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Tuesday, August 3, 2010

Tips for an executor on completing an estate inventory


An executor or administrator almost always has to prepare an inventory of assets and debts of the estate, whether he or she is applying for Letters Probate or Letters of Administration. There are other good reasons for preparing an inventory too, such as accounting to the beneficiaries, filing tax returns, and calculating the probate fee, lawyer's fee and executor's compensation.


Though the forms themselves vary from province to province, the principles behind the inventory are the same everywhere. The following are 16 tips to keep in mind as you gather information and fill in the paperwork:


1. All values should be as of the date the deceased died.


2. Use fair market value as a general rule.


3. "Real" property includes land, buildings of all kinds, life estates and mines and minerals titles. All other property is considered "personal" property.


4. When listing real property, include both the civic (street) address and the legal description. The legal description can be found on the title or on the tax notice for the property.


5. Use appraisers to set values on large assets.


6. When listing debts, include a breakdown of funeral expenses.


7. Under debts, include not just current debts but also future tax liability and other future debts.


8. Do not include any real or personal property that the deceased owned jointly with another person.


9. Do not include life insurance that names a beneficiary unless the beneficiary has already passed away, or the policy names the estate as the beneficiary.


10. Do not include financial assets that name a beneficiary, such as RRSP, RRIF, or pension.


11. Do not include anything that comes to an end with the death of the deceased, such as an annuity.


12. List and apply for all government and private death benefits.


13. Household items such as clothing and furniture may be grouped together and described on the inventory as "household and personal items" and given a nominal value such as $200. Assets of higher resale value such as artwork or antiques may be listed and valued separately.


14. Include the deceased's business interests, whether that interest takes the form of shares in a private corporation or a share in a partnership.


15. If your inventory is all ready to be filed except for one value that seems to be taking forever to get, you may give your best guess as to the value SO LONG AS you describe it on the inventory as an estimate, and later file a supplementary document to give the court the missing value.


16. Remember that the inventory is part of sworn evidence, so you will have to swear it in front of a commissioner for oaths. Swearing a false document is perjury.


Hopefully these tips help answer some of your questions.

10 comments:

  1. What happens when a named executor in the Will wants to transfer responsibility to someone else?

    ReplyDelete
    Replies
    1. When an executor is named but doesn't want to take on the job, he or she has two basic choices.

      One is to renounce the job. This must happen at the beginning of the estate. If the executor does this, he or she has no say in who takes over the job, so the executor can't really "transfer" it to anyone else.

      The other option is to hire a trust company to act as the executor's agent. If this happens, the executor retains the legal decision-making authority but pays the trust company to do the actual work.

      If you are talking about an executor who has already started work on the estate, renouncing is not an option. If the executor wants or needs to withdraw from the estate, he must approach the court and apply to be dismissed. He remains legally responsible for the assets of the estate unless and until the court dismisses him. The court will require him to pass his accounts before granting the request.

      Lynne


      Delete
  2. Is the Executor required to provide named beneficiaries with a copy of the Inventory list? A) only if requested in writing? B) Automatically?

    ReplyDelete
    Replies
    1. The details of exactly what has to be given to which beneficiaries, and when, differs from province to province, but the general guiding principal is the same. Residuary beneficiaries are entitled to full documentation but specific beneficiaries are not.

      Both of these types of beneficiaries fall within your description of "named beneficiaries" so I believe this distinction is important for you to understand. A person who is named to receive a certain item or a certain sum of money is not entitled to see the estate inventory at all. A person who is named to receive a share of the residue (i.e. rest of) the estate does have a right to see it.

      In provinces where notice must be given to residuary beneficiaries when the executor applies for probate, the beneficiaries should automatically receive a copy of the full application, which includes an inventory.

      Lynne

      Delete
  3. Thank you for your comments. My brothers and sister are beneficiaries in our mother's will and her estate.My mother passed away on August 5, 2015. It appears that many of the 'issues' we are having with her brother named Executor, are addressed here in Ontario by changes made regarding Wills and Probate in January 2015. The Executor is using a heavy handed approach offering no information on the Estate or current status. I recently requested a copy of the Inventory only to be told by his lawyer that I am " not in control here and that you are unable to make any demands whatsoever." Obtaining a copy of our mother's Will was equally difficult but finally provided. In late August 2015 I filed a Notice of Objection regarding Application for Certificate of Estate Trustee with a Will with the Court from which it now appears the Executor has been served a 'warning'. I assume my siblings and I will have to appear before the Court to explain why the Notice of Objection has been filed.

    ReplyDelete
  4. Thanks for this info...it is hard to remember all the questions to ask a lawyer when you see him in person. One question needing clarification...when you talk about future debt...do you mean future utilities on the house of the deceased that is being put on the market? If you do include these utilities, how many months would you include in the inventory? For example, Mom died in January, do you include January, February,March and April's utilities if you think the house will sell by April? Also does this timeline also go for future assets? Thanks

    ReplyDelete
    Replies
    1. