This Will Make All the Difference
The Fundamentals You Need to Know 23What They Will Call You 24Can You Just Say, “No, thanks”? 26What Can You Expect? 28A Celebration of Life 28Are There Any Simple Estates? 29Don’t Assume This Will Be Quick 29Keep Track of Who Does What 30Executors Disease™—A Case Study 31Timing the Sale of Assets 31Your Conduct Can Cost You 32My Wish for You 33You Are the Gatekeeper 34Executors Must Meet Legal Standards 35You Must Be Prudent and Reasonable 36Essential Executor Lingo 37Executor Kung Fu Summary 40
2 Executor Kung Fu Survival RulesWhat You Need to Remember 42Learn Your Dos, Don’ts and Duties 43Executor Circle of Responsibilities 44Executor Kung Fu Duties 47Rules That Matter 48Can Wills Be Challenged or Varied? 49Wills Can Be Attacked 49Married or Divorced? What a Difference 49Estate Income Tax Returns 51
When Are Returns Due? 51How to Manage Expectations 53Watch Out for Stalkers 53Who Is Watching You? 54You Must Control the Estate Inventory 55Why Staying Calm Is Important 56Not All Last Wishes Are Equal 56Be on Guard 57Count Every Penny 58When It Comes to Money 59Executor Kung Fu Summary 60
3 The Executor MantraIntroducing Three Steps: Protect, Probate and Pay 62Questions You Will Be Asked 63Your Own Questions May Be … 63The Executor Mantra 64How to Use Your Executor Mantra 65Summary of Your Duties as an Executor 66First, Protect Estate Assets 66Second, Probate the Will 67Third, Pay Everyone 67Executor Kung Fu Steps 69Executor Milestones 70The Probate Process … 12 Months and Counting 71Executor Kung Fu Summary 72
4 Your Top 10 Executor Questions AnsweredBegin with These Basics 74Q.1 How do I know if I am the executor? 75Q.2 When does the executor take charge of the estate? 76Q.3 Who pays for the funeral? 77Q.4 How difficult is it to be an executor? 78Q.5 How long will it take to handle an estate? 79Q.6 Does an executor get paid? 80Q.7 How much do executors get paid? 81Q.8 When should I get help from professionals? 82Q.9 Why is probate necessary? 83Q.10 Must all assets go through probate? 84
Contents 7
Your Executor Questions 85Executor Kung Fu Summary 86
5 Your First Day—What to DoStart Here If You’re in a Hurry 88Action Step #1– Make the Calls 89Action Step #2—Locate the Will 90Testate and Intestate Estates 91Action Step #3—Arrange the Funeral 92What to Do at a Funeral 93Action Step #4—Secure Valuables 94Record Who Has the Keys 95Making the Right Moves with Valuables 96Action Step #5—Begin Keeping Records 97Action Step #6—Start an Estate Inventory 99Preliminary Estate Inventory 100Executor Kung Fu Summary 103
SECTION II • Opening and Closing an Estate6 Protect the Estate—Get Organized
Checklists You Can Use 106Legal Issues and Deadlines 107Legal Claims Can Freeze an Estate 108Protection Checklist 109Executor Kung Fu Self-Defense Moves 113Papers to Start Collecting 114What Cash Will You Require? 116Estimated Monthly Cash Needs 117Executor Kung Fu Summary 119
7 Special Considerations—Business, Investments,Real Estate and Joint AssetsHow to Avoid Some Very Real Dangers 121Three Worries About Business 1221. Do you have the authority to run the business? 1222. Where will the money come from to run it? 1223. Can you sell the business, or is it unmarketable? 122What’s Special About a Family Business? 123Business Always Has a Bottom Line 123Investments—Executors Can Pay for Mistakes 124
8 EXECUTOR KUNG FU
Why You Should Keep Written Investment Plans 124Keep an Eye on the Cash Flow 125Real Estate Is Special 126Property Insurance Is Your Responsibility 127Getting Ready to Sell 128Methods to Clear Contents 128Special Problems with Joint Assets 129What Looks Suspicious? 129Gifts Made Before Death 130Abuse Under a Power of Attorney 130Executor Kung Fu Summary 132
8 Probate—It’s Not Brain SurgeryProbate Can Be Painless 134The Ins and Outs of Probate 135You Must Locate the Original Will 135Is Probate a Dirty Word? 136Probate vs. Non-probate Assets 137What Does Payable or Transferred on Death Mean? 137The Role of Probate Court 139Where to Apply for Probate 139The Role of Probate Court 139Probate—Court Confirmation of Executors 140Probate Petitions or Applications 141Opening an Estate Bank Account 143Small Estates Get Special Treatment 145Executor Kung Fu Summary 146
9 Paying EveryoneWho Is First on Your List? 148Step #1—Pay Creditors First 149Estate Income Tax Recap 150Tax Clearances Protect You 151Step #2—Pay Beneficiaries 152How to Pay Specific Gifts 152What to Do with the Residue 153How Are Assets Distributed? 153Interim Estate Distribution 154Distribution Under the Will 155Executor Kung Fu Summary 156
Contents 9
10 Pay Yourself Last—Closing the EstateYour Payoff Is Near 158The Beneficiaries’ Ultimate Revenge 159What If It Gets Nasty? 160Only Lawyers Should Respond to Lawyers 160When Do You Need a Court Order? 161Why Releases Protect You 162Sample Release of Estate Trustee 163Executor Fees 164Who Decides How Much? 164Closing an Estate Checklist 166Storing Your Estate Files 167Executor Kung Fu Summary 168Congratulations 169
SECTION III • Executor Kung Fu ToolsWill Notes 172Gifts of Property Under the Will 172Cash Bequests Under the Will 174Beneficiaries of the Estate 176Sample Lawyer Letter to Executors 178Certificate of Appointment of Estate Trustee with a Will 182Detailed Estate Inventory 183Important Contacts 196Other Important Contacts 198Executor Logs 201Time Log 201Telephone Log 203Correspondence Log 205Appointment Log 207Cash Journal 209Monies Received 209Monies Dispensed 211Sample Will 212Web Resources 214
Glossary 216Index 220What Is EstateTherapy™? 223About Author Edward Olkovich 224
10 EXECUTOR KUNG FU
FOREWORD BY DR. THOMAS EGAN
Executor Kung Fu at first struck me as an unusual title for a book
authored by Ed Olkovich. The Executor part made sense because Ed
is one of Canada’s foremost authorities on wills and estate law. But the
Kung Fu part—I found that puzzling.
I have known Ed since we met through a mutual friend in grade 9.
Our friendship grew, through running together for student council,
living in the same dorm in college, attending each other’s weddings
and sharing in the joy of having families—including spending summer
vacations together.
Although we are as close as brothers, we are very different. I am
the science nerd; Ed is the writer. When I went to med school, Ed
studied law. Both of us do help people deal with death, however. I am
a lung transplant surgeon, assisting some patients after the unfortu-
nate demise of others. Ed is an expert in estate law: what happens to
assets, liabilities, family and loved ones after a death.
But neither of us is into martial arts—hence my initial confusion
about the title. Turning to Wikipedia (is there any other source of
information today?), I learned that, colloquially, kung fu can allude to
any individual accomplishment or cultivated skill obtained by long
and hard work. So Executor Kung Fu makes perfect sense.
Ed has worked hard to provide an easy-to-understand, comprehen-
sive guide with a lot of useful information. And, in keeping with the
common perception of kung fu as a martial art, it is a guide that will
help you defend yourself in the potentially very difficult, sometimes
even disastrous, task of being an executor.
There’s no doubt in my mind that my family would have been
helped immensely if they had read this before our mother passed
away and they took up their duties as co-executors.
There were many questions they could have asked in order to
clarify her wishes—and simple things that could have been done
before her death that would have made settling her estate so much
easier.
But this guide is valuable not only as a resource for anyone who
has been asked to assume the responsibility of being executor of an
estate. It is also valuable for anyone who is contemplating naming an
executor for their own affairs. That should include every one of us.
Because two things are certain … death and taxes.
Before asking someone to be executor of your estate (and we all
need one), it’s a good idea to know what’s involved. This guide
provides that information in a no-nonsense, user-friendly format.
However, although I found Executor Kung Fu an informative,
entertaining read, I didn’t really need it. Why? Because I have no
worries about my executor or his knowledge of the field … I chose Ed!
Tom Egan is a lung transplant surgeon who has authored or co-
authored over 100 publications and 15 book chapters.
12 EXECUTOR KUNG FU
PREFACE
Executors carry out their duties and fulfill the last wishes of a dear
friend or loved one. In most cases, they are totally unprepared for
their legal responsibilities and all the necessary hard work.
People ask me how I can deal with estates all the time.
Here’s how I look at it: Carrying out a person’s last wishes makes
you appreciate your loved ones.
Life and death do not meet at any particular point. They are two
sides of the same coin. Executors come close to seeing life and death
as one.
In many ways, this is an eye-opening experience.
As an estate lawyer, I have had the privilege of advising executors
for the past 30 years.
I have written this guide for all the clients who asked me for help. I
hope it serves as a roadmap and eases your burdens as you prepare to
act as an executor.
Along the way, as I prepared this guide, Brad Huxtable, Howard
Lane and Jim Ruta were kind enough to comment on the drafts.
I owe special thanks to Darlene Jukes, Eletra Lasci and Patricia
Standello, members of my staff. They helped me, it seemed constantly,
to prepare and revise this material. I owe them a debt of gratitude for
making it what it is.
To my dear wife, Krystyna, our sons, Nick and Adam, and our
great friends, Tom and Lynn Egan, thank you; I love you all.
To Don Bastian, thank you for raising the quality of everything I
write.
Ed Olkovich
Like a bird
Singing in the rain
Let grateful memories
Survive in time of sorrow
—Robert Louis Stevenson
12
How Executor Kung Fu Will Help You
A few weeks ago, Carol came into my law office. She placed a new
black-leather portfolio on the boardroom table. She told me she had
just come from a relative’s funeral.
“I am executor of my brother’s estate, but I don’t know what to
do,” Carol said. “I can’t believe there isn’t a guide to help people like
me.”
“What’s in your portfolio?” I asked.
“I got this from the funeral home,” she said.
As she opened it, I saw a few executor checklists.
“What about all those checklists?” I said. “Aren’t they of any use to
you?”
“They don’t explain what my duties are. I want to know what to do
and how and why.”
I realized then what executors really need: a user-friendly, home-
study guide to defend them against the hidden dangers in their jobs.
This, then, is the first self-defense guide for executors.
Executor Skills Aren’t Taught in School
No one wants to deal with death, especially the death of a loved one or
friend.
A person’s death can create huge problems that someone must
handle.
The skills you will learn in this home-study guide are not taught in
any school or course.
This guide will keep you on track. It will help if you are handling
an estate as:
• a spouse and sole beneficiary of an estate
• an adult child handling a parent’s estate
• one of several co-executors named in a will
• an administrator of an estate where there is no will
• an executor in waiting who is expecting to handle an estate
I have designed Executor Kung Fu as your complete self-defense
system. You can follow it step-by-step to learn what you must do.
The specific tasks you must perform in each estate will vary. No
guide can adequately cover all of the individual problems that may
arise.
You will need legal advice on the finer points in law and family
history that will affect how your work is done.
If you are expecting to be an executor, you may be wondering:
“What’s an executor supposed to do?”
Your Call to Duty
It’s simple.
When you act as executor, you are called to duty.
A friend or relative may have asked you to be their executor. You
may not even recall if you said yes or no.
You may be worried that you’re inexperienced. You may be uncer-
tain about what to do. Don’t worry, you’re not alone.
16 EXECUTOR KUNG FU
Research has confirmed most people have no idea what’s involved
in being an executor.
This may surprise you, but it’s also the reason why you need this
self-defense guide.
Mistakes You Make as Executor Can Haunt You
Perhaps you were given the job because you’re a spouse, a son or
daughter or a beneficiary. You were chosen, above all reasons, because
you are trustworthy.
Don’t worry if you are completely unprepared to be an executor. I
have created Executor Kung Fu precisely for someone like you.
In this guide I give you the keys to open and close the estate. This
information will help you work with professionals and receive proper
advice.
This is not another legal book. You will not find any legal jargon
here.
My aim is to prevent you from making costly mistakes that can
haunt you.
What Is Executor Kung Fu?
Like kung fu masters, executors use skills requiring knowledge, disci-
pline and compassion.
Unlike kung fu masters, executors do not have years to develop
these skills.
As an executor, you must quickly take charge of an estate. I explain
the three easy steps for such mastery: protect, probate and pay. These
steps will guide your actions like magic, helping you perform all your
tasks on time.
How Executor Kung Fu Will Help You 17
Executor Kung Fu gives you tricks and tips to work smarter and
faster. It simplifies the probate process and offers techniques to
protect yourself and the estate.
As an executor, you have legal obligations to carry out a person’s
last wishes. As you act for the benefit of the estate, you must also
practice self-defense to protect yourself from dangers. This is the yin
and yang of executor work.
Many people may take advantage of your lack of experience and
knowledge. You can be caught by surprise if you do not do your home-
work.
Anything you can do to educate yourself will reduce your stress.
But remember this: Your authority to act begins only when a
person has passed away.
When the Time Comes
“When do I pay the bills?”
“Do I pay debts with my own money?”
“What do I do first?”
Executor Kung Fu answers these questions and helps you under-
stand your responsibilities.
I have divided this guide into three easy-to-use sections: Start Your
Journey Here; Opening and Closing an Estate; and Executor Kung Fu
Tools. Each of the 10 chapters ends with a summary of key points to
make your work easier.
Here’s a summary of what you’ll find inside.
18 EXECUTOR KUNG FU
Section I—Start Your Journey Here
This section gives you the basics for understanding your obligations.
It’s a plain-English explanation of the important legal lingo you need.
Beware. Your inexperience and grief can make you vulnerable.
Various people can take advantage of this. You are responsible to
manage the estate. You cannot let someone else take over.
This section provides you with the background information you
need to secure control over the estate. You’ll be introduced to the
concept of Executor’s Disease™ and how you can avoid it.
As an executor, you will make many decisions. I introduce you to a
three-word mantra to guide your thinking and actions.
This mantra—protect, probate and pay—will keep you focused on
the stages in handling an estate. You will understand the process to
open and close the estate.
Next, I give you answers to the top questions asked by executors.
If this is your first day on the job, you may want to start with
Chapter 5, “Your First Day—What to Do,” and then double back to the
beginning.
Section II—Opening and Closing an Estate
Timing is important. A person’s death may freeze their assets, but it
doesn’t freeze their bills. This section shows how you can get organ-
ized to avoid wasting time.
You’ll discover how to protect the estate’s assets and how to tackle
probate without worry.
Together, we’ll go through the process of protecting valuable prop-
erty. Executor Kung Fu gives you special pointers for dealing with a
business, investments and real estate.
How Executor Kung Fu Will Help You 19
Finally, you’ll learn how to pay out and close the estate. You’ll
discover the secret to paying yourself.
Section III—Executor Kung Fu Tools
This section contains practical tools to help you right from the start of
your journey as executor.
It shows you how to keep track of what is going on in the estate.
This will prove priceless when you start to close the estate.
These stress-reducing tools will also help you avoid disaster.
Settling an estate can be a complex process involving legal and
emotional issues. Getting proper professional advice makes your work
easier. It will give you confidence and assist you in understanding
your role.
Now let’s get started.
20 EXECUTOR KUNG FU
Grief is crowned with consolation.
—William Shakespeare
12
Section IStart Your Journey Here
1 This Will Make All the DifferenceThe Fundamentals You Need to Know
2 Executor Kung Fu Survival RulesWhat You Need to Remember
3 The Executor MantraIntroducing the Three Steps: Protect, Probate and Pay
4 Your Top 10 Executor Questions AnsweredBegin with These Basics
5 Your First Day—What to DoStart Here If You’re in a Hurry
1
THIS WILL MAKE ALL THE DIFFERENCE
The Fundamentals You Need to Know
“I’m an executor. Now what?”
You may be asking yourself what you’re supposed to do.
Let me answer. Every estate is different and some situations can
become dangerous. This is why you must be careful.
You don’t need special skills. You can hire lawyers, accountants
and other professionals to advise you. They can also carry out some
estate tasks.
Anything you do to understand your obligations will reduce your
stress.
Note: Chapter 5 gives you special tips for your first day as
executor.
What They Will Call You
As an executor, you are named in a person’s will as their legal repre-
sentative. In Ontario, executors are called estate trustees with a will.
In some jurisdictions, executors are also referred to as fiduciaries
or personal representatives. In some wills, you may be referred to as
executor and also estate trustee.
Your authority comes from being named in a will and becomes
effective when a person dies. A court may then confirm your appoint-
ment as executor.
As an executor, you are a fiduciary in a position of trust.
Being a fiduciary has special legal significance. It creates a
personal obligation and this creates personal liability as well. I will
explain this further in a moment.
Let me start with the three steps executors must take.
The Executor’s Job Description
1. Protect and collect all estate assets.
2. Probate the will, if necessary, and sell assets.
3. Pay bills and pay beneficiaries named in the will.
24 EXECUTOR KUNG FU
These three steps may overlap. You don’t have to fully complete
one before going to the next. For example, you will protect the estate
assets until you pay out or distribute them.
However, you should never skip to the third step and distribute
assets without your lawyer’s approval.
Note on terminology: The term executrix is frequently found in
some wills and court cases. It is the feminine version of executor. The
modern term frequently used for executor is personal representative
appointed by a will.
For simplicity’s sake, I use the most universally understood term
executor. This is the person named in the will to be in charge and is
gender-neutral.
This Will Make All the Difference 25
Can You Just Say “No, Thanks”?
Since you will be exposed to personal liability if you act as an
executor, you should get legal advice immediately. This can help you
to assess the risk and to find out whether you should protect yourself
by refusing to accept the role of executor, and how to do so.
Being named as an executor doesn’t mean you have to accept the
responsibilities. You may refuse or renounce your title and obliga-
tions.
So what do you do if you don’t want the job?
You can just say no. Lawyers must file court forms to confirm you
have declined the position. You must notify any alternate executor as
well.
Renounce your position if you are unable or unwilling to complete
all tasks. Why consider this now?
Because renouncing before you begin is easy but resigning later is
difficult. You can’t just quit as executor once you get started.
Here are three things to consider.
First, you will need court permission to resign if you have
started your duties. This is a complex and costly procedure
that you should avoid. It involves filing an accounting of all
your actions for court approval. The court must then have
someone take over your job.
26 EXECUTOR KUNG FU
Second, you can’t just sit back and do nothing. You can be
liable for losses and penalties if you take too long to decide
once the person has died. You can also be sued if you neglect
your duties.
Some estates will have problems and may even be bank-
rupt. You may wish to decline if you anticipate lawsuits or
family disputes or if a risky business is involved. Speaking with
a lawyer at this early stage is crucial.
Third, you may be the best person for the job. Yes, the task may
be time-consuming. But can you think of anyone better moti-
vated to do the job as efficiently?
You can be compensated for your time and trouble. As
you’ll see, that may not be a bonus if you’re also a beneficiary.
This Will Make All the Difference 27
What Can You Expect?
As a lawyer, I have advised executors for over 30 years. I have seen
executors carry out their tasks in different ways. Sometimes they get
legal advice too late to make a difference.
How you start the executor journey often determines how well you
finish it.
Some executors are filled with an almost religious zeal in fulfilling
the last wishes of a loved one. Others are grief-stricken and vulner-
able. They become obsessed with their obligations and suffer unbear-
able burdens.
Some executors get caught in the middle of bitter family battles –
courtroom contests that drain all participants, both emotionally and
financially.
A Celebration of Life
There are executors who enjoy their tasks as a wonderful experience.
They cheerfully celebrate the life of a close friend or relative.
Most people, however, never wish to be an executor again.
Don’t let that scare you. You need to learn the best way to carry out
your responsibilities.
There are too many things that can go wrong. And when they do, it
can cost you personally.
You may be thinking, “I’m keeping things simple without a lawyer.
What’s wrong with that?”
28 EXECUTOR KUNG FU
Are There Any Simple Estates?
“Mom has a simple estate. There’s not a lot of money involved so I
don’t anticipate any problems.”
Yes, I hear that a lot.
People hope things will go smoothly since there’s not a lot of
money at stake. But that doesn’t make an estate simple.
This is a common symptom of what I call, Executor’s Disease™. It
can affect anyone once they agree to act as executor. They don’t know
what’s involved. They hope things will go smoothly and without a
hitch.
Every executor, however, has to deal with legal, tax, estate, finan-
cial and personal issues.
Many of these involve judgment calls that are not always easy or
simple.
Don’t Assume This Will Be Quick
Don’t assume that, since you are dealing with your own relatives,
everything will be simple. A death in the family creates sorrow, stress
and strife.
As executor, you must also address the potential for conflict and
unpleasantness.
The death of a family breadwinner can leave many in difficulty.
Some people may be fighting for their financial survival. This can
also lead to struggles as they anxiously await their inheritance.
You could be lucky. Your family may not give you anything to
worry about. You may not be asking for a fee for your work. You may
not be concerned about keeping an executor’s log.
This Will Make All the Difference 29
Even if you’re one of the lucky ones, you still need a way to prevent
problems, understand your tasks and identify the traps to avoid.
Keep Track of Who Does What
Matters that are straightforward to begin with can turn into a quag-
mire of difficulty. An executor’s fiduciary obligations are demanding
even in the case of a small estate.
For example, getting a clearance letter from the tax department
doesn’t seem all that difficult. However, it can take several months
from the date it is requested. Who’s supposed to request this clear-
ance?
Your estate lawyers or accountants will not automatically do this
for you. If you forget to request the clearance, it can cause a delay of
six months or more. The people waiting for their inheritance can
blame you for being late.
Following is another example of what can go wrong.
30 EXECUTOR KUNG FU
Executor’s Disease™—A Case Study
David was in the business of renovating homes. He was made
executor under his uncle’s will. The will instructed David to sell his
uncle’s home and give the net proceeds to the charities specified in the
will.
David, however, thought he could improve the value of the home
by upgrading the 1960s-style kitchen and bathrooms.
This would be easy enough to do. He thought his company could
do the work and bill the estate.
Unfortunately, he didn’t understand his fiduciary duty and didn’t
obtain legal advice.
David finished the renovations, but by then the value of homes in
the real estate market had dropped by 20%.
Timing the Sale of Assets
The charities named as beneficiaries in the will thought David
should not have renovated the house. He should have sold the house
while the market was hot.
David, on the other hand, thought he had done his job. He wanted
to deduct $45,000 from the sale proceeds to pay for the renovations.
Here’s how the story unfolded.
The charities claimed David breached his fiduciary obligation to
the estate. He ignored the instructions in the will. These directed him
to sell the property, not call on him to carry out improvements.
According to the charities, David charged excessive amounts for
the unauthorized renovations.
They calculated David’s delay had cost them $80,000 in losses on
the sale price they should have received.
The charities threatened to sue David for this loss. They refused to
This Will Make All the Difference 31
pay for his renovations or his executor services. They claimed these
were worthless.
David had to hire a lawyer to settle all his claims. The charities
told David his legal fees could not be paid from the estate. This only
further enraged him.
Your Conduct Can Cost You
David didn’t realize his conduct could be subject to review. Perhaps he
would have acted differently had he known.
David became a victim of what I call, Executor’s Disease™. He
didn’t even know he had a problem until it hit him. He wasn’t even
aware he had done something wrong until it was too late.
This self-defense system can help you avoid these troubles.
Estate problems can keep you up at night. Some mistakes may be
impossible to repair. Always check that your conduct meets the legal
standards for executors.
When it comes to legal problems, prevention is always cheaper
than the cure.
Before I explain this, here is my wish for you.
32 EXECUTOR KUNG FU
My Wish for You
My wish is that you will not run into problems acting as an executor.
Is that possible?
Yes, but you must avoid this common mistake: trying to keep
things simple without using lawyers. That is wishful thinking.
Whatever the value of estate assets, it’s a mistake for you to think
you don’t need legal advice.
Yes, lawyers can be expensive. But don’t be afraid of the costs.
Protecting the estate and yourself is a valuable investment.
Hire an experienced lawyer to keep you on track and on time. This
is important for various reasons.
Beneficiaries are almost always unhappy waiting for their inheri-
tance.
It’s a good idea to stay on good terms with them; otherwise, you’ll
regret it. Beneficiaries can take executors to court for all kinds of
reasons, especially if they are ignored.
If you’re dealing with your siblings, you may have to avoid secrecy.
Explain your role so they won’t be confused about their place in the
process. This openness will prevent suspicions.
Judges hate to see an estate squandered on squabbles. They can
penalize those they feel are responsible for costly delays and unneces-
sary lawyers’ fees.
Don’t risk having a judge blame you for creating the problems.
This Will Make All the Difference 33
You Are the Gatekeeper
Being an executor is like being a gatekeeper.
You’re left with the keys to homes, cars, boats and planes. You’re
trusted as executor to distribute a person’s worldly goods. This means
you’re in a position of trust and a fiduciary.
You may be surprised by your legal responsibilities as an executor.
Let me explain this fiduciary concept in a way that’s simple to under-
stand.
As a consumer, you may be familiar with the saying, “buyer
beware.”
I want a similar saying to be uppermost in your mind: executor
beware.
When you are a fiduciary, you must diligently perform your duties.
Most importantly, you must be prepared to have your work pass an
audit.
Beneficiaries, creditors and the courts can demand that you prove
you acted with due diligence. If you never knew this, you too could
find yourself stuck with Executor’s Disease™.
34 EXECUTOR KUNG FU
Executors Must Meet Legal Standards
You may have been given only 48 hours to clear your grandmother’s
apartment. That’s no reason, however, for you not to seek legal advice.
As executor, you are expected to be honest. You must always put
the interests of the estate before your own. You must know what your
legal obligations are.
You can’t spend estate money unnecessarily. If you do, your
conduct could be considered negligent or a breach of trust. You must
also supervise the conduct of a co-executor.
A court can make you liable for irregularities in your accounting
or for losses the estate suffers.
Avoid having a court remove you as executor because you:
• neglected your responsibilities
• had a conflict of interest
• misunderstood your duties
• made mistakes
• wasted assets
• can’t account for estate property
• took steps that did not benefit all beneficiaries
• ignored binding instructions set out in the will
This Will Make All the Difference 35
You Must Be Prudent and Reasonable
You are trusted to handle someone’s property, money and collectibles.
This includes their dreams and promises.
All of these can be dangerously fragile. You must exercise proper
care, due diligence and prudence.
A court used these words in 1883 to explain the standard for your
conduct:
A trustee [executor] who takes another man’s money into
his hands, is bound, whatever other duties he may have to
discharge, to care that the money shall be preserved, and
not to deal with it or do anything with it which a prudent
and reasonable man would not do with his own money.
Speight v. Gaunt
(22Ch. D 727.CA)
Sounds simple enough. But what are the prudent rules for
handling someone else’s money and property?
The next chapter explains some rules for survival.
But first, let’s review some of the key words executors use.
36 EXECUTOR KUNG FU
Essential Executor Lingo
Accounting—what an executor must prepare and keep by way of
financial reports and records. These are reviewed by the court,
beneficiaries and anyone who has a financial interest in the estate.
Also called executor’s accounts.
Assets—what a person owns, including land, money, investments and
personal effects, such as jewelry. Assets are also further defined as
different types of property. For example, real estate is real property;
money is personal property.
Beneficiary—a person entitled to receive the benefit or gift under a
will or a designated asset, such as a life insurance policy or pension
benefit.
Debts—what a person owes. These are liabilities and may include
credit card balances, loans, mortgages and taxes.
Estate—whatever is left by a deceased, usually consisting of assets
(property, real estate, stocks, money, etc.) less liabilities (bills,
debts, expenses and taxes).
Estate Taxes—in Canada there are no estate taxes based on the overall
size of the estate. However, there are federal income and provincial
probate taxes.
Executor—a person named in a will to handle legal and financial
matters. In Ontario also called an estate trustee with a will. May be
referred to as a fiduciary or personal representative. (The term
executor is used in this guide.)
Executor Accounts—includes a history of all transactions, income and
assets received, and expenses paid from the date an executor takes
charge of the estate.
This Will Make All the Difference 37
Executor’s Disease™—a condition that sets in when you agree to act
as executor. You are unprepared for your duties and do not know
what to expect. Treatment requires legal advice to avoid any
complications. Mistakes can ruin the financial and personal health
of an executor.
Fiduciary—a person who holds a position of trust. The law imposes
duties on a fiduciary to protect the rights of others. Other terms for
this include personal representative, estate trustee and executor.
Income Tax—at death, certain property is treated as income for
income tax purposes. It is deemed disposed of at fair market value
and taxed, even if gifted and no proceeds are received. Assets such
as Registered Retirement Savings Plans (RSPs), Registered Income
Funds (RIFs), investments and second homes can thus be treated
as income.
Probate—a process that proves who shares in and administers an
estate. Probate, surrogate or estate courts have jurisdiction over
estates when someone dies with or without a will. Probate is
required to transfer the assets of the deceased.
Probate Tax—a provincial tax that is charged on assets going through
the probate process. Ontario calls it the estate administration tax.
Property—can be real property (real estate) or personal property (cars,
cash). Some property passes through probate. Other non-probate
property passes as part of a person’s estate on death without the
need for probate.
Renounce—declining to act as executor because you choose not to
assume the responsibility. This can be because of age, illness, lack
of time or inability to act. Renouncing can be done by signing a
form, filing it with the court and notifying the people named in the
will as backup executors in your stead.
38 EXECUTOR KUNG FU
Resign—quitting your duties after you have begun to act as an
executor handling assets. You cannot quit or resign unless you have
court permission. A replacement executor must be appointed by a
court.
Taxes—no definition necessary! Estates are subject to various taxes
that an individual didn’t pay while alive. These include provincial,
probate and federal income taxes on RSPs, RIFs, business, invest-
ments and second homes.
Testamentary Capacity—the ability to know and make a legally valid
will. A testator, the person making a will, must have this ability to
know who should and will benefit from their estate.
Trustee—person appointed by a will to carry out the trust terms.
Trustees are not necessarily executors or estate administrators or
guardians. You can, though, give an executor the additional role of
a trustee.
Trusts—legal relationships by which executors (or trustees) manage
assets for the benefit of trust beneficiaries, such as minors. Can be
created by a person’s will as a testamentary trust or during the
person’s lifetime as an inter vivos, or living trust.
Will—a legal, testamentary document signed by a person to take effect
only on death. Can be amended before death by a written codicil.
Named executor(s) manage the estate, pay bills and distribute
assets under the will.
This Will Make All the Difference 39
Executor Kung Fu Summary
• Your authority as executor comes from the will.
• You are a deceased person’s legal representative.
• You are responsible for the entire estate of the deceased,
including assets and liabilities.
• Executors are in a position of trust as fiduciaries; you hold estate
assets as trustee.
• Keep records to answer questions about your handling of the
estate.
• Your conduct must satisfy legal standards for executors.
• Start right to finish right.
• Keep on good terms with the estate beneficiaries.
• Become familiar with the “legal lingo” to increase your confi-
dence.
40 EXECUTOR KUNG FU
But the souls of the just are in the hand of God,
and the torment of death shall not touch them.
In the sight of the unwise they seemed to die: and
their departure was taken for misery:
And their going away from us, for utter
destruction: but they are in peace.
And though in the sight of men they suffered
torments, their hope is full of immortality.
—Wisdom 3:1-3
12
2
EXECUTOR KUNG FU SURVIVAL RULES
What You Need to Remember
In this chapter, I give you practical rules you can use. They are not,
however, a substitute for proper legal advice.
At this point, you may be saying to yourself, “Why bother? I can let
the pros handle everything.”
Know this: You can’t allow someone else to be in charge. You are
still responsible for the mistakes of the experts you hire.
You need a simple survival strategy. Executor survival depends on:
S – Start with legal advice.
U – Understand your duties and
R – Responsibilities to protect the estate’s
V – Valuables for all beneficiaries.
I – Important deadlines must be met.
V – Verify all claims before paying.
A – Accounting information must be kept.
L – Legal liability must be avoided.
To follow this rule, you must understand everything that’s required
of you, which is the focus of this chapter.
Learn Your Dos, Don’ts and Duties
Executors don’t always see the big picture.
Most executors read a person’s will and believe it tells them all they
need to know. It will help if you think of these duties imposed under
the will as a small circle, surrounded by four larger circles, much like
the rings on a tree.
These five rings make up five layers of an executor’s responsibility:
1. Will terms
2. Contracts that bind the estate
3. Duties imposed by your fiduciary obligations
4. Laws particular to the jurisdiction
5. Beneficiaries
All of these rings define your responsibilities as an executor. They
are not clearly visible when you begin acting as executor.
Executor Kung Fu Survival Rules 43
Executor Circle of Responsibilities
Let me take you through these five rings one by one.
1. Will
The will may not be conclusive on what an executor must do. For
example, a gift to a wife in a will may appear to be straightfor-
ward. But if the wife is now divorced, the gift in the will is
canceled.
As an executor, you need a lawyer to interpret the will.
2. Contracts
Around the will core are the duties imposed on executors by
contracts. These agreements can include:
• prenuptial or marriage contracts
• separation or cohabitation agreements
• shareholder or buy/sell agreements
• codicils or written amendments to a will
44 EXECUTOR KUNG FU
BeneficiariesLaws
Duties
Contracts
Will
You need legal advice about how these contracts affect the will and
estate. It’s not uncommon for marriage contracts to contradict or vary
the will.
3. Duties
These are fiduciary duties requiring executors to be honest, loyal
and trustworthy and to keep records. They prevent you from
dealing with yourself to make a secret profit or from mishandling
the estate.
Failure to maintain these records can make executors appear
financially irresponsible. This affects their claims for compensa-
tion and how they are assessed by beneficiaries and the court.
4. Laws
Another circle in this ring is made up of the laws of each province
or state. These can require executors to perform certain acts
within specified time limits.
In some jurisdictions, an executor must not distribute an estate
for six months without a married spouse’s written consent.
5. Beneficiaries
Yet another ring of executor responsibilities has to do with benefi-
ciaries. Different kinds of beneficiaries create different obligations.
Executors must report to certain beneficiaries and give them a
breakdown of their fees and expenses. This is a duty that most
executors do not realize from reading the will.
If all a person is inheriting is a specific gift like a painting or a
$5,000 bequest, an executor does not have to provide an
accounting.
Executor Kung Fu Survival Rules 45
If a person is inheriting 10% of the estate or a share of the residue,
that’s different. Such beneficiaries can question all such executor
transactions.
46 EXECUTOR KUNG FU
Executor Kung Fu Duties
Here is a summary of your duties and responsibilities as executor.
1. Account—you must keep records to explain what happened
while you handled the estate. This means answering questions
from beneficiaries or a judge.
2. Invest—you must sell, convert and invest estate assets unless
the will specifies otherwise. Assets must be productive, earning
interest at all times.
3. Defend the estate—this includes going to court and defending
the estate if the will is contested.
4. Manage the estate—avoid wasting assets and do not mix your
money with estate money.
5. Supervise co-executors—to prevent harm and liability.
Remember, decisions must be unanimous unless the will
specifies otherwise.
6. Avoid conflicts of interest—you cannot put your personal
interests above the estate’s. In fact, you are prohibited from
purchasing estate assets, unless a will or court permits it.
7. Comply with the terms of the will—your duty can be modified
by legal claims made against the estate.
8. Pay all creditors—this includes income taxes and debts. When
appropriate, you will place a newspaper ad to notify creditors.
9. Avoid self-dealing—you cannot give yourself a benefit;
however, you can be paid for your services as executor.
Executor Kung Fu Survival Rules 47
Rules That Matter
Executors get into trouble when they do not understand their duties.
It will help if you remember some simple rules covered in this chapter.
Let’s start with:
Rule #1 You need a lawyer to advise you about the will.
Rule #2 File tax returns on time or you may be responsible
for penalties.
Rule #3 Ignoring beneficiaries can be dangerous.
Rule #4 Count the pennies so they don’t come back
to haunt you.
What follows will help you to avoid breaking these rules.
48 EXECUTOR KUNG FU
Can Wills Be Challenged or Varied?
Only legally valid wills can be probated. Before rushing to carry out a
deceased’s wishes, call the lawyer who prepared the will. Make sure
there are no changes or questions about the will’s validity.
The person making the allegations must prove them in court.
Lawyer-prepared wills are more difficult to attack. Lawyers keep notes
and can testify as experts in court.
Sometimes a will is challenged. A court can be asked to hold a
hearing to declare that a will is not legally valid.
Wills Can Be Attacked
Here are some reasons why courts invalidate wills:
• fraud (forgery)
• duress (coercion)
• lack of sound mind (lacking testamentary capacity)
• noncompliance with legal requirements (invalid)
• suspicious circumstances (questionable conduct)
• undue influence (abnormal persuasion)
Handwritten (holographic) wills are ones that are written entirely in
a person’s own handwriting and signed. Some jurisdictions deem these
to be valid wills or codicils. Witnesses are not required for such wills.
Married or Divorced? What a Difference
Wills are also affected by a person’s rights due to marriage or divorce.
You must investigate if the will has been amended. For example, a
will’s terms can be canceled or overridden by a marriage, codicil
(written amendment), a marriage contract or prenuptial agreement.
Executor Kung Fu Survival Rules 49
In many jurisdictions, marriage automatically revokes a will unless
it specifically states otherwise. If the will is revoked, any prior wills
may still be valid.
What if a person is divorced after a will is made?
The divorced partner is not entitled to be executor or to any gifts
under the will. These same restrictions do not apply to separated
spouses.
Separation agreements or court orders must also be read. They
can identify what estate rights separated spouses may still have.
Wills can also be varied by a court order. This can happen when
dependants or common-law spouses are awarded support by court.
Tip: You can find more resources to deal with estate disputes and will
contests at EstateTherapy.com.
50 EXECUTOR KUNG FU
Estate Income Tax Returns
As an executor, you can be legally liable. For example, you must be
familiar with the income tax filing deadlines. Here are the moves you
need to make.
You must arrange to prepare and file federal income tax returns.
The three tax returns typically required are:
1. one for the years before the death if the deceased had not filed
returns and taxes are payable (outstanding years)
2. one from January 1 to the date of death (called a terminal
return)
3. one for income received after the date of death during the tax
year of the estate administration (called an estate return).
Contact an accountant to discuss the tax liabilities and your
responsibilities as executor. The accountant may be able to file addi-
tional returns, which can save taxes.
As executor, you must pay taxes out of the estate before distrib-
uting it. Usually, you request a final tax clearance to protect yourself.
Make sure you specify if you wish your tax advisor to request the
clearance.
When Are Tax Returns Due?
You are allowed at least six months before the final return is due. This
return is called the terminal tax return.
You should confirm this date with your tax advisor. Do not forget
to diarize the date. Find out what documents the accountant will
require because these take time to collect.
Executor Kung Fu Survival Rules 51
You should not use a “tax preparer” for any estate tax returns. You
will be liable for their mistakes. Hire licensed professionals.
If you file the final return late and there is money owing, you could
be responsible for interest and a filing penalty. The terminal return
and any taxes owing are due as follows:
Period when Due date
death occurred
January 1 to October 31 April 30 of the following year
November 1 to December 31 Six months after the date of death
You can contact Canada Revenue Agency (CRA) at 1-800-959-8281
or on the web at cra-arc.gc.ca for more information.
Speak to your tax advisor about which documents they need you
to collect.
You may need to locate prior years’ returns and notices of assess-
ment.
52 EXECUTOR KUNG FU
How to Manage Expectations
Even at this early stage of your reading, you can’t ignore the people
and relationship issues. The death of a parent, for example, can cause
a family break-up.
When a parent dies, there may be no one to act as a family referee.
This can increase stress and tension among the survivors.
Some people may be disappointed they weren’t chosen executor
instead of you. They may consider this a slight and be envious. They
assume your executor’s role is only one of honor and not responsi-
bility.
However, you are the one who will be held personally responsible.
This puts you in charge of making decisions.
Don’t let this go to your head. You must still:
Be sensitive—protect yourself from behavior that may be
irrational, even if coming from members of your own family.
Be polite—a minor slight of funeral etiquette may cause unneces-
sary friction later.
Be careful—your conduct is under particular scrutiny at this
stage.
Indecisiveness, favoritism or a lack of direction can unnerve
beneficiaries and creditors.
Watch Out for Stalkers
This is important. Don’t assume all your decisions as executor will go
unchallenged or unquestioned.
Don’t feel answering questions about your work as an executor is a
waste of time.
Executor Kung Fu Survival Rules 53
You can keep beneficiaries from microscopically analyzing your
conduct by keeping beneficiaries informed. Share information and be
prepared to give them answers.
Remember, they are unfamiliar with estate procedures and your
role and authority.
At times you will consult with certain beneficiaries about key deci-
sions. This does not mean you are not in charge.
Who Is Watching You?
People with a financial interest in the estate can:
• hire their own lawyers to monitor your conduct
• wish to protect their interests in the estate
• threaten you and challenge your decisions
• look for possible misconduct
• try to remove you as executor
Be prepared to be surprised, even at the funeral. Guests may ask
you in private or in public if they were included in the will. If they
weren’t, they may demand to know why.
Some tears at funerals are about money and who got more and
who got less.
Some people will suggest you allow them to take personal
mementos from the deceased’s home. It may be a painting they were
“promised” or the gift they bought the deceased last Christmas.
54 EXECUTOR KUNG FU
You Must Control the Estate Inventory
As a rule, never release any property until after probate. Wait for
probate before you pay out (distribute) the estate.
In some cases, personal items must be appraised for probate or
income tax purposes.
Some claims against an estate can be made six months to a year
after a person’s passing. Giving away any property can create prob-
lems for you.
If you have given away items, even to family members, it may be
impossible to retrieve them later.
Are there exceptions? Certainly.
You should talk with a lawyer to confirm you have authority to do
what people ask of you.
Executor Kung Fu Survival Rules 55
Why Staying Calm Is Important
Are you dealing with your own grief?
Make sure you get sufficient rest and time off from work and your
other commitments.
Take a few minutes every once in a while to get things in perspec-
tive. Slow down. Take a few deep breaths.
Try it … right now.
You don’t want to collapse under the time demands and pressures.
Don’t get carried away, feeling you must honor a relative’s last wishes
immediately, whatever the cost.
Handling things exactly as the deceased would have wanted may
not be possible.
Time and limited financial resources may affect the steps you can
take.
Not All Last Wishes Are Equal
You are restricted by legal standards and terms of the will. A dying
person’s verbal instructions are not legally binding.
You may also be dealing with new circumstances. These were not
foreseen when a person made their will perhaps 20 years earlier.
Get legal advice if you are in doubt.
On top of that, you may have relatives who are upset with you. You
may consider it a trivial matter. They were left the six-place setting
Royal Doulton china set. They think it’s somehow your fault that two
cups and a saucer have gone astray.
56 EXECUTOR KUNG FU
Difficult relatives and dysfunctional families can become your
personal agony.
The right lawyer can help you set the proper tone. Legal advice can
keep you in charge and help you save all your relationships.
The last thing you want is to make a costly mistake. Beneficiaries
may then become suspicious of everything you do.
Be on Guard
While you are planning a funeral, others may be planning to rob the
estate.
In an age of identify theft, you must be vigilant. Burglars read obit-
uaries, too.
As you help others grieve, it’s still important to control access to:
• homes
• cars
• credit cards
• online banking
• debit cards
• driver’s license
• vacant properties, which must be supervised and insured
Executor Kung Fu Survival Rules 57
Count Every Penny
Do you intend to charge a fee for your work as an executor?
Your job as executor basically remains the same whether you’re
paid or not. You still must satisfy all your financial and legal obliga-
tions.
Yes, you may have to deal with only a small apartment, a car, a cat
and a cash bank account. However, your legal duties are the same as if
the estate is complex and worth millions.
You must keep track of the money. Record what you spend on
behalf of the estate. This means keeping receipts. Write down and
itemize incoming and outgoing money and expenses.
You don’t need a degree in bookkeeping. You do need to be able to
balance a check book. Record the date, purpose and amount of all
money you receive or spend.
For example:
February 28, 2008—received $500 from Terry Jones for the garage
sale proceeds.
Tip: You should become familiar with the forms in Section III of this
guide, Executor Kung Fu Tools. Reviewing them will help you get
organized.
58 EXECUTOR KUNG FU
When It Comes to Money
Here are some additional important rules:
Rule #5 You should never deposit estate money into accounts in
your name. It may be considered evidence of theft of
estate property.
Rule #6 You should never mix your money with estate money.
This commingling of funds can be viewed as theft.
Rule #7 As an executor, you must act promptly to administer the
estate. Beneficiaries are entitled to their money within a
reasonable time.
Your work will usually be carried out within an executor’s year.
This is a rule of thumb for distributing gifts under the will. In some
jurisdictions, this may be as little as six months.
It’s not a good idea, then, to sit back and wait till you can find the
time. You can get into more trouble because you don’t know what to
do.
What should be a priority?
What can you leave for later?
The next chapter explains how to understand your priorities.
You can use the three steps of the Executor’s Mantra—protect,
probate and pay—to understand your role as executor. This simple
formula works without your having to reinvent the wheel.
Executor Kung Fu Survival Rules 59
Executor Kung Fu Summary
• Review the Kung Fu survival rule for executors at the start of
this chapter.
• You owe a duty of loyalty to the estate and to beneficiaries.
• Never allow your personal interests to conflict with your duties
to the estate.
• File all income tax returns on time to avoid interest and
penalties.
• You can be personally liable if you distribute the estate without
paying all taxes and creditors.
• Hire a lawyer to confirm that the will complies with legal
formalities.
• Remember, wills can be challenged or contested in court.
• Only lawyers can express opinions on the legality of wills.
• Make no distributions of estate property without clearing them
with your lawyer.
• Beneficiaries have rights you should not ignore.
60 EXECUTOR KUNG FU
No matter how busy you may think you are,
you must find time for reading,
or surrender yourself to self-chosen ignorance.
—Confucius
12
3
THE EXECUTOR MANTRA
Introducing the Three Steps:Protect, Probate and Pay
This chapter gives you specific examples of what executors do. But
first, a word about your mantra.
My simple three-word mantra will guide all your actions. Use it to
keep yourself focused on what you must do and when.
Here it is:
Protect, Probate and Pay
This easy-to-use mantra represents the three steps you must take to
successfully handle an estate.
Concentrate on three key steps when you administer an estate:
protecting, probating and paying the estate out.
Questions You Will Be Asked
People bombard executors with questions like:
“Mom said I was to have her diamond ring. Can I take it now?”
“Will I still get a support check every month?”
“When can I expect to get my share of the estate?”
Use the mantra to understand the sequence you must follow.
You can answer questions by explaining you must protect and
probate before you can pay or distribute. This will help you under-
stand—and explain—the process to open and close an estate.
Your Own Questions May Be …
As executor, you may have questions like:
“When am I supposed to apply for probate?”
“How do I pay for the funeral?”
“What am I supposed to do first?”
Again, the mantra will help keep you on track.
You can create problems for yourself if you don’t follow the
mantra.
We will cover each of the mantra’s three steps in detail in
Section II.
Use the chart on the next page as your reminder.
The remainder of this chapter takes you on a trip through the steps
of your duties as an executor.
The Executor Mantra 63
The Executor Mantra
Step 1. Protect
Identify, take possession of and secure property
for beneficiaries.
Step 2. Probate
Have lawyers file documents to certify the will and sell assets.
Step 3. Pay
Pay bills and taxes, beneficiaries and yourself.
64 EXECUTOR KUNG FU
How to Use Your Executor Mantra
As an executor, you are responsible for protecting all estate property.
You may be running around for days going through personal
papers, shoeboxes and closets looking for anything that may be valu-
able or important.
You have to identify and collect the estate assets this detective
work uncovers.
Preparing an inventory of estate assets and liabilities can feel like a
full-time job. An inventory is usually required before you move on to
probate the will.
Probate documents are filed with an estate court. This is legal
work paid for from the estate’s funds. Give this job to an experienced
estate lawyer.
Once you receive probate documents, you can prepare to pay out
the estate.
The payout of the estate happens only after you have paid the
estate’s creditors. You then prepare your distribution report and
accounts for beneficiaries. Don’t worry, I will explain this in more
detail.
You will learn why you need to obtain signed releases from benefi-
ciaries to protect yourself. Never put the cart before the horse and pay
yourself first.
Let’s go step by step through the protect, probate and pay process.
The Executor Mantra 65
Summary of Your Duties as an Executor
Here’s what you need to know if you’re an executor.
You must be trustworthy and financially responsible, and hire the
right professionals to guide you.
You do not need to perform legal work such as applying to probate
a will.
When a will is probated, a court certifies it complies with all legal
formalities. A court then issues a document, which may be called
letters probate.
In some jurisdictions, this court document is called letters testa-
mentary. In Ontario, it is referred to as a certificate of appointment of
estate trustee.
First, Protect Estate Assets
Executors must protect, identify and collect all estate property. Taking
possession of valuables may be the first step you take.
Make sure the will is in your possession, is valid and is the last one
signed. If not, you could be liable to the legal beneficiaries.
Confirm proper insurance is in place for cars, homes and valu-
ables. Have a lawyer educate you about your executor duties and
deadlines.
Prepare a list of debts and assets, including relevant details for
your lawyer and tax advisor.
Your record keeping should start at the outset. Continue with this
until beneficiaries or a judge have approved all transactions.
66 EXECUTOR KUNG FU
Business assets, perishables and pets require your immediate
attention and protection.
Coin, stamp and other collections or jewelry can mysteriously
disappear. Arrange for safe and secure storage of all valuables.
To proceed, you must locate a will naming you as executor.
Second, Probate the Will
Your authority to act on the estate’s behalf comes from a valid will.
This allows you to act immediately. Dealing with certain assets held by
banks or brokers may, however, require court-probated documents.
Probate papers prove to third parties that a court has validated the
will.
Some assets are valued or appraised to calculate provincial
probate taxes and federal income taxes. Obtaining up-to-date
appraisals of property, investments and any business will take some
time.
You hire lawyers to obtain letters probate or a certificate of
appointment from the court.
Until probate is obtained, you will need legal advice to manage
estate assets. Investment decisions may need to be made. You will
meet with the estate financial and tax advisor.
Check if the will protects you from honest mistakes and falling
markets. Confirm what discretion and specific powers you have under
the will. These include the right to settle claims or to run a business.
Third, Pay Everyone
Once you obtain probate papers, you can deal with estate assets.
Usually this is when you can sell property, stocks and write checks on
the estate bank account.
The Executor Mantra 67
You must settle all debts, including income tax. Normally, you
would receive an income tax clearance certificate before distributing
the estate.
In some cases, you will also wish to advertise for creditors. Discuss
this with your lawyer, who can prepare the proper newspaper ad.
These steps protect you from personal liability for income tax and
other debts.
After this you can distribute gifts of specific property, like a car or
artwork. What is left over is the estate residue.
Releases are usually signed once beneficiaries approve the distri-
bution and your executor compensation.
Following is a summary of the steps you need to take as executor.
68 EXECUTOR KUNG FU
Executor Kung Fu Steps
Step 1—Protect Assets
1. Review the will and contact a lawyer.
2. Confirm the funeral arrangements.
3. Take steps to secure the estate property.
4. Notify the next of kin and beneficiaries.
5. Confirm insurance coverage on valuables.
6. Preserve any business or investments.
Step 2—Probate Wills
7. Prepare an inventory of assets and liabilities.
8. Hire a lawyer to probate the will.
9. Settle all legal issues.
10. Sell assets to pay bills.
Step 3—Pay Everyone
11. Pay all liabilities and get income tax clearances.
12. Account to the beneficiaries.
13. Have your executor’s compensation approved.
14. Get releases signed by all beneficiaries.
15. Distribute the estate assets.
The Executor Mantra 69
Executor Milestones
Many of the activities from your first day on the job will carry on
through the first few weeks.
By now, you will have spoken to a lawyer. It’s essential for you to
confirm all important deadlines. Ask your lawyer for a roadmap so
you know what to expect in the weeks and months ahead.
The probate application with the original will must be filed in the
jurisdiction where the deceased resided.
Depending on the court’s workload, getting court papers can take
several weeks. Executors are usually not required to appear in court.
In a typical estate, a 12-month calendar would look like the chart
on the next page. (Note, however, that some steps will be taken
together at the same time.)
70 EXECUTOR KUNG FU
The Probate Process … 12 Months and Counting
1. Locate the original will.
2. Hire a lawyer / review the will.
3. Protect estate assets.
4. Identify and value probate assets.
5. File income (estate, federal, provincial) tax returns.
6. Lawyer prepares probate paperwork.
7. Court approves appointment / open estate bank accounts.
8. Collect and sell necessary estate assets.
9. Deal with estate creditors.
10. Get income tax clearances.
11. Propose a distribution, compensation and release.
12. Get releases and receipts to close the estate.
The Executor Mantra 71
Executor Kung Fu Summary
• Assets may be frozen when a person dies, so don’t waste time.
• Probating the will is legal work; hire a lawyer.
• You may consult family and professionals, but you are respon-
sible for making decisions.
• Verbal instructions you received from the deceased may not be
legally binding.
• Keep track of every penny you take in or spend.
• Keep all money separate from your own at all times.
• Remember to repeat your executor mantra (protect before you
probate and probate before you pay everyone).
• Probate certifies you are executor.
• In Ontario, probate is called a certificate of appointment and you
are called an estate trustee with a will.
• Have your legal advisor prepare a list of the tasks you are
expected to complete during the executor’s year.
72 EXECUTOR KUNG FU
It’s a funny old world.
A man is lucky if he gets out of it alive.
—Walter de Leon and Paul M. Jones
12
4
YOUR TOP 10 EXECUTORQUESTIONS ANSWERED
Begin with These Basics
If you’re like me, by now you probably have a lot of questions.
This chapter contains my short answers to frequently asked ques-
tions.
After you read this top-10 list, prepare your own questions. You’ll
want to get specific answers from your lawyer because every estate is
different.
In some cases, your selection as executor may come as a surprise.
You may want to decline to act as executor. This could be because of
age, health or time obligations.
Are you thinking this may be too much for you? Remember, it’s
easy to renounce (declining to be an executor), but you must obtain a
costly court order to resign (quitting after you have begun your
executor duties).
What if you hear rumors the will is going to be contested? You
should immediately contact your lawyer. Not every lawyer can handle
a will challenge. Finding an expert to help you may be your first
challenge.
Q.1 How do I know if I am the executor?
You may have been told you are the executor by a relative or profes-
sional.
Ask where you can find the original will. If you’re lucky, an inven-
tory of estate assets will be with it.
You must read the will to confirm your authority. This is usually
the first thing I ask people to do. This requires you to locate the orig-
inal will.
Confirm with the lawyer who prepared the will that it was not
changed.
Are you dealing with a homemade, do-it-yourself will? You need
legal advice in writing to confirm this document is a valid will.
Only a lawyer can express a legal opinion as to a will’s validity.
Remember, in some jurisdictions, a holographic (handwritten) will
can be valid. These wills are 100% in the deceased’s own handwriting
and signed without witnesses.
Do you require access to a bank’s safety deposit box? If you are
looking for a will, you will need a lawyer’s help.
Your Top 10 Executor Questions Answered 75
Q.2 When does the executor take charge of the estate?
When a person dies, his or her property legally “vests” in their
personal representative or executor. This is a way of saying you
become the legal, but not the registered, owner of all the deceased’s
property.
If you are named executor in the will, you have certain authority to
deal with the deceased’s property. This usually gives you access to
safety deposit boxes to locate the original will.
You will need to produce a death certificate. You must prove you
are the estate’s legal representative by producing the will and your
photo identification.
You have the right to take certain steps to protect assets even
before you probate the will.
Usually, until the will is probated, you will have no legal authority
to sell assets.
76 EXECUTOR KUNG FU
Q.3 Who pays for the funeral?
The reasonable cost of a funeral is an estate expense.
Confirm what arrangements have been made by the deceased. This
may include a paid or prearranged plan.
Normally, you can obtain access to the deceased person’s funds to
pay funeral expenses. Your lawyer or funeral director can explain how
this is done.
You will need to provide the deceased’s bank with a copy of the
funeral bill and evidence of death. A funeral director’s certificate will
usually suffice.
Who pays for the funeral if no will is found?
This is where you must be careful.
You may be asked to personally guarantee payment. You can also
be personally responsible for these expenses. What if these expenses
are considered unreasonable? You can find yourself on the hook.
If there is no will, you may need to be appointed by a court as the
estate administrator. In Ontario, this is called an estate trustee without
a will.
Your Top 10 Executor Questions Answered 77
Q.4 How difficult is it to be an executor?
This depends on the complexity of the estate and how organized the
deceased’s personal affairs were.
You don’t need special skills or experience. Executors are usually
chosen for their trustworthiness. This is a quality that is often in short
supply.
An estate administration can be quick. You may simply have to
handle a few items of property, like a car and bank accounts, pay bills,
and file tax returns.
Problems can arise in handling homemade wills, contested wills,
business assets, creditors’ claims, disappointed beneficiaries, and
spouses or former spouses.
If estate assets are complex and located in numerous jurisdictions,
you may be involved for several years.
On the other hand, small estates can be resolved in a few weeks or
months.
Once you start work as an executor, you cannot quit without a
court order. If you doubt you’ll be able to carry out your duties over
the next 12 to 18 months, consider renouncing.
78 EXECUTOR KUNG FU
Q.5 How long will it take to handle an estate?
A common estate expression refers to the executor’s year. This is only a
rule of thumb. It describes how long beneficiaries should wait for
their inheritance.
In some jurisdictions, there are mandatory filing deadlines. Legal
proceedings, for example, must be started within seven days of a
person’s accidental death.
This is why it’s crucial to get advice immediately when a person
dies. This will identify any matters that put you at risk.
Most income tax clearances can take eight months to obtain once
the estate is ready to be distributed. This often stretches an executor’s
work to 18 months or more.
Wills can also create long-term trust obligations. Part of the estate
may be set aside to provide for underage children. You may need to
hold the trust funds for years.
You may be investing and distributing money to the children’s
custodians until the children are adults.
Is there a house to be sold? It can take you several weeks to empty
and prepare it for sale.
Your Top 10 Executor Questions Answered 79
Q.6 Does an executor get paid?
Executor’s fees are legal. They are designed to compensate executors
for their care, time, trouble and services. Usually, this includes reim-
bursement for executor expenses.
Executor expenses are paid first and include postage, long-
distance calls, mileage and parking.
Executor’s compensation may be specified in the will or set by
local custom, practice or law. (See answer to next question.)
Never promise the estate beneficiaries you will not take a fee for
your services. This decision should only be made after you speak to a
lawyer. Find out what is involved and what you are entitled to receive.
You cannot ignore your legal responsibilities just because you are
not charging a fee.
Taking your fee before obtaining approval is usually not permitted.
Remember, executor compensation or fees are treated as taxable
income in your hands. The amount allowed is shared among all co-
executors.
80 EXECUTOR KUNG FU
Q. 7 How much do executors get paid?
The amount usually depends on how much time and work was
involved.
In Ontario, as a rule of thumb, this is 5% of the estate. It’s calcu-
lated as 2.5% of the capital and income receipts and 2.5% of the
capital and income disbursements.
Executors may have to participate in lawsuits to collect damages
and loans or to prove the will. Such circumstances may warrant extra
compensation.
Compensation is approved by beneficiaries and, in some cases, by
a court. Factors that are considered in setting fees include:
1. the size of the estate
2. care and responsibility involved
3. time spent on duties
4. skill and ability shown
5. success in administering the estate
The Executor Kung Fu Tools section of this guide will help keep
these records.
Your Top 10 Executor Questions Answered 81
Q.8 When should I get help from professionals?
The sooner the better.
Don’t assume that the professionals the deceased was comfortable
with will meet your needs or standards.
You may need to interview or meet with several lawyers and
accountants before making hiring decisions.
Getting the will probated is legal work, not executor work. Have
your lawyer explain the distinction. The estate should not end up
paying lawyers to handle work that is your responsibility.
Professional advice is paid for from the estate. Ask advisors about
the steps and services required to carry out your responsibilities.
Record the advice and answers to questions you receive from your
advisors.
Professional investment advice is also required to handle stocks
and bonds.
82 EXECUTOR KUNG FU
Q.9 Why is probate necessary?
Probate provides for the orderly transfer of a person’s property
after their death. This gives notice to all persons who have an interest
in the estate to request a formal hearing, if necessary.
Probate is a legal process that certifies the last will is valid. This
confirms who is entitled to control the estate (executor) and who
shares in the estate (beneficiaries).
Technically, the will is probated and after that the estate is admin-
istered.
Most people refer to the probate process as settling an estate by
paying bills and distributing assets to beneficiaries.
Probate courts differ in every province and state. They may be
called estate, surrogate or chancery courts. Usually probating a will is
necessary to sell or transfer real estate assets.
Probate is required by banks and brokers to sell or transfer assets.
They will require probate to distribute funds out of the estate bank
account.
The ins and outs of probate are covered in more detail in
Chapter 8.
Your Top 10 Executor Questions Answered 83
Q.10 Must all assets go through probate?
Not all assets must go through probate. If you are a spouse acting as
executor, you will be relieved to know this.
Jointly owned assets can be a joint bank account or a home. These
assets pass to the surviving joint owner by right of survivorship.
Designated assets include life insurance, RSPs or RIFs. These also
pass directly to the beneficiary, unless they are payable to the estate.
Designated assets have named beneficiaries and bypass probate.
They may also create income tax liabilities for the estate you’ll have to
consider.
Often, for both joint and designated assets, a transfer of assets is
simple without probate. Producing a death certificate and completing
a form may suffice.
Typically, when assets are jointly owned by spouses, probate is
required only later to deal with the surviving owner’s assets.
84 EXECUTOR KUNG FU
Your Executor Questions
List your executor questions here and seek legal advice to answer them.
1.
2.
3.
4.
5.
Your Top 10 Executor Questions Answered 85
Executor Kung Fu Summary
• It is easier to decline to act as the executor at the outset.
• If you begin acting as executor, you require a court order to
permit you to resign.
• Until a will is probated, you have no legal authority to sell or
distribute estate property.
• Funeral expenses, if not prearranged or prepaid, can be paid
from the deceased’s bank account.
• As a rule, executors are given a year to distribute an estate.
• You are entitled to compensation for your care, time and trouble
and this is considered taxable income.
• You can be reimbursed for reasonable expenses and professional
fees of lawyers, accountants and investment advisors.
• Beneficiaries’ approval and in some cases court approval is
required before you receive compensation.
• All executors share the compensation amount.
• Probating the will is legal work, not executor’s work.
86 EXECUTOR KUNG FU
Some are born with knowledge, some derive it from
study, and some acquire it only after a painful
realization of their ignorance.
—Confucius
12
5
YOUR FIRST DAY—WHAT TO DO
Start Here If You’re in a Hurry
We have covered some of the fundamentals in previous chapters. Now
here are some practical steps.
If you’re starting work as an executor of an estate, you may want
to begin with this chapter.
I have included some checklists for you to use. Many of these early
steps may need to be taken at the same time. Each will vary in impor-
tance depending on what you already know or have in hand.
If a funeral has been prearranged and you’re in possession of the
original will, you’re in good shape.
On the other hand, if you are looking for all this information, you
may feel some panic.
This section should help reduce your discomfort.
So here is the information you need for the crucial first 24 hours
and beyond.
Action Step #1—Make the Calls
You must be certain you are named in a will as executor. Otherwise,
you can be sued and not paid for your work.
When a death occurs in a hospital or other facility, you can expect
staff to help with some arrangements.
If a death occurs at home or at work, your first call may be 9-1-1 to
report to the police. Notify medical care providers if the death was
expected.
A call to a local funeral director may be your next call. You will
want to:
� Check if any prearranged funeral plans were made.
� Get your family and friends to help with referrals if plans are
not made; they can make calls to other family members, the
deceased’s employer, friends and associates.
� Consider what religious services are required.
� Consider consulting family members about what the deceased
may have liked or disliked about funerals, if you are making
the arrangements.
� Consider if burial, cremation or entombment is preferred.
� Consider if funeral services are to be traditional, alternative or
memorial—or if there is to be no service.
Your First Day—What to Do 89
Action Step #2—Locate the Will
Wills can be stored in various places including the deceased’s home,
personal files, safety deposit box or even a sock drawer.
Note:
• You need the original will for probate purposes.
• Many lawyers retain the original will for clients.
• Wills are often amended by written codicils. Do not discard any
notes or documents that may refer to the will.
• Call the lawyer who prepared the will to confirm whether
changes have been made.
If you cannot locate a will, get legal advice before proceeding.
Ask what to bring to the meeting with a lawyer. This can make all
the difference to your peace of mind.
You are not obligated to hire the lawyer who prepared the will.
This is so even if this lawyer or another law firm is specified in the
will for this purpose. You may hire your own lawyer to probate the
will.
No matter what anyone thinks, you cannot distribute any personal
items that belonged to the deceased.
You will be asked to identify yourself and the will to confirm your
authority. Without this, you can be refused access to information
about the deceased’s affairs.
90 EXECUTOR KUNG FU
Testate and Intestate Estates
You should know the difference between testate and intestate estates.
Testate means a person dies with a valid will that names
an executor/estate trustee to be in charge. (Think “T” for
“trouble-free.”)
Intestate means a person dies without a valid will and no
executor is available to take charge.
An intestate person’s estate is divided by strict government rules.
No variations are allowed. There are no executors, only court-
approved administrators.
Administrators have no legal authority to handle an estate until
appointed by the court. This process is complex and time-consuming,
meaning no one is in charge for weeks or months.
Once appointed, estate administrators basically have the same
duties and obligations as executors. Their powers and authority,
however, are more restricted.
Your First Day—What to Do 91
Action Step #3—Arrange the Funeral
Everyone deals with grief in their own way. Common feelings include
anxiety, anger, depression, guilt, inability to make decisions, sadness,
fatigue, shock and restlessness.
Funerals and memorials play a role in helping people deal with
grief.
Executors must pay for the funerals in most jurisdictions. This
gives them the final say on funeral expenses.
Your funeral director will:
• arrange for the transfer of your loved one to the funeral home
• explain their role in the funeral preparation process
• ask for details about the deceased to register with the govern-
ment
• help you with clothing, casket, flowers, pall bearers, press
notices and announcements
• provide funeral certificates of death to assist with processing of
certain government death benefit forms
Note: in most jurisdictions funeral wishes in the will are not legally
binding on executors.
You are obligated to pay only for reasonable funeral expenses.
Refer questions and conflicts to your legal advisor.
92 EXECUTOR KUNG FU
What to Do at a Funeral
• Be supportive; don’t feel you must cheer everyone up.
• Express your sympathy with simple statements of condolence.
• Express your sympathy and acknowledge the loss.
• Be prepared to listen.
• When words fail, use a gesture or touch to speak for you.
• Thank people for coming, record addresses and list all dona-
tions.
• Follow up with appropriate acknowledgements and thank-you
notes.
Your First Day—What to Do 93
Action Step #4—Secure Valuables
Your immediate attention is important to locate key official docu-
ments like birth, marriage, divorce, citizenship and income tax
returns. Use the Executor Kung Fu Tools section of this guide to record
the information you collect.
To complete applications for death and pension benefits or insur-
ance policies, you will need to secure this information for the
deceased:
• date and place of birth
• date and place of death
• address and postal code
• social insurance number
• last occupation
• names of next of kin
• names of children / dates of birth / addresses
• parents’ names
• cause of death
94 EXECUTOR KUNG FU
Call employers and life insurance agents to help you obtain bene-
fits.
Remember, you are not required to use your money to pay the
estate’s bills.
Speak to a lawyer, however, before any insurance or vital services
are cut off.
Record Who Has the Keys
Car 1
Car 2
House 1
House 2
Apartment 1
Apartment 2
Safety Deposit Box
Miscellaneous
Duplicates
Your First Day—What to Do 95
Making the Right Moves with Valuables
� Take videos or pictures to identify valuable property.
� Secure cash, wallets, credit cards, jewelry, passport, car and
home keys for safekeeping as soon as possible.
� Deal with perishables, animals; stop deliveries; change alarm
codes and locks.
� Confirm proper insurance coverage is in place. Notify all
insurers of a change of status to maintain coverage.
� Pay for any outstanding insurance bills (home, car and
collectibles) to protect the estate and yourself from liability.
� Rental properties carry special needs such as collecting rent
and making sure that services are maintained.
� Visit homes and ensure heat and utilities are maintained.
� Redirect mail, open bills and locate investment and banking
cards, checks and passbooks.
� Keep your money separate from the estate’s.
96 EXECUTOR KUNG FU
Action Step #5—Begin Keeping Records
You have a lot on your mind.
You can’t possibly remember everything, so keeping notes is vital.
Although doing so is time-consuming, it will help protect you and the
estate. You will find this guide’s Executor Kung Fu Tools section
helpful with your record keeping.
You must record expenses and details of money received.
Months later, you may regret not doing this as you went along.
Beneficiaries have the right to ask questions about your handling
of the estate.
Whether you are being paid as executor or not, keeping benefici-
aries up to date about your progress is important. Your records will
help avoid misunderstandings.
Record which assets are jointly owned.
Life insurance, RSPs, RIFs and pension plan benefits, unless desig-
nated otherwise, are payable to the estate. You may not be able to
control them otherwise.
Keep time records from the start. You will then be able to explain
how much time you spent on estate matters.
This is important if a court is asked to audit your work as executor
and your fee. Your records can be reviewed to close the estate.
It’s important that you remember this simple rule:
Your First Day—What to Do 97
Handling someone else’s money
means you will have to account for it.
Record all cash receipts and expenses. Show details, dates and
reasons regarding any monies paid or received.
Your recording system doesn’t need to be elaborate. See the
Executor Kung Fu Tools section of this guide for sample record logs
you can use.
Confirm with your advisors what additional details should be
recorded.
98 EXECUTOR KUNG FU
Action Step #6—Start an Estate Inventory
This is one of your primary duties. Following is a list of things to
consider when preparing an estate inventory. Identify these items and
record the information you find.
You don’t need to fill in all the details at this point. Use your inven-
tory to identify what is at risk (cars, homes, valuables); perishables
(food, flowers); businesses and animals.
Once you have more time, you will want to consider what values to
assign to each item. Appraisals of valuable property may be necessary
to establish values for probate and income tax calculations.
Your lawyer and accountant can tell you what details/documents
are required for tax, probate and distribution purposes. Investment
advisors can also help you identify the value of stocks.
Try to identify and locate any specific items referred to in the will.
If Joan is to inherit her aunt’s diamond ring, you will want to look
for it as soon as possible. If necessary, confirm insurance coverage and
remove these items for safekeeping.
You will learn shortly (in Chapter 8, on probate) that some assets
will be payable on death to the estate or third parties. Some assets will
be joint and not part of the estate. You will have no control over these
items.
You may need to revisit this preliminary inventory after you review
the probate requirements. A detailed inventory worksheet is also
included in the Executor Kung Fu Tools section.
Your First Day—What to Do 99
Preliminary Estate Inventory
Assets Estate Value ($) Note what is:
1. Real Estate Jointly Owned or Estate
Home ____________ � �Vacation property ____________ � �Rental property ____________ � �Land ____________ � �
Total $ ____________
2. Bank Accounts
GICs ____________ � �Savings ____________ � �Money market ____________ � �Checking ____________ � �
Total $ ____________
3. Business Ownership Interest Particulars
Business bank accounts ____________ ______________________
Furniture and equipment ____________ ______________________
Sole proprietorship ____________ ______________________
Partnership ____________ ______________________
Accounts receivable/other ____________ ______________________
Corporation Name ____________ ______________________
Business type ____________ ______________________
Shares owned ____________ ______________________
4. Personal Property Particulars
Autos ____________ ______________________
Home furnishings ____________ ______________________
Jewelry ____________ ______________________
100 EXECUTOR KUNG FU
Art ____________ ______________________
Total $ ____________
Cash ____________ ______________________
Collections ____________ ______________________
Total $ ____________
5. Retirement Accounts Named orbeneficiary Estate
RSPs ____________ _______________ �
RIFs ____________ _______________ �
Pension ____________ _______________ �
TFSAs Total $ ____________
6. Investment Accounts Jointly Owned or Estate
Stock brokerage ____________ � �Mutual funds ____________ � �Stock certificates ____________ � �Bonds ____________ � �Annuities ____________ � �Money market ____________ � �
Total $ ____________
7. Life Insurance Note who is ornamed Estate
beneficiary
Term ____________ _______________ �Group ____________ _______________ �Whole ____________ _______________ �Universal ____________ _______________ �
Total $ ____________
Total Assets__________
Your First Day—What to Do 101
Now, list the debts and liabilities.
Liabilities Particulars
8. Mortgages
Mortgage #1 ____________ ______________________
Mortgage #2 ____________ ______________________
Home equity line ____________ ______________________
Total $ ____________
9. Loans and debts
Credit card debt ____________ ______________________
Unsecured credit ____________ ______________________
Life insurance loan ____________ ______________________
Promissory notes ____________ ______________________
Total $ ____________
10. Funeral
Care ____________ ______________________
Burial Providers ____________ ______________________
11. Other ____________
Total Liabilities $ ____________
12. Net Estate (Total Assets – Total Liabilities):
$
102 EXECUTOR KUNG FU
Executor Kung Fu Summary
• You have been placed in a position of trust and must be reason-
able and prudent.
• Beneficiaries, creditors of the estate, co-executors and the courts
can require you to account for your actions as an executor.
• Get legal advice before taking any action and arranging the
funeral.
• Take steps to secure and insure all valuables.
• From day one, keep written records, including all receipts and
expenses.
• Action Steps:
1. Make the calls.
2. Locate the will.
3. Arrange the funeral.
4. Secure valuables.
5. Begin keeping records.
6. Start an Estate Inventory.
Your First Day—What to Do 103
Section IIOpening and Closing
an Estate
6Protect the Estate—Get OrganizedChecklists You Can Use
7Special Considerations—Business, Investments, Real
Estate and Joint Assets
How to Avoid Some Very Real Dangers
8Probate—It’s Not Brain Surgery
Probate Can Be Painless
9Paying Everyone
Who Is First on Your List?
10 Pay Yourself Last—Closing the Estate
Your Payoff Is Near
Good-night! Good-night!
As we so oft have said
Beneath this roof at midnight, in the days
That are no more, and shall no more return.
Thou hast but taken up thy lamp and gone to bed;
I stay a little longer, as one stays
To cover up the embers that still burn.
—Henry Wadsworth Longfellow
12
6
PROTECT THE ESTATE—GET ORGANIZED
Checklists You Can Use
Protecting estate assets is the first step in Executor Kung Fu.
But there are also some steps to take to protect yourself.
The trick is to identify, locate, collect and secure all estate assets.
You will deal with government agencies, brokers, bankers, lawyers
and accountants.
Organize all the documents you gather into different-colored file
folders or boxes. You may want to label them as having to do with
assets, debts, taxes, legal documents and personal items.
Legal Issues and Deadlines
Read this guide before you meet with an estate lawyer. Bring a list of
questions with you.
You may find the first session overwhelming. You probably won’t
get all of your questions answered in the first visit.
Come prepared to identify your top concerns. Take notes, or better
still, have someone come with you to do so.
Ask your lawyer to warn you about all legal deadlines. Have this
advice put into writing.
While you’re at it, ask your lawyer to explain what you should
expect to happen in your particular situation.
Has a person died in a car accident? You may only have days to
notify those responsible of your intention to sue.
Failure to provide necessary notices may prevent the estate from
making future claims for benefits.
Some U.S. jurisdictions require you to file the original will with
the estate court within 15 to 30 days of learning of the deceased’s
passing.
Protect the Estate—Get Organized 107
Legal Claims Can Freeze an Estate
Lawyers must advise you on legal claims, divorce, marriage, spousal,
dependant and support claims that affect how you distribute any part
of the estate.
Claims by married, common-law spouses or dependants can over-
ride provisions in a will. Notice of such claims must be filed in court
within certain deadlines. These will vary according to local laws.
Deadlines may be six months from the date of death, the date you
receive probate or even before you fully distribute the estate.
Your lawyer will guide you and refer you to the necessary experts.
You cannot delegate your decision-making powers. It’s your
personal responsibility, for example, to set the sale price of estate
assets.
108 EXECUTOR KUNG FU
Protection Checklist
Your first duty to the estate is to protect its assets. Use this checklist
and mark N/A for those that do not apply. Possible actions you should
take include:
1. Remove perishables and valuables. Keep cash, insurance poli-
cies, securities (stock certificates), jewelry and other valuables
in a safe place. Be careful about thefts that may occur while
you’re at the funeral home or with relatives.
Unsure / NA / Done
� � �
2. Lock the deceased’s home (if vacant) and notify the police.
Most insurance policies will not allow you to leave the house
vacant and still maintain coverage. Get vacancy coverage in the
estate’s name.
Unsure / NA / Done
� � �
3. Check the insurance coverage (contents and liability re car,
home, rental or vacation property, furniture, boat). Check the
expiry dates and inform the insurers of the death.
Unsure / NA / Done
� � �
4. Arrange for someone to manage the deceased’s business, if
permitted under the will, until the estate is settled.
Unsure / NA / Done
� � �
Protect the Estate—Get Organized 109
5. Make banking arrangements. Notify banks of the death. Collect
and deposit any outstanding checks (pension, dividends,
interest, salary).
Unsure / NA / Done
� � �
6. Cancel the deceased’s credit and bank cards, passport and
driver’s license.
Unsure / NA / Done
� � �
7. Redirect mail, if necessary. Ensure that you will continue to
receive mail for one year.
Unsure / NA / Done
� � �
8. Check the maturity dates of bonds and stock options.
Unsure / NA / Done
� � �
9. Check mortgages and loan agreements. Arrange for payment to
keep them up to date, if possible. If not, seek a postponement.
Unsure / NA / Done
� � �
10. Check leases and tenancies. Pay rent that is owed, if possible.
Also, give tenants notice of termination, if necessary, and
notice of where to send future rent payments.
Unsure / NA / Done
� � �
110 EXECUTOR KUNG FU
11. Review checks written by the deceased over the last few
months. Make sure there are no irregularities. Watch for
possible identity theft.
Unsure / NA / Done
� � �
12. Collect income information, prior tax returns and assessments
and documents to identify current assets and liabilities.
Unsure / NA / Done
� � �
13. Find information to choose an estate lawyer at EstateTh-
erapy.com.
Unsure / NA / Done
� � �
Make a list of your reminders for follow-up.
Protect the Estate—Get Organized 111
Executor Lingo
Limitation Period—sets out the period of time during which legal
claims for a cause of action can be raised. After the period expires
(for example, six months after death), a claim can no longer be
raised.
Notarized Copy—a verified copy signed by a notary, who is usually
also a lawyer. This confirms the copy is the same as the original
document.
Power of Attorney—a legal document signed and witnessed to
appoint an agent, proxy or attorney. Attorneys can be chosen to
make decisions when the donor can’t. These cease to be valid upon
a person’s death.
112 EXECUTOR KUNG FU
Executor Kung Fu Self-Defense Moves
1. Speak with the lawyer who prepared the will, trusts or agree-
ments, or a lawyer you select who has estate experience.
2. Contact funeral home and clergy.
3. Notify friends, family, next of kin and beneficiaries.
4. Advise employer, member organizations, professional advisors
or business partners.
5. Notify government, private death-related benefit and pension
providers to stop payments or, if applicable, transfer them to a
survivor.
6. Redirect mail at post office.
7. Cancel credit or cash cards and newspapers.
8. Change locks, passwords, alarm codes, voicemail messages and
collect car keys.
9. Advise attorneys under powers of attorney for property to
provide accounting.
10. Confirm insurance for property, automobiles and valuables.
Protect the Estate—Get Organized 113
Papers to Start Collecting
You will, no doubt, need all kinds of originals or certified copies of
legal documents. Here’s what to start looking for:
Documents
� will and prior wills and codicils, if any
� birth, adoption, marriage, death certificates
� social insurance card
� income tax returns
� divorce papers
� marriage contracts/prenuptial agreements
� separation agreements
� shareholder agreements
� citizenship papers (if applicable)
� military discharge certificate
� passports
Benefits
� employment
� government records
� personal life, health or employment insurance
� accident
� veteran’s or employment pensions
� death
114 EXECUTOR KUNG FU
Assets
� bank books, statements, safety deposit box and keys
� property tax bills
� insurance policies
� deeds or leases to property
� security system contracts and passwords
� income tax returns
� stocks and bonds
� cars, trucks, boats, planes
� coins, stamps, collectibles, antiques
Debts
� bank or car loan
� credit cards and statements
� mortgage papers
� personal loans / business debts
Make a list of other papers that need follow-up.
Protect the Estate—Get Organized 115
What Cash Will You Require?
Take steps to protect any assets, including investments, real estate or a
business.
Decisions may need to be made quickly if you’re going to liquidate
these items immediately upon obtaining probate.
To obtain a higher price, you may wish to postpone the sale of
some assets until you distribute the estate.
Monitor any investment portfolio for risk and dangers.
In some cases, you will need to make tax payments. Your tax
advisor can assist you in calculating these amounts.
If real estate is involved, you must understand how to pay for
ongoing carrying costs.
You need to estimate a cash budget until a house is sold or trans-
ferred to a beneficiary. Consider the following sample list of items for
cash flow purposes.
116 EXECUTOR KUNG FU
Estimated Monthly Cash Needs
• Mortgage or loan payments $ ______________
• Property tax, insurance premiums $ ______________
• Utility bills $ ______________
• Alarm/security costs and other $ ______________
• Maintenance costs $ ______________
• List any other known expenses here $ ______________
• Professional fees $ ______________
• Special costs $ ______________
• Cash required each month $ ______________
• Support payments to minors or dependants $ ______________
Total $ ______________
Protect the Estate—Get Organized 117
Be careful. Do you need to keep a business going? You cannot
automatically spend estate money to keep the business afloat.
If a business is involved, consult a lawyer immediately. Read
Chapter 7 on how to deal with a business.
You may have to deal with minor children who were orphaned.
The will may nominate someone as their legal custodian or guardian
until they reach the age of majority.
Your first step may be to confirm if the named custodian or
guardian can accept the responsibility. If not, a court must appoint a
blood relative to assume custody and care for the children.
Dependants may also require support payments under court
orders or separation agreements.
The next chapter explains how you can handle special assets such
as a business, investments, real estate and jointly owned property.
118 EXECUTOR KUNG FU
Executor Kung Fu Summary
• Create a colored or labeled filing system to separate information
on assets and liabilities and to keep important legal documents.
• Keep track of bills so no essential services are cut off.
• Confirm what, if any, legal deadlines must be met.
• You may have to obtain an accounting and financial records
from anyone who exercised a power of attorney.
• Legal claims by spouses or dependants can freeze distribution of
an estate.
• Estimate what cash you will need on a monthly basis to manage
the estate.
• Notarized copies of documents may be required by government
and financial institutions.
• Avoid releasing the original will or certificate of appointment to
anyone.
Protect the Estate—Get Organized 119
He who is taught only by himself
has a fool for a master.
—Ben Jonson
12
7
SPECIAL CONSIDERATIONS—BUSINESS, INVESTMENTS,REAL ESTATE AND JOINT ASSETS
How to Avoid Some Very Real Dangers
This chapter deals with particular assets included in many estates.
What if the estate assets include a business? You must determine if
the will allows you to operate the business or if you must sell it.
Speak to business lawyers or accountants as soon as possible. You
must find out if the business has partners or other shareholders.
Look for any shareholder, partnership or buy/sell agreements to
deal with the business. There may be an obligation from the other
shareholders to buy/sell the shares within 30 days.
Professional advisors, business partners and other shareholders or
executive members are your best sources of information. Verify all
information and any deadlines.
Doctors, lawyers, accountants and dentists have obligations to
clients to protect confidential information. You must notify the appro-
priate professional organizations for patient or client privacy reasons.
The failure to protect their interests, funds or records can be a
source of liability. The clients who suffer losses can sue the estate.
Various licenses are also not transferable. For example, franchise
operators cannot sell a franchise unless the buyers are approved and
transfer fees paid.
Three Worries About Business
As an executor dealing with a business, you must be concerned about
three things:
1. Do you have authority to run the business?
What if there is no express authority in the will for an executor to
operate a business? Will you be protected from liability by the
will’s terms?
You may not wish to deal with the business unless the benefici-
aries waive claims against you.
If you have no authority to operate the business under the will,
you need a court order to operate it.
2. Where will the money come from to run it?
Do you need cash flow to be able to operate the business and pay
salaries, rent and ongoing expenses?
Check if the business has sufficient funds to keep it afloat until
you can sell it. If not, you may have to liquidate it. This means you
sell its assets and settle up with any creditors the business may have.
3. Can you sell the business, or is it unmarketable?
Much depends on whether the family business is a proprietorship,
a private company with shares or a partnership.
Reorganizing the business may give the estate tax advantages.
Professional tax advice is always necessary when you’re consid-
ering your options.
122 EXECUTOR KUNG FU
If the deceased had 29% minority share in a private corporation,
you may not be able to control the business. This also makes it diffi-
cult to find a buyer unless a buy/sell agreement is in place.
You may find a corporate-owned insurance policy is available to
purchase the deceased’s interest. The surviving shareholders may have
access to these funds to purchase the business.
What’s Special About a Family Business?
One word says it all—family.
If you come from a family that gets along, you may not understand
what I’m going to say. If you come from a family that is dysfunctional,
you will understand all too well.
Wherever there is a family business, there are relatives. Relatives
usually have emotional ties and strongly held beliefs about the value
of the business and who deserves to inherit it.
Business Always Has a Bottom Line
Family members in the business may have bias that clouds their judg-
ment. Each may have different short or long-term visions of what to
do.
They may need to retain their own legal advisors to educate them-
selves about the estate process and possible outcomes.
Make sure that the bank lines of credit, guarantees and securities
are in place to allow you to meet payroll and other day-to-day
expenses.
Special Considerations 123
Investments—Executors Can Pay for Mistakes
Kevin was a Kodak man. All his life he collected Kodak cameras and
gadgets related to the company he had worked for until his retire-
ment.
Kevin also had shares in Kodak that at the time of his death were
worth $100,000. Kevin’s executor thought it was okay to hold the
shares in the estate portfolio.
However, the value of the shares plummeted after Kevin’s death
and now were valued at only $10,000.
The beneficiaries noticed the shares’ value had declined by
$90,000. They successfully sued the executor for their loss of value.
The executor could not hold the investments as he had found
them. He had a duty to obtain proper investment advice and reinvest
the estate assets.
As a prudent investor, the executor must also assess risk and take
steps to protect the estate’s investments.
If the estate is small, you may not have to worry about an invest-
ment plan. But you always want estate funds to be earning interest.
Why You Should Keep Written Investment Plans
If you are advised by your lawyer that you need one, obtain a written
investment plan to meet the estate’s goals. This is especially important
if you are investing funds for beneficiaries’ needs for the long term.
These should include both short and long-term needs, based on the
beneficiaries’ circumstances and the terms of the will.
Consider this an estate investment to protect yourself as executor.
Review the plan at regular intervals.
124 EXECUTOR KUNG FU
Provide a copy of the will to your investment advisers. They can
review any restrictions or limitations that may be contained on your
investment options.
Check with your lawyer before proceeding with any loans, mort-
gages or financial commitments on behalf of the estate.
Keep an Eye on the Cash Flow
Executors are also responsible for managing cash requirements for
the estate. This involves making sure you have cash to cover depen-
dants’ and estate needs.
Generally, cash savings and checking accounts will be used for
estate expenses. Use these before borrowing money or mortgaging
assets.
Borrowing is usually the last resort if cash or other investments
are not available. Before you sell investments, make sure you have
correctly assessed the timing for the sale.
Assets or investments are usually sold for a distribution or to
protect the capital of the estate.
Avoid being accused of reckless sale of investments. For example,
do not sell Google shares and put the proceeds into a checking
account. It could be seen as the same as hiding cash under your
mattress.
Special Considerations 125
Real Estate Is Special
Real estate has its own special potential problems for executors. You
want to be systematic in looking for:
• insurance policies
• contracts dealing with the land
• utility account payments
• property tax statements
• mortgage papers and statements of balance or arrears
• rental agreements to arrange to collect rent
• deeds/surveys for the property to record ownership
• title insurance policies showing any coverage exceptions
• lawyers’ reporting letters
• original purchase agreements to establish tax values
• tenancy on rental agreements
• contracts or invoices for improvements or repairs
• locks and security codes that need changing
You will have twice as much work if there is more than one prop-
erty.
Until assets are sold or distributed to the beneficiaries, you are
responsible to safeguard them from loss or waste. Keeping assets
insured is crucial.
126 EXECUTOR KUNG FU
Property Insurance Is Your Responsibility
You arrange for vacant fire insurance coverage to limit liability. You
may need to have someone visit the home daily in cold weather to
make sure heat is maintained.
In some cases, you will need to obtain opinion letters or appraisals
to establish the value of property.
Bear in mind these values vary depending on the purpose for
which they are required. Different purposes may be to:
• establish a sale price for a beneficiary under the will
• calculate value for probate purposes
• set a value for income tax calculations
• use in legal proceedings
Only qualified appraisers can establish values in court proceed-
ings. On the other hand, a real estate agent’s opinion may set a value
for probate or income tax purposes.
Special Considerations 127
Getting Ready to Sell
When you sell real estate, always use a licensed real estate profes-
sional.
Select someone known in the area where the property is located.
Get a referral from a trusted source, if necessary.
How do you deal with the contents of the house?
Contents and personal effects are always potentially explosive.
You don’t want to divide the dining room set by giving the table to
a sister and two chairs to each of your brothers. It may be equal, but
it’s not fair.
Methods to Clear Contents
• appraised or sold at auction
• draw by lots in rotation
• purchased by family members from the estate
• divided with the help of a mediator
• according to any legally binding means (your lawyer should
advise you)
• donated to charity
128 EXECUTOR KUNG FU
Special Problems with Joint Assets
Jointly owned assets pass outside the will to the surviving joint owner.
These items are not under your control, but they still concern you as
executor.
Typically, there is nothing wrong when spouses use joint accounts
to avoid probate.
However, you must alert your lawyer about possible suspicious
transactions involving joint assets. These warrant further scrutiny.
Someone can claim assets were put into joint ownership not to make
a gift but to avoid probate.
What difference does it make? For example, a joint bank account
containing $100,000 not intended to be a gift can be put into the
estate for division under the will.
What Looks Suspicious?
Various factors should be considered, such as:
• age and vulnerability of the deceased at the relevant time
• relationship of the parties involved
• changes to timing and size of the gift
• if the property is transferred into joint ownership merely to
manage the property
• how funds in joint accounts were used or contributed
• any evidence that contradicts a gift
• lack of independent advice
• if the change of beneficiary is out of character
Special Considerations 129
• if it is contradictory to the deceased’s personality or prior
convictions
Remember, it is your duty to locate and collect all estate assets.
Gifts Made Before Death
Seek legal advice on what steps you should take. Responsibility to
prove a joint account was intended as a gift lies with the person
claiming the gift.
As the executor of the estate, you have a responsibility to investi-
gate. In appropriate cases, you may have to sue to recover such ques-
tionable gifts for the estate.
What if a person gives their beneficiary their inheritance in
advance?
Be careful to identify such gifts. They could be considered an
advance under the will.
In legal terms, such advances reduce the will gift by the value
received before a person’s death.
Abuse Under a Power of Attorney
Occasionally, an attorney may have been managing an elderly person’s
finances before their passing. In such cases, you must satisfy yourself
whether there has been any financial mismanagement.
Elder abuse is real. Be prepared to report to your lawyer if any
person received substantial gifts from an elderly person who was
vulnerable.
You should obtain an accounting from anyone who acted under a
power of attorney.
130 EXECUTOR KUNG FU
Executor Lingo
Buy/Sell Agreement—partners and shareholders use these legal
contracts to ensure a deceased’s interest in the business is bought
out by the surviving party. A sale price or formula is usually
included.
Fair Market Value—the appraised value of property established
by appraisers, reflecting the price a willing and knowledgeable
buyer would pay.
Joint Tenancy—a way to record ownership, e.g., on a deed or
bank account. Joint tenants are owners with rights of survivorship.
The next chapter simplifies the probate process. Don’t worry, I’ve
made this painless.
Special Considerations 131
Executor Kung Fu Summary
• Business assets create special problems requiring expert advice
to operate, value and sell.
• If the will does not permit you to operate the business, you can
be liable for losses.
• Keep estate cash invested so it earns proper interest.
• Real estate must always be insured and vacant coverage
arranged as soon as possible.
• Investment portfolios can put you and the estate at risk.
• Obtain a written investment plan to protect yourself.
• Investigate suspicious circumstances around any joint assets.
132 EXECUTOR KUNG FU
Honest plain words
best pierce the ear of grief.
—William Shakespeare
12
8
PROBATE—IT’S NOT BRAIN SURGERY
Probate Can Be Painless
Yes, it’s possible to breeze through the probate process without
trouble. But you can never tell what skeletons may pop out of a closet
or two.
So much has been written about probate that is negative. Probate
does, however, provide for an orderly process to distribute a person’s
property.
You can use it as a verb, as in probate the will, or as a noun, as in
the estate goes through probate. What it means is that the estate is
supervised by the estate court.
You will learn about the important distinctions between probate
and non-probate assets.
Provincial probate taxes (except in Quebec) are levied as a
percentage of the value of the estate and protect it from predators.
In Ontario, probate taxes are collected under the Estate Adminis-
tration Tax Act (EAT). This amounts to, roughly speaking, about
$1,500 on every $100,000 of estate assets.
The Ins and Outs of Probate
Simply put, probate is the process that validates the will.
The process of transferring assets to beneficiaries, paying taxes
and paying creditors is administering, or settling, an estate.
Most people panic when they hear the word probate.
Why? Because they fear it can eat up an estate, its beneficiaries
and executors. In reality, it is a price most people are glad to have
their estates pay. It allows them to keep control over their assets until
they no longer need them.
You Must Locate the Original Will
To probate a will, you’ll need the original. Locating the will is a task
that can be quite time-consuming.
You’ll also need a witness to the will to complete documents for
probate.
Witnesses must sign a statement under oath to prove the will was
properly signed.
Your lawyer will complete the paperwork called a petition or court
application. This request for letters testamentary or probate confirms
the will.
You will need to give a dollar value for the estate assets and swear
that the list is complete. This is one reason why keeping an inventory
of estate assets is important.
Probate 135
Is Probate a Dirty Word?
Barbara, the estate lawyer, was careful choosing her words.
“Frank, there are different kinds of assets in an estate. As executor,
you must know the difference between probate and non-probate
assets.”
Frank rolled his eyes. “I’m having enough trouble understanding
probate,” he said. “Now you’re telling me there is a non-probate estate
as well?”
“Some assets, like life insurance and pension benefits, are not part
of the probate estate,” Barbara said. “They are payable to designated
beneficiaries. These items pass outside your Uncle Bill’s will.
“The beneficiaries can collect their benefits with a funeral
director’s death certificate and by filling out some forms. You may not
have to be involved.”
“You mean the person named in the policy as a beneficiary collects
the life insurance without probate?” Frank asked.
“Yes. As an executor, you may have no control over non-probate
assets. You may, however, need to consider non-probate assets when
preparing income tax returns. Only certain assets need to go through
probate, as I set out in this chart.”
136 EXECUTOR KUNG FU
Probate vs. Non-probate Assets
Probate Assets Non-Probate Assets
• assets that pass by will • pass other than by will
• property not jointly owned • can include: life insurance,
or in a person’s name alone pensions, retirement plans
• property designated, payable (RSPs, RIFs)
to the estate • jointly owned assets
• trust assets
What Does Payable or Transferred on Death Mean?
“These types of assets (investment bank accounts) have a named bene-
ficiary with rights of survivorship,” Barbara said.
“So I don’t have to touch those assets?”
“That depends, Frank. You may have to assist the surviving owner
merely by providing documents to prove that your Uncle Bill has
passed away. Do you know if he had any jointly owned assets?”
“Yes, there was a bank account with my sister. So does that
become part of the non-probate estate? Is it her money now?”
“That may be a legal question. I need to know whether it was a
jointly owned investment account or just a small checking account.”
“It was only a checking account with not much in it,” Frank said.
“My uncle told my sister to use that account like it was her own. I
didn’t consider it an estate asset.”
Frank’s lawyer went on to explain that each jurisdiction has
different rules for what is included in calculating provincial probate
taxes.
Probate 137
1. Life insurance
When a person buys life insurance, he or she is asked to name a
beneficiary for the money payable on their death. This is a desig-
nated beneficiary. Unless this is changed by the will, this person
receives the benefit without probate.
Complications arise if a designated beneficiary dies or a
dispute develops over who is supposed to be the proper benefi-
ciary. Separation or divorce agreements can specify a beneficiary
to satisfy a support obligation.
2. Retirement funds
A pension, self-directed pension or retirement plan has benefici-
aries controlled by the terms of the plan. These may be payable
without probate.
If a spouse was designated but predeceased, the benefits may
be payable to the estate and require probate.
Note: If the designated beneficiary is the estate, you need to
include the asset for probate.
3. Joint assets
With married spouses, real estate is typically jointly owned with
rights of survivorship. This means the last surviving owner inherits
without probate.
If the joint asset is with a spouse, you may need to investigate
whether it is an estate asset.
4. Trust property
This is controlled by the terms of a trust agreement and passes
without probate to the beneficiary of the trust. Non-probate assets
may be part of the estate for income tax purposes.
138 EXECUTOR KUNG FU
The Role of Probate Court
In some provinces, you will deal with an estate, surrogate or probate
court. Whatever they’re called, estate courts supervise the way you
handle an estate.
The procedure and rules of the local probate court govern what
you must do. Details of this process may be accessible online.
Court staff are available to help but cannot dispense legal advice.
The court has an obligation to supervise the estate administration.
It does this to protect minors, creditors and those who are vulnerable.
When estates and executors become involved in lawsuits, the
probate court establishes rules for trial. If a will is contested, these
disputes are resolved in court proceedings.
Where to Apply for Probate
Normally, you apply for probate where the deceased was domiciled.
This is done through the local county or district estate, surrogate or
probate court.
Domicile by itself is a tricky definition. Regular physical presence
may not be enough to determine the issue.
You may need to apply for probate in more than one jurisdiction.
This is often called ancillary probate. It is a process of recertifying
the letters probate in another jurisdiction.
Probate 139
Probate—Court Confirmation of Executors
The estate’s lawyer will advise you on the procedure to file the will for
probate and in which court.
As mentioned, a will is usually probated where the deceased
person lived. This involves questions of jurisdiction and domicile.
Consider Sandra, who signed her will in Toronto but resided in
Michigan. She maintained multiple residences, which further compli-
cates where to probate her will.
Domicile and jurisdictional issues are important because the laws
differ according to state and province involved.
The greater the number of places where assets are located, the
greater the number of problems.
If Sandra owned real estate in several jurisdictions, it may be
necessary to obtain probate of the will in each jurisdiction.
140 EXECUTOR KUNG FU
Probate Petitions or Applications
Probate is usually obtained by filing the original will with an applica-
tion or petition form. This is legal work to admit the will to probate
and confirm your appointment as executor.
This application material usually requires such information as:
• the deceased’s legal name in full
• address of residence
• age, last occupation
• date of death, place of death
• names and addresses of those named in the will
• the relationships and ages of any minors
• marriage or divorce particulars
• valuations of assets, including real estate
• particulars of beneficiaries who predeceased
• information about creditors
• proof that the will was properly witnessed with statements
under oath
• proof that notice of the probate proceedings is given to inter-
ested parties, including next of kin, persons named in the will,
heirs who may not be mentioned in the will
As executor, you will need to find addresses for these individuals.
A detailed inventory of all assets, property and debts may be
required to calculate the probate taxes.
Probate 141
Record here a summary of assets included for probate.
List of assets included for probate calculation:
Value of assets* for probate:
Total probate value:
*Each jurisdiction has different rules for these calculations,
including what is deducted. In Ontario, only a mortgage liability can
be deducted in calculating provincial probate tax.
Particulars of other liabilities, bills and expenses should still be
part of your responsibility for record keeping. They will not, in most
provinces, reduce the provincial tax.
142 EXECUTOR KUNG FU
Opening an Estate Bank Account
You may have already opened an estate account at a bank. You could
be depositing checks payable to the estate. You cannot, however, write
checks or access estate funds until you probate the will.
The estate account can be at your own bank. However, it must be a
separate account from your own. Note:
• Substantial cash should not be kept in the savings account. It
should be invested in certificates to receive a higher rate of
interest.
• Funds received from the transfer of other bank accounts or
from selling assets should be reinvested.
• Record all expenses. Items such as parking expenses can be
recorded in the cash journal and parking receipts kept in the
receipt or voucher folder.
• Carefully record information that identifies how money is
invested and where. You should specifically identify all closing
bank balances that you’re investing in a deposit certificate.
• It’s easier to record as you go along.
• You must account for each item going in and out of the estate
checking account. With this in mind, the more detailed your
record keeping the better.
• Review the will to ensure bank accounts or stock investments
that were gifted are not accidentally sold.
Probate 143
However tempting it may be to liquidate all investments immedi-
ately, it is not appropriate to do so. You may sell some assets if the
estate needs cash.
Once various assets are sold and funds are in the estate account,
decide what expenses and creditors to pay.
The next chapter discusses the rules for paying money out of the
estate account.
Executor Lingo
Probate—a process that proves who shares and administers an
estate. Probate, surrogate, chancery or estate courts have jurisdic-
tion over estates when someone dies with or without a will.
Probate is required to transfer the assets of the deceased.
Letters Testamentary—another name for letters probate, the court
documents approving an executor’s authority and the will.
Non-probate Assets—some assets or property pass on death to
beneficiaries (designated beneficiaries on life insurance, for
example) or operation of law (joint ownership). These assets are
not governed by the terms of the will or probate.
144 EXECUTOR KUNG FU
Small Estates Get Special Treatment
Small estates may go through a modified probate process. Each juris-
diction has a simplified procedure for estates under certain mini-
mums. In some areas, estates valued at less than $50,000 are
considered small and less complicated procedures to probate apply.
In a small estate, some financial institutions require a copy of the
deceased’s will and a death certificate before they will give you any
information.
Bank managers may refer all estate questions to the head office
legal team when more than $10,000 is involved. You will find local
custom and practice will vary from bank to bank.
You will also find different degrees of familiarity with estates and
cooperation. In some cases, bank managers will have little estate expe-
rience. Remember: Being considerate will get you farther than being
short-tempered.
What do you do after probate is granted?
You’ll find steps in the next two chapters, which take you through
the last leg of your journey: closing the estate (and getting paid).
Probate 145
Executor Kung Fu Summary
• Whether or not you expect to be paid, you must satisfy all your
financial and legal obligations.
• Use your Executor Mantra to remember your priorities.
• Probating the will is the legal process to certify the will. This
allows you to collect estate assets and use the estate bank
account.
• Paying out the estate means that bills, taxes and beneficiaries
get paid before you do.
• Make sure you get sufficient rest and time off from work and
your other commitments.
• All estate funds should be kept separate and never be deposited
into your name.
• As executor you will be held responsible for decisions you make.
• Be sensitive and polite when dealing with relatives and family
members.
146 EXECUTOR KUNG FU
I shan’t die, I shan’t go anywhere,
I’ll be here;
But don’t ask me anything,
I shan’t answer.
—Master Ikkyu
12
9
PAYING EVERYONEWho Is First on Your List?
How is an estate closed?
Even if you have distributed the residue of the estate, a court may
also need to discharge you. In some cases, when minors are involved,
closing an estate is more complex.
The payout of an estate happens when you distribute it.
The rule is that you pay all creditors and beneficiaries before you
pay yourself.
You may also need to cancel a bond or to pay money into court for
minors.
Finally, there’s the matter of executor compensation. We’ll cover
the general guidelines. Your fee, however, will always depend on the
complexity of the estate and local custom.
Even if you are waiving any compensation, you will want to follow
these steps.
Three Things You Must Do
Step #1—Pay creditors first.
Step #2—Pay beneficiaries.
Step #3—Pay yourself last.
Step #1—Pay Creditors First
Executors pay creditors out of estate assets only. Yes, this means you
need not use your own money. This is a priority in calculating what’s
left over for estate beneficiaries.
Even if the will does not specifically state this, it is your legal obli-
gation to do so.
Your lawyer will advise you how you can advertise for estate credi-
tors.
Your lawyer will ask if you wish to publish a notice to creditors in
a local paper. This requires anyone with a claim against the estate to
come forward. This can be done once before you obtain probate.
The notice usually runs once a week for several weeks. It requires
those with claims against the estate to file particulars of the claim. A
deadline for filing is usually specified.
A general notice to creditors does not give you blanket protection
from liability. If you are aware of creditors’ or potential claims, you
must deal with them directly.
You do not want to pay beneficiaries before creditors. This is
because creditors’ payments can reduce what beneficiaries are to
receive.
If you overpay a beneficiary, you can be personally responsible to
reimburse the estate. Retrieving or collecting such monies can be
impossible.
Creditors always have first claims to the estate.
Paying Everyone 149
Estate Income Tax Recap
As executor, you will file the deceased’s last tax return, called the
terminal tax return.
Capital gains from capital property (stocks, real estate and busi-
ness, including RSP and RIF income) are all included in the terminal
return. It covers all income from January 1 to the date of death.
In some cases, you can elect to file optional tax returns to report
certain types of defined income. These elective returns may allow you
to maximize tax savings. You will need professional advice to decide if
this would benefit the estate.
Most importantly, all income received after a person’s death is
reported in a separate estate return. This is referred to as a trust
return.
While waiting for a final clearance, with a legal advisor’s consent,
you can make an interim distribution of the estate.
Only when you receive the clearance should you make a final
distribution of estate property.
150 EXECUTOR KUNG FU
Tax Clearances Protect You
As executor, you will want to obtain a final tax clearance. There is no
legal requirement for you to obtain a clearance, but there are many
reasons to do so.
Without a tax clearance, you would be personally responsible for
any outstanding tax liabilities, interest and penalties.
By obtaining the appropriate clearance certificate, you protect
yourself.
Tax clearances can take eight months or longer to obtain.
You cannot obtain a clearance if there are:
• any outstanding tax filings that have not been assessed
• errors in previous filings
• amended returns required
Filing amended returns can add significant delays to closing an
estate. Get proper tax advice at the outset from a professional who is
experienced in completing estate returns.
Are there exceptions to this rule?
You may not feel a clearance is required if you are handling a
spouse’s estate or if you are certain there are no tax issues.
Now, on to Step #2.
Paying Everyone 151
Step #2—Pay Beneficiaries
Are you shipping or delivering personal property to a beneficiary?
You should get a receipt from the beneficiary. This confirms the
property was received in good condition, satisfying your obligations.
Are you distributing a large, bulky, valuable item, such as a baby
grand piano?
You may need to pay to insure this item at the estate’s expense.
Make appropriate delivery arrangements as called for by the terms of
the will and local custom.
How to Pay Specific Gifts
Are you paying a specific bequest like a $10,000 gift? You should
obtain a receipt to acknowledge payment. This document can be
drafted by your lawyer.
You may need to file receipts or releases with the court to cancel
any outstanding bond. This satisfies the court that you fulfilled your
obligations and the estate can be closed.
What if Tom’s will states that $300,000 is to be divided among his
children? This is not the residue but a specific gift of a sum of money.
What is left over after you pay all expenses and gifts and deliver
the baby grand piano? It’s called the residue of the estate.
Tom’s adult children will each have to sign an acknowledgment of
receipt of their gift.
What if, after paying all gifts and expenses, you have $300,000 left
as residue or the remainder of the estate?
152 EXECUTOR KUNG FU
When it comes to a distribution of the estate residue, those who
share in it have rights. These rights permit them to audit your
expenses and how you arrived at calculating what was included in or
deducted from the residue.
What to Do with the Residue
The residue may be divided among beneficiaries in percentages or
parts according to the terms of the will.
A court approves your distribution proposal if the children are
minors or there are incapacitated persons. Your lawyer will assist you
with these steps.
If all beneficiaries are capable adults, they will sign a release to
approve your account and waive all claims against you and the estate.
How Are Assets Distributed?
You have now identified all the assets and liabilities of the estate. If
necessary, you will raise cash to cover debts and prepare a distribution
proposal.
Here is where you will need to visit your lawyer again. Never
consider making a distribution from the estate without legal advice.
After probate is granted, you may decide to pay:
• legacies (gifts of cash; for example, “$200 to my nephew”)
• bequests (gifts of personal items; for example, “my diamond
watch to my cousin Betty”).
You will want a receipt to confirm delivery of these items.
Paying Everyone 153
Interim Estate Distribution
Say there’s a residue of $300,000 in the estate account. You are
waiting for the final tax clearance certificate before you distribute the
estate.
With your lawyer’s help, you can make a partial or interim distribu-
tion.
You can set up a fund, say, of $30,000, to cover any contingencies
and expenses and distribute the balance.
Once you distribute money, however, it is next to impossible to get
it back. You will want to do this only after speaking with your lawyer
and tax advisor.
If you feel comfortable doing so, make an interim distribution. This
can include obtaining an interim release with a holdback for the final
tax notice, if necessary.
Do not make an interim distribution without having your lawyer
double-check your calculations.
Executor Lingo
Devise and Bequeath—ancient terms used in wills to refer to gifts
of real property and personal property, respectively. Today, I give is
often used instead.
Interim Distribution—a distribution of part of the estate before the
final distribution.
Final Distribution—a distribution of the estate residue among
beneficiaries.
154 EXECUTOR KUNG FU
Distribution Under the Will
As executor you would distribute an estate by paying the following, in
this order:
1. Debts: You will file all the necessary income tax returns and
obtain tax clearances.
2. Specific bequests or gifts: $5,000 each to Tom, Dick and Harry.
3. Conditional Gifts: Pay to Sheila $10,000, if she is still alive.
4. Gifts from specific funds: Sell my home and divide the net
proceeds among my three sons.
5. Gifts in trust: Hold $100,000 to pay out in your discretion for
Helen’s health care.
6. Gift of residue: Divide the remainder between Rod and Todd.
You may need prior approval of a court for your compensation and
your distribution plan. Usually, though, beneficiaries will give you a
formal release and permit you to close the estate.
Are any beneficiaries minors? You probably need court approval of
your financial accounts to close the estate.
The third thing you must not forget is to pay everyone, including
yourself. It’s such a key step I’ve given it a chapter of its own.
Paying Everyone 155
Executor Kung Fu Summary
• Always use an estate bank account when paying expenses.
• An advertisement for creditors should be reviewed or prepared
by a lawyer.
• Although they are not mandatory, tax clearances protect you as
executor.
• Obtain receipts for property gifted under the will.
• Interim distributions allow you to distribute part of the estate
while you wait for final tax clearances.
• If minors are involved, you will usually need court approval to
pay their entitlement into court for their protection.
156 EXECUTOR KUNG FU
We don’t know life:
how can we know death?
—Confucius
12
10
PAY YOURSELF LAST—CLOSING THE ESTATE
Your Payoff Is Near
At last! Your journey has come to an end. You are ready to close the estate.
Don’t expect a framed certificate or an award celebrating your
accomplishments.
Knowing you have honored a person’s last wishes while staying out
of trouble may be reward enough.
Well, almost. You can now add a request to be paid for your time,
trouble and tribulations as executor. It’s time to calculate your
executor’s compensation.
Closing most estates is usually an informal process.
But what if your numbers do not add up or your accounting has
errors? The estate beneficiaries may have some questions for you.
You may not be able to close the estate and get paid. Worse still,
you can be required to have a court audit your records.
If there’s a shortfall, a judge can make you cover it out of your own
pocket.
This usually entails hiring a lawyer to help put your records into a
formal court form called executor’s accounts. The process involves
having a court pass (or approve) your accounts.
The Beneficiaries’ Ultimate Revenge
If you have maintained a healthy relationship with them, you can
usually expect the beneficiaries’ thanks. But you need more than that.
You need their approval of your accounting and claim for compensa-
tion.
Did you make time to give beneficiaries a progress report as you
handled the estate? If you did, you made a valuable investment.
Beneficiaries expect prompt answers to their questions about
estate matters. They have a natural curiosity, with questions like:
• Why is it taking so long to get our inheritance?
• Why did it take a year to sell Uncle Bill’s home?
• Was his house appraised before you sold it?
• Is your claim for a fee as executor normal?
• How much did you get for the stock portfolio?
• Did you pay the taxes on time?
• Do you have a final tax clearance yet?
Those who have felt neglected or who have been allowed to have
their suspicions fester can be difficult to convince.
Beneficiaries can challenge your claim for compensation. They can
be motivated by your attitude toward them.
Your work is almost finished. It is time for you to close the estate
administration. Read on for information on how to collect your fee.
Pay Yourself Last 159
What If It Gets Nasty?
Strangers and even relatives can hire lawyers to question your
records. Don’t be too anxious now to pay everyone to get rid of your
headache.
This is not the time to be casual about fulfilling your legal duties to
report to the beneficiaries.
Only Lawyers Should Reply to Lawyers
You are ready to close the estate. You are proud that, so far, you have
kept estate expenses to a minimum.
You get a surprise in the mail. It’s a letter from a lawyer on behalf
of a beneficiary.
You prepare a reply by yourself, trying to clarify any misunder-
standing. Instead, you get a further letter from the lawyer asking for
more details. Did you do something wrong?
Always have a lawyer reply to a lawyer’s letter. Otherwise, you may
be exposing yourself to unnecessary risks.
Here is where your hard work in keeping records will pay you divi-
dends. Your notes will help you easily answer questions to close the
estate.
In cases where there are beneficiaries who are minors, the estate is
usually supervised by a court. Your records must answer questions
from both the beneficiaries’ lawyer and a judge.
160 EXECUTOR KUNG FU
When Do You Need a Court Order?
You may need a court order to close an estate. Such formal steps are
often required to cancel an executor’s bond or to pay a minor’s inheri-
tance into court or to a child’s guardian.
The court needs key documents to cancel an executor’s bond:
1. proof that all creditors and taxes have been paid and tax
clearances obtained
2. proof that all beneficiaries have been paid or a proposal to
pay them with appropriate releases
3. a proposal for executor compensation as approved by the
beneficiaries
You can voluntarily ask a court to audit your accounts to protect
yourself.
Why would you want to do this? In some cases, you may need to
ensure your actions as executor for compensation are not questioned.
If you are handling a long term-trust for a disabled beneficiary,
you may want to do this every couple of years.
Pay Yourself Last 161
Executor Lingo
Abatement—when there is not enough money to pay all debts,
claims and gifts under the will
Ademption—if a specific item named in a will cannot be found,
the gift adeems or fails.
Executor’s Bond—a guarantee for performance of an executor’s
duties usually purchased from insurance companies.
Why Releases Protect You
Releases protect you from liability and must be in a form acceptable
to the court.
Never try to prepare a release by yourself. You have neither the
training nor the understanding of what the law requires.
Executor releases are important legal documents. Always have
them prepared by an estate lawyer.
Following is what a sample of a simple release of executor looks
like.
The key provisions confirm that your accounting and compensa-
tion are approved. The beneficiaries then acknowledge they have no
further claims to the estate.
162 EXECUTOR KUNG FU
Sample Release of Estate Trustee
I, BOB BROWN, of the City of___________________ , in the Province of
___________________ , DO HEREBY ACKNOWLEDGE that I have received
from JOHN SMITH, Estate Trustee for the Estate of JANE SMITH, late of
the City of___________________ , in the Province of___________________,
deceased, the sum of THIRTY THOUSAND DOLLARS ($30,000.00). This is
to be paid from the Estate at the time of final distribution in full
satisfaction and payment of my share of the said Estate to which
I am entitled.
AND THEREFORE I, BOB BROWN, do by this document approve all claims
for executor compensation on the executor’s report and release and
forever discharge the said JOHN SMITH in his capacity as Estate Trustee
for the Estate of Jane Smith, her heirs, executors and administrators of
and from any and all actions, claims, accountings and demands whatso-
ever which I now have or ever had against the said JOHN SMITH, person-
ally and in respect of or in connection with the said estate.
IN WITNESS WHEREOF I have hereunto set my hand and seal this 1st day
of February, 2009.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
__________________________________ ) _______________________________
Witness Bob Brown
Pay Yourself Last 163
Executor Fees
In the last chapter I told you the third thing you should never forget is
to pay yourself. Do this after paying creditors and beneficiaries and
getting legal advice.
In some jurisdictions, paying yourself before court or beneficiaries’
approval of your accounts is not permitted.
Paying yourself before everyone else may constitute a misappropri-
ation. The court can penalize you and order you to repay the amount
taken, plus interest.
In some cases, the will may provide for specific payment of your
fees. If this is true, you need not wait until the estate is closed.
However, your fee is always subject to review.
Such clauses do not legally prevent a beneficiary from challenging
your fees. Your compensation is based always on your successfully
handling the estate.
Who Decides How Much?
Courts are called on to determine what’s fair and reasonable as
payment. The court has discretion in approving your fees.
Remember, executor compensation is set by local custom. You are
not in a conflict of interest by taking a fee. It is proper for you to be
compensated for your time, services and responsibility.
The fee, once set, is shared among executors. Hopefully, you have
already agreed with your co-executor on how to share it.
164 EXECUTOR KUNG FU
As executor, you may sell Henry’s home, which is worth $600,000,
and claim an executor’s fee. This is a percentage of the sale price.
Beneficiaries, however, may say the fee is inappropriate because you
took two years to sell the property.
Maintaining an executor’s log and time records will help you
satisfy everyone regarding your entitlement.
Your Executor Kung Fu strategy requires you to keep a log docu-
menting:
• all the time you spent inspecting the property, maintaining
estate assets and preparing the house for sale or transfer
• the number of trips to prepare an inventory of contents
Even if your time logs are not examined, you’re still better off
having them. Memory is fallible.
Your decision to claim fees does not have to be made until the
distribution of the estate is proposed.
It is best not to make any early promises to waive your fees. You
never know how much time you’ll spend solving problems.
And if you think being an executor is not all that difficult,
remember this: You still have one final duty—closing the estate.
You will find the following checklist for closing the estate helpful.
Pay Yourself Last 165
Closing an Estate Checklist
1. Arrange for sale of assets, if necessary:
• real estate
• motor vehicles, boats, etc.
• personal items
• investments
2. Deposit into the estate account proceeds collected from:
• banks, credit unions
• brokers
• insurance policy
• investments
• safety deposit box
• sale of estate properties
3. Deliver personal items (the jade ring) and obtain receipts.
4. Convert other assets to cash and deposit into estate account.
5. Obtain federal tax clearances and keep several copies.
6. Pay specific bequests ($3,000 to Alex) and obtain receipts.
7. Prepare distribution reports to beneficiaries, including:
• executor accounts showing your compensation
• releases to be signed by beneficiaries
• distribution proposals to close the estate account
8. Answer all questions and obtain signed releases from all
beneficiaries.
9. Obtain any necessary court orders (cancels bond) before
making final payments.
166 EXECUTOR KUNG FU
10. Notify necessary parties that the estate is closed and prepare
your records for storage in a safe place.
Storing Your Estate Files
You must store your records in a safe place for several years after you
have closed the estate. This satisfies your obligations to the tax depart-
ment.
Are there other reasons to do this?
Laws allow certain groups (creditors, beneficiaries or others) to
sue you for violating their legal rights. Many claims against you as
executor may be raised up to two years after the estate is closed.
In cases where fraud is alleged, such two-year limits may be
expanded and start from the time when the fraud is discovered.
You can continue to protect yourself from such claims using the
next section of this guide, Executor Kung Fu Tools.
Pay Yourself Last 167
Executor Kung Fu Summary
• Never make a final distribution of an estate without legal
advice.
• Have your lawyer prepare the release of executor documents.
• Cancel any executor’s bond with necessary court orders.
• Keep records. Some tax files must be retained for years to
protect yourself.
• Executor’s fees are treated as taxable income in your hands.
• Remember the importance of what you have learned. It can save
your own executor heartache and headaches.
168 EXECUTOR KUNG FU
Congratulations
Your journey as executor has come to an end. Along the way you may
have had to deal with obstacles that you didn’t anticipate.
Hopefully you have shared joyous memories and experiences along
the way. The trip was an experience you will not forget.
I hope the Executor Mantra helped you master the estate tasks and
guided your actions.
Put what you have learned to good use. Prepare your own execu-
tors for the day when you’ll need them.
If you have any suggestions for improving Executor Kung Fu,
please contact me directly at [email protected].
I would be glad to hear from you.
Dedication
To Walter, my father, who, at 90, is still telling me and teaching me
what to do.
Pay Yourself Last 169
Success depends upon previous preparation,
and without such preparation
there is sure to be failure.
—Confucius
12
Section IIIExecutor Kung Fu Tools
Will Notes
• Gifts of Property Under the Will
• Cash Bequests Under the Will
• Beneficiaries of the Estate
Sample Lawyer Letter to Executors
Certificate of Appointment of Estate Trustee with a Will
Detailed Estate Inventory
Important Contacts
Other Important Contacts
Executor Logs
• Time Log
• Telephone Log
• Correspondence Log
• Appointment Log
Cash Journal
• Monies Received
• Monies Dispensed
Sample Will
Web Resources
Will Notes
Gifts of Property Under the Will
1. Name
Address
Relation
Item
Tel Fax
Notified � Delivered �
2. Name
Address
Relation
Item
Tel Fax
Notified � Delivered �
3. Name
Address
Relation
Item
Tel Fax
Notified � Delivered �
172 EXECUTOR KUNG FU
4. Name
Address
Relation
Item
Tel Fax
Notified � Delivered �
5. Name
Address
Relation
Item
Tel Fax
Notified � Delivered �
6. Name
Address
Relation
Item
Tel Fax
Notified � Delivered �
Executor Kung Fu Tools 173
Will Notes
Cash Bequests Under the Will
1. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
2. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
3. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
174 EXECUTOR KUNG FU
4. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
5. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
6. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
Executor Kung Fu Tools 175
Will Notes
Beneficiaries of the Estate
1. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
2. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
3. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
176 EXECUTOR KUNG FU
4. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
5. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
6. Name
Address
Relation
Item
Tel Fax
Notified � Delivered � Receipt �
Executor Kung Fu Tools 177
Sample Lawyer Letter to Executors
October 29, 2009
Dear Ms. Smith:
RE: Estate of Ronald Smith
Date of Passing: August 12, 2009
Please accept my condolences on the passing of your brother.
Executor‘s Role
As the executor, you are the legal representative for your brother’s estate.
In Ontario, you are also referred to as the estate trustee with a will.
You should be aware of your various duties. You will find it helpful
to review the following information.
Estate trustees administer the estate and this work includes:
1. securing and insuring all estate assets;
2. preparing an inventory of all estate assets, including the
contents of any safety deposit boxes or dwellings;
3. hiring a lawyer to advise you with respect to the administration
of the estate;
4. supplying the estate lawyer with the information necessary to
prepare an application for a certificate of appointment of estate
trustee with a will;
5. paying all debts that were owed by the deceased and, if neces-
sary, advertising for creditors;
6. administering the estate assets and making prudent investment
decisions;
178 EXECUTOR KUNG FU
7. filing returns and paying all estate and income taxes;
8. accounting to the beneficiaries, and to the court, if you are
required to do so, for all your actions in the administration of
the estate.
Estate Year
Traditionally, a period of twelve months from the date of death is
allowed by the court for executors to complete the administration of
the estate, including its distribution.
Lawyer’s Role
My role in connection with the estate is basically to:
1. advise you as to the administration of the estate and assist you
in making any necessary decisions;
2. prepare the application for a certificate of appointment of
estate trustee without a will;
3. advertise for creditors, if necessary;
4. assist you to convert any assets that you may decide to sell or
transfer;
5. assist you in the preparation of any accounts that may be
required to be submitted for audit purposes with the Estate
Court, if you are required to submit your accounts.
Estate Trustee’s Compensation
By law you are entitled to receive compensation for your care,
expenses and responsibilities as estate trustee. As a general rule of
thumb, this can amount to more or less 2.5% of the receipts and 2.5%
of the disbursements.
Executor Kung Fu Tools 179
Your fees must be approved by the beneficiaries (depending on the
circumstances). Your decision to claim fees does not have to be made
until the distribution of the estate is proposed.
Income Tax
Under the Income Tax Act, you are to file any income tax returns that
may be required, including for the period up to the date of passing,
which is called a terminal return. This is in addition to any corporate
tax returns.
A return for any capital gains, an estate tax return and a final
distribution return need to be prepared and filed. I recommend that
you obtain assistance from an accountant for these returns. I confirm
that I do not prepare or file any tax returns.
Failure to pay tax found owing can make you personally respon-
sible for payment of any outstanding tax penalties and interest. You
should therefore obtain a clearance certificate from Canada Revenue
Agency.
Estate Accounts and Books
I would suggest that you maintain a written record listing the
following for every transaction in the estate:
1. from whom money was received, or to whom paid, and the
reason for such receipt/payment;
2. the amount of money received or paid and the date of the
transaction;
3. separate records for capital and interest income received.
Please contact my office to confirm the value of the estate for
probate.
180 EXECUTOR KUNG FU
Lawyer’s Fees
My fee will be calculated on a number of factors, including my hourly
rate. The amount of work to administer the estate, the degree of
responsibility, effort and final results will also be considered in setting
my final fee.
My usual hourly rate is set out in a retainer agreement you will be
asked to sign. If you wish my office to perform any of the estate
trustee’s duties for you, separate charges will be incurred. I will do this
only if you instruct me to do so.
Real Estate
You will not be able to deal with the real estate until you transfer the
property into your name as the estate trustee.
Legal fees to deal with the property will be billed separately.
I trust that this letter outlines to you some of the estate work and
gives you some insight into the work and responsibility each of us has.
If there is any matter upon which you require further clarification, I
would be happy to discuss it with you.
I will be contacting you shortly to sign documents to appoint you
as the estate trustee.
Sincerely,
ABC Lawyers
Executor Kung Fu Tools 181
Certificate of Appointment of Estate Trustee with a Will
FORM 74.13
Courts of Justice Act
CERTIFICATE OF APPOINTMENT OF ESTATE TRUSTEE WITH A WILL
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE ESTATE OF JANE DOE, deceased,
late of the City of Toronto
occupation Retired Teacher
who died on February 20, 2009
CERTIFICATE OF APPOINTMENT
OF ESTATE TRUSTEE WITH A WILL
Applicant Address Occupation
John Doe 123 Smith Avenue Retired
Toronto, Ontario Salesperson
A1A 1A1
This CERTIFICATE OF APPOINTMENT OF ESTATE TRUSTEE WITH A
WILL is hereby issued under the seal of the court to the applicant named
above. A copy of the deceased’s last will (and codicil(s), if any) is attached.
......................................... .........................................................................
DATE Registrar
Address of court office
330 University Avenue
7th Floor
Toronto, Ontario
M5G 1R7
RCP-E 74.13 (November 1, 2005)
182 EXECUTOR KUNG FU
Detailed Estate Inventory
Personal Information for Estate
Deceased’s Full Name:
(also known as):
Address:
Telephone numbers:
Email:
Occupation:
Name of Business:
Date of Birth:
Marital Status:
Date and Place of Marriage:
Details of any domestic contracts:
Details of any divorce decrees or dissolutions:
Executor Kung Fu Tools 183
Full name of spouse:
Date of Birth of spouse:
Full name(s) of any ex-spouse(s):
Full names of all children:
Name: Address: Date of Birth:
Full names and addresses of any other beneficiaries:
Name: Address: Date of Birth:
Details of any support obligations—legal or moral:
184 EXECUTOR KUNG FU
Details of any relevant personal situations, e.g., disabled spouse and/or children:
Residence for Income Tax Purposes: Domicile:
Name / Contact of Accountant:
Name / Contact of Investment Advisor:
Name /Contact of Insurance Advisor:
List of Assets:
1. Safety Deposit Boxes:
Location Box Number
Registered Name Location of Key
Executor Kung Fu Tools 185
2. Real Estate: (indicate principal residence)
Street address or location:
Names on title: Location of Deed:
Current Market Value: Encumbrances: Equity:
Assessed Value: Acquisition Cost and Date:
3. Other real estate property:
Street address or location:
Names on title: Location of Deed:
Current Market Value: Encumbrances: Equity:
Assessed Value: Acquisition Cost and Date:
186 EXECUTOR KUNG FU
Names on title: Location of Deed:
Current Market Value: Encumbrances: Equity:
Assessed Value: Acquisition Cost and Date:
If property is rented:
Tenant’s name:
Address:
Amount of rent: Due on:
Length of lease:
If property is out of the jurisdiction, who was local solicitor?
4. Land or mortgages owned and agreements for sale:
5. Insurance or annuities:
Policy: Issued by: Value: Beneficiary or to Estate:
Executor Kung Fu Tools 187
Policy: Issued by: Value: Beneficiary or to Estate:
6. RRSPs, DRPs, TFSAs and pensions:
Number: Value of Benefit:
Institution Value: Beneficiary or to Estate:
7. Bank Accounts
Money on Deposit:
Name: Address of Bank: Type of Account:
Bank or Depository and No.: Ownership: Approximate:
188 EXECUTOR KUNG FU
8. Investments, Shares, Bonds, Debentures, Guaranteed
Investment
Certificates:
Approximate value of portfolio:
Description: Acquisition: Current: Physical:
Number: Cost and Date: Value: Location:
9. Business Assets
– Corporate shares?
– Are there any restrictions on transfer?
– Are shares subject to buy-sell agreement?
– If a buy-sell agreement is in force, is it funded?
– Obtain all relevant agreements.
Interests in partnership or unincorporated business:
Executor Kung Fu Tools 189
10. Debts owing to the deceased including promissory notes:
11. Automobiles, boats and recreation vehicles:
Description: Value: Ownership:
Farm machinery, Tools, Livestock and quotas:
Description: Value: Ownership:
12. Heirlooms, artwork, plates, jewelry and any collections, etc:
Description: Value: Ownership:
13. Household goods and furniture:
Description: Value: Ownership:
190 EXECUTOR KUNG FU
14. Other assets:
– contingent or vested interest in an trust or will (obtain copy of document)
Description: Value: Ownership:
– power of appointment (obtain copy of document)
Description: Value: Ownership:
– general or specific
Description: Value: Ownership:
– tax sheltered investments (murbs, oil and gas investments, movies, etc.)
Description: Value: Ownership:
– royalties
Description: Value: Ownership:
TOTAL VALUE OF ASSETS: $
Executor Kung Fu Tools 191
LIST OF DEBTS:
Mortgages:
Creditor Principal Interest Maturity
Loans:
Creditor Principal Interest Maturity
Credit Cards:
Creditor Principal Interest
TOTAL VALUE OF DEBTS: $
Approximate net value of estate $
Will Dispositions:
Personal Effects:
If spouse survives:
If children survive:
192 EXECUTOR KUNG FU
How is distribution to be effected? / Not applicable
OR
trustee’s sole discretion Yes__________________ No__________________
OR
as children agree Yes__________________ No__________________
OR
memorandum binding Yes__________________ No__________________
OR
memorandum persuasive Yes__________________ No__________________
If none of immediate family survives: real estate
To be held in trust? Yes__________________ No__________________
If held in trust, review obligations for maintenance costs and capital repairs
and liability for waste
– Shares of family business:
– Pension proceeds:
Any special terms?
Legacies: (e.g. to relatives, employees, charities, etc.)
Name Relationship Amount Gift To
Executor Kung Fu Tools 193
Investment Powers:
Wide Yes________________________ No________________________
Restricted Yes________________________ No________________________
Special Clauses:
Guardians of minor’s property:
Guardians of minor’s person:
Alternative:
Special instructions:
Exclusion of Illegitimate Children:
Funeral instructions:
Donation of organs:
194 EXECUTOR KUNG FU
Powers of Attorney:
Property:
Personal care:
Executor Kung Fu Tools 195
Important Contacts
Lawyer
Address
Telephone/Email/Fax
Tax Accountant
Address
Telephone/Email/Fax
Investment Advisor
Address
Telephone/Email/Fax
Bank Advisor
Address
Telephone/Email/Fax
Life Insurance Agent
Address
Telephone/Email/Fax
Funeral Home
Address
Telephone/Email/Fax
196 EXECUTOR KUNG FU
Real estate agent
Address
Telephone/Email/Fax
Appraiser
Address
Telephone/Email/Fax
Doctor
Address
Telephone/Email/Fax
Attorney (named in Power of Attorney)
Address
Telephone/Email/Fax
Estate Contact Information
Executor Kung Fu Tools 197
Other Important Contacts
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
198 EXECUTOR KUNG FU
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
Name:
Company:
Email:
Phone: Fax:
Executor Kung Fu Tools 199
Executor Logs—Sample
Time Log
Date Activities Time Spent
February 7 call to funeral director to obtain
prearrangements, book visit 10 minutes
February 8 call to lawyer to confirm last will not
changed and get general advice 15 minutes
200 EXECUTOR KUNG FU
Executor Logs
Time Log
Date Activities Time Spent
Executor Kung Fu Tools 201
Telephone Log—Sample
Date Call To/From Left Message Call Back
February 7 call from church re funeral, will confirm funeral
date tomorrow
202 EXECUTOR KUNG FU
Telephone Log
Date Call To/From Left Message Call Back
Executor Kung Fu Tools 203
Correspondence Log—Sample
Date Letter To/From Reply Follow-up
Feb 9 letter to bank re confirmation
of RRSP designated beneficiary
Feb 11 letter to confirm insurance coverage
of Jack’s vacant home and request
written confirmation
Feb 11 letter from lawyer re services, draft
retainer to be signed
204 EXECUTOR KUNG FU
Correspondence Log
Date Letter To/From Reply Follow-up
Executor Kung Fu Tools 205
Appointment Log—Sample
Date of Met With Location of Time Spent
Appointment Appointment
Feb 7 Janice to enter Jack’s Jack’s home 20 minutes
home with key to
arrange changing
of locks
206 EXECUTOR KUNG FU
Appointment Log
Date of Met With Location of Time Spent
Appointment Appointment
Executor Kung Fu Tools 207
Cash Journal—Monies Received—Sample
208 EXECUTOR KUNG FU
Date Received from Reason for AmountPayment received
Feb 7 Cash found in $900Jack’s kitchen
cupboard
Cash Journal—Monies Received
Executor Kung Fu Tools 209
Date Received from Reason for AmountPayment received
Cash Journal—Monies Dispensed—Sample
210 EXECUTOR KUNG FU
Date Received from Reason for AmountPayment Paid
Feb 11 Locksmith locks changed $110 from cash
Cash Journal—Monies Dispensed
Executor Kung Fu Tools 211
Date Paid To Reason for AmountPayment Paid
I, ROBERTA STEVENS, of the City of Sunnytown, in any Province, declare this
to be my Last Will.
1. REVOCATION
I revoke all former Wills and Codicils made by me.
2. APPOINT EXECUTOR AND ALTERNATIVE
I appoint my husband, NICK STEVENS, as my Executor. If he does not
survive me, or is unable or declines to act, or, having accepted the
appointment, ceases to act as my Executor, I appoint my brother, ADAM
SINCLAIR, to be the Executor of this, my Will, and refer to him as my Trustee to
deal with my estate as follows:
3. DEBTS, EXPENSES, TAXES
Pay out of my general estate my debts, my income taxes for the time up to my
death, my funeral expenses, and estate inheritance and succession taxes and
duties that are payable because of my death in any country. Pay the costs to
administer my general estate out of my general estate; pay the costs to admin-
ister a trust under this Will out of the trust.
4. SPECIFIC GIFTS
Give all my jewelry and $5,000 to my sister, TARA SINCLAIR.
5. GIFT OF RESIDUE
Give the residue of my estate to my husband, NICK STEVENS, if he
survives me by 30 days.
6. ALTERNATIVE BENEFICIARY
If my husband does not survive me by 30 days: Divide the remainder
of my estate equally among my children, SARA STEVENS, CALLAN
STEVENS, and BETHANY STEVENS, who survive me, and do this equally
subject to the trust conditions set out below.
7. TRUST PROVISIONS
If anyone is to receive part of my estate and is under 18, set a part aside and hold
it in a trust fund on these terms:
212 EXECUTOR KUNG FU
Sample Will—Do Not Use—Sample Only
-2-
Give what remains of the fund to them when they reach 18. Before then, you,
my Trustee, may use the fund for them. You will decide how much of the fund to
use, when to use it, and whether to pay amounts to them or to others on their
behalf. You may use income of the fund or capital of the fund, as you choose. If
any child dies before 18, divide what is left of the fund when he or she dies
equally among my other children who are alive when this happens.
8. APPOINTMENT OF MINOR’S GUARDIAN
If my spouse predeceases me and if I die before any child of mine has attained
the age of majority, I appoint my brother, MICHAEL SINCLAIR, to have custody
of such child and act as the guardian of the property of such child. It is my wish
that before the expiration of 90 days from the date of my death the said MICHAEL
SINCLAIR apply in court to have custody of such child and to act as the guardian
of the property of such child. If MICHAEL SINCLAIR declines or is unable to act,
I appoint my sister NADINE SINCLAIR to be my children’s guardian.
9. FAMILY LAW EXCLUSION
I hereby direct that the income from any property acquired by a beneficiary
pursuant to my Will shall be excluded from such beneficiary’s net family property
under the provisions of the Ontario Family Law Act, or any similar or successor
legislation.
DATED the 22nd day of May 2005
WITNESSES:
This will is signed by the Testatrix and by us, all in the presence of each other.
____________________________________ ___________________________________Witness #1 (name) ROBERTA STEVENS
Address
____________________________________Witness #2 (name)
Address
Executor Kung Fu Tools 213
Web Resources
Canadian Legal Information Institute (Canlii)
http://www.canlii.org
Law Society of Upper Canada (LSUC)
http://www.lsuc.org
Ontario Bar Association (OBA)
http://www.oba.org
In Canada
http://www.servicecanada.gc.ca/en/lifeevents/loss.shtml
Alberta
http://www.albertacourts.ab.ca/CourtofQueensBench/FrequentlyAsked
Questions/tabid/95/Default.aspx
British Columbia
http://www.ag.gov.bc.ca/courts/civil/info/wills estates.htm
Manitoba
http://www.gov.mb.ca/publictrustee/services/deceased estates.html
New Brunswick
http://www.gnb.ca/cour/05PROB/index-e.asp
Newfoundland and Labrador
http://www.justice.gov.nl.ca/just/LAWCOURT/estates.htm
214 EXECUTOR KUNG FU
Northwest Territories
http://www.justice.gov.nt.ca/pdf/PublicTrustee/Questions about
Wills.pdf
Nova Scotia
http://www.courts.ns.ca/probate/index probate.htm
Nunavut
http://www.gov.nu.ca/english/
Ontario
http://www.attorneygeneral.jus.gov.on.ca/english/estates/estates-
FAQ.asp
Prince Edward Island
http://www.gov.pe.ca/infopei/index.php3?number=51004&lang=E
Québec
http://www.justice.gouv.qc.ca/english/publications/generale/testamen-
a.htm
Saskatchewan
http://www.justice.gov.sk.ca/Deceased-Estates
Yukon
http://www.publicguardianandtrustee.gov.yk.ca/estate.html
Web Resources 215
GLOSSARY
Abatement—when there is not enough money to pay all debts, claims andgifts under the will.
Accounting—what an executor must prepare and keep by way of financialreports and records. These are reviewed by the court, beneficiaries andanyone who has a financial interest in the estate. Also called executor’saccounts.
Ademption—if a specific item named in a will cannot be found, the giftadeems or fails. For example, a gift of a motorcycle to Tim but it was sold.The gift fails.
Assets—what a person owns, including land, money, investments andpersonal effects, such as jewelry. Assets are also further defined asdifferent types of property. For example, real estate is real property;money is personal property.
Beneficiary—a person entitled to receive the benefit or gift under a will or adesignated asset, such as a life insurance policy or pension benefit.
Buy/Sell Agreement—partners and shareholders use these legal contracts toensure a deceased’s interest in the business is bought out by the survivingparty. A sale price or formula is usually included.
Codicil—legal documents used to revoke or amend your will.
Debts—what a person owes. These are liabilities and may include credit cardbalances, loans, mortgages and taxes.
Devise and Bequeath—ancient terms used in wills to refer to gifts of realproperty and personal property respectively. Today, I give is often usedinstead.
Estate—whatever is left by a deceased, usually consisting of assets (property,real estate, stocks, money, etc.) less liabilities (bills, debts, expenses andtaxes).
Estate Taxes—in Canada there are no estate taxes based on the overall size ofthe estate. However, there are federal income and provincial probate taxes.
Executor—a person named in a will to handle legal and financial matters. InOntario also called an estate trustee with a will. May be referred to as afiduciary or personal representative. (The term executor is used in thisguide.)
Executor Accounts—includes a history of all transactions, income and assetsreceived, and expenses paid from the date executors take charge of theestate.
Executor’s Bond—a guarantee for performance of an executor’s duties usuallypurchased from insurance companies.
Fair Market Value—the appraised value of property established by appraisers,reflecting the price a willing and knowledgeable buyer would pay.
Fiduciary—a person who holds a position of trust. The law imposes duties ona fiduciary to protect the rights of others. Other terms for this includepersonal representative, estate trustee and executor.
Final Distribution—a proposal to distribute the estate residue among benefi-ciaries that is circulated for their approval.
Income Tax—at death, certain property is treated as income for income taxpurposes. It is deemed disposed of at fair market value and taxed, even ifgifted and no proceeds are received. Assets such as Registered RetirementSavings Plans (RSPs), Registered Income Funds (RIFs), investments andsecond homes can thus be treated as income.
Interim Distribution—a proposal to distribute part of the estate before thefinal distribution.
Joint Tenancy—a way to record ownership, e.g., on a deed or bank account.Joint tenants are owners with rights of survivorship.
Letters Testamentary—another name for letters probate, the court docu-ments approving an executor’s authority and the will.
Limitation Period—sets out the period of time during which legal claims for acause of action can be raised. After the period expires (for example, sixmonths after the death), a claim can no longer be raised.
Glossary 217
Non-probate Assets—some assets or property pass on death to beneficiaries(designated beneficiaries on life insurance, for example) or operation oflaw (joint ownership). These assets are not governed by the terms of thewill or probate.
Notarized Copy—a verified copy signed by a notary, who is usually a lawyer.This confirms that the copy is the same as the original document.
Power of Attorney—a legal document signed and witnessed to appoint anagent, proxy or attorney. Attorneys can be chosen to make decisions whenthe donor cannot do so. These cease to be valid upon a person’s death.
Probate—a process that proves who shares in and administers an estate.Probate, surrogate, chancery or estate courts have jurisdiction over estateswhen someone dies with or without a will. Probate is required to transferthe assets of the deceased.
Probate Tax—a provincial tax that is charged on assets going through theprobate process. Ontario calls it the estate administration tax.
Property—can be real property (real estate) or personal property (cars, cash).Some property passes through probate. Other non-probate propertypasses as part of a person’s estate on death without the need for probate.
Renounce—declining to act as executor because you choose not to assumethe responsibility. This can be because of age, illness, lack of time orinability to act. Renouncing can be done by signing a form, filing it withthe court and notifying the people named in the will to act as backupexecutors in your stead.
Resign—quitting your duties after you have begun to act as an executor,handling assets. You cannot quit or resign unless you have court permis-sion. A replacement executor must be appointed by a court.
Taxes—no definition necessary! Estates are subject to various taxes that anindividual didn’t pay while alive. These include provincial, probate andfederal income taxes on RSPs, RIFs, business, investments and secondhomes.
Testamentary Capacity—the ability to know and make a legally valid will. Atestator, the person making a will, must have the ability to know whoshould and will benefit from their estate.
218 EXECUTOR KUNG FU
Trustee—person appointed by a will to carry out the trust terms. Trustees arenot necessarily executors or estate administrators or guardians. You can,though, give an executor the additional role of a trustee.
Trusts—legal relationships by which executors (or trustees) manage assets forthe benefit of trust beneficiaries, such as minors. Can be created by aperson’s will as a testamentary trust or during the person’s lifetime as aninter vivos, or living trust.
Will—a legal, testamentary document signed by a person to take effect onlyon death. Can be amended before death by a written codicil. Namedexecutor(s) manage the estate, pay bills and distribute assets under thewill.
Executor Kung Fu Tools 219
INDEX
abatement, 162, 217accountants
estate business, 121reimbursement for fees, 86tax returns, 51, 99
accountingbeneficiaries’ approval of, 159, 162definition, 37, 217for actions, executor’s duty, 179liability for irregularities, 35power of attorney, 130resignation as executor, 26specific gifts, 45
ademption, 162, 217advertising for creditors, 68, 149, 155ancillary probate, 139assets
business, 117, 121, 123defined, 37, 217designated, 84, 136, 144distribution (see distribution of estate)executor’s responsibility, 40, 47, 64,
65, 66–67frozen, 72insurance for, 126, 127inventory (see inventory of assets)investments, 124–125, 189joint, 84, 129–130, 138probate for (see probate)property (see property)protecting, 65, 66–67, 76, 106, 109–110,116sale of, 31, 67, 69, 71, 76, 83, 84, 144tax (see income tax; taxes)typical assets, 114valuables, safe deposit, 67, 76, 94–95, 185
beneficiariescollection of benefits, 136defined, 37, 217designated (named), 84, 136, 137, 138obligations to, 45–46, 54payment, 149, 152
will notes, 176–177benefits, list of, 114bequests, 153, 174–175bills of estate, 95business, 117, 121
family business, 123three worries, 122buy/sell agreement, 131
cash journal, sample, 209–212cash needs for estate management, 116, 125certificate of appointment of estate trustee
(Ontario), 66sample, 182
children (minors), 117circle of responsibilities, 43–46closing an estate, 165, 166–167codicil to a will, 39, 220conditional gifts, 155contracts, 44–45creditors
advertising for, 68, 149, 155paid first, 148, 149–151potential claims, 149
custodians for minors, 117
death certificate, 76debts
defined, 37, 217list of debts, 114, 193payment, 155
designated assets, 84, 136, 144devise and bequeath, 154distribution of estate, 153–155
distribution under the will, 155final distribution, 154interim distribution, 150, 154
duties as executor, 45, 47–48, 66–69
estatedefined, 37, 217distribution (see distribution of estate)
Estate Administration Tax Act (Ontario),134
estate bank account, 143–144estate inventory, 55, 69, 75, 99, 135
detailed estate inventory, 183–196preliminary inventory, 100–102
estate return, 51estate taxes, 37, 39, 217
estate trustee without a will (Ontario), 77executor
defined, 37, 218duties, 45, 47–48, 66–69payment for expenses, 80
executor fees, 164–165executor mantra, 64–65executor process
in 12 months, 70–71reasons for shorter or longer time, 78, 79
executor releases, 162, 163, 168executor’s accounts, 37, 158, 218executor’s bond
cancellation documents needed, 161defined, 162, 218
executor’s compensation, 80executor’s disease
case study, 31–32defined, 38
fair market value, 131family business, 123fees. see executor fees; record keepingfiduciary
defined, 38, 218executor as, 40
final distribution, 150, 154first day, 88–104funeral arrangements, 92–93funeral expenses, 77
gift of residue, 155gifts
conditional, 155property, under the will, 174–175specific, 130, 152, 155
gifts in trust, 155guardians, 117
identification for executor, 76important contacts, 197–199income tax at death, 38income tax returns, 51–52insurance, 66, 126–127inter vivos trusts, 39, 220interim estate distribution, 150, 154inventory of assets, 55, 69, 75, 99, 135
detailed list, 141, 185–192preliminary inventory, 99–102
investments
executor’s duties, 124inventory, 189written plans, 124–125
joint assets, 84, 129–130, 138joint tenancy, 131
keys to valuables, recording, 95lawyer’s helpadvertising for creditors, 68, 149, 156advice on a business, 118, 121bills of estate, 95challenges to a will, 44, 74choosing a lawyer, 111consultation at early stage, 27, 28, 55, 70contents sale, 128estate financial commitments, 125executor releases, 162, 168executor’s fee, 80filing of documents, 64, 65, 99finding a will, 75, 90interim distribution, 150, 154legal issues and deadlines, 107–108necessity of, 33, 44, 48, 49, 57, 60, 66, 70other problems, 129, 130, 152, 153paid from estate, 82, 86probate, 65, 67, 69, 71, 72, 75,
82, 135–138, 140replying to lawyers, 160sample letter to executors, 178–181self-defence for executor, 113, 124, 158
legacies, 153legal standards, 35, 45letters probate, 66, 144letters testamentary, 66, 144life insurance, designated beneficiaries, 136,
138, 144limitation period, 112logs
appointment log sample, 207correspondence log sample, 205necessity of, 164, 165telephone log sample, 203time log sample, 201
managing expectations, 53–55
non-probate assets, 84, 136, 137, 138, 144notarized copy, 112
Index 221
outstanding years, tax return, 51
payable on death, 137paying everyone, 67–68, 69, 148–157
first, pay creditors, 148, 149–151second, pay beneficiaries, 152–155third, pay yourself, 158–160, 164
power of attorneyabuse under, 130defined, 112
probate, 38, 49, 83, 144. see also lawyer’shelpancillary probate, 139executor’s responsibility, 64, 65, 67, 69letters probate, 66non-probate and, 84, 136, 137, 138, 144summary of assets for, 142validating the will, 135where to apply, 139, 140
probate court, 83, 139, 140probate petitions or applications, 141–142probate tax
defined, 38inventory needed, 141, 142Ontario and Quebec, 134varying rules by province, 138
professional advice. see also accountants;lawyer’s helppaid from the estate, 82, 86
propertydefined, 38detailed inventory, 186–187notes on gifts under will, 172–173selling real estate, 128
property insurance, 127protecting assets, 65, 66–67, 76, 94–95, 106,
109–110, 116, 185
questions frequently asked, 74–86
receiptsfrom beneficiaries, 152, 153tax clearance, 150, 151
record keeping, 45, 47, 66, 81, 97–98, 103advice from advisors, 82assets included for probate, 142closing an estate, 158, 160estate inventory (see estate inventory)executor logs, 97, 165, 201–208
executor’s accounts, 37, 158expenses and receipts, 58, 97, 98,
143, 152, 153funeral, 93investments, 143keys, 95locating documents, 94storing records, 167, 168will notes, sample, 172–177
release of executor, 162, 163renouncing, defined, 38, 219request for letters testamentary, 135residue of the estate, 152, 153distribution of, 153, 155resigning, 39, 219retirement funds, beneficiaries, 138rights of survivorship, 138
safety deposit boxes, 76, 185sale of assets, 144selling real estate, 128settling an estate, 135small estates, 145specific gifts, 130, 152, 155standards of conduct, 36staying calm, 56-57support payments, 118
tax clearances, 151, 155taxes on estates, 37, 39, 150-151, 217terminal tax return, 51, 150testamentary capacity, 39, 219testamentary trusts, 39, 220testate and intestate estates, 91trust return, 150trustee, 39, 220trusts, 39, 138, 220
valuables, securing, 67, 94-95,185
Web resources, 215will, 39, 43, 220
challenges to, 49-50lawyer needed to interpret, 44, 75locating, 75, 90, 135probating (see probate)sample notes on, 172-177sample will, 213-214
222 EXECUTOR KUNG FU
What Is EstateTherapy™?
For where your treasure is,
there also will your heart be.
Matthew 6:21
Traditional estate planning often leaves people cold and in the dark,
unable to make decisions.
EstateTherapy Inc. was founded to offer you a new breakthrough
approach to deal with your money.
Your money should go straight to your loved ones without any
problems.
Here’s what EstateTherapy™ looks like:
EstateTherapy™ provides simple solutions to estate matters.
Find more valuable executor resources at
www.EstateTherapy.com.
About Author Edward Olkovich
Ed is recognized as a leading Canadian estate
expert. He has practiced law in his own firm
since 1978 and is a Certified Specialist in
Trusts and Estates Law.
Ed is also the author of seven books,
including Choosing Executors, Breakthrough
Estate Planning and Estate to the Heart: How
to Plan Wills and Estates for Your Loved Ones.
He is regularly quoted in national publi-
cations as an expert in estates and is a
frequent guest on television and radio. As a
lawyer, Ed advises clients on wills, estates,
executors and estate administration, and handles legal challenges to
wills.
Ed is a member of the Ontario Law Society of Upper Canada,
Ontario Bar Association, American Bar Association, Society of Trust
and Estate Practitioners (STEP), Canadian Association of Professional
Speakers (CAPS) and National Speakers Association (NSA).
Ed is an entertaining and passionate speaker in financial and
education programs, conferences and client seminars. He is the
founder of EstateTherapy.com, an online estate planning publisher.
Ed can be reached by email at [email protected] or by telephone at
416.769.9800 or toll free at 1.877.MrWills.
Other EstateTherapy™Products
Estate to the Heart:
How to Plan Wills and Estates for Your Loves Ones
Choosing Executors:
Your Formula for Success
Breakthrough Estate Planning:
Finding All the Answers You’ll Ever Need
About Wills:
You Need to Review These Essential Tips
Order these and other valuable EstateTherapy™ resources at
www.EstateTherapy.com, by sending an email to
[email protected] or by calling 1.877.679.4557.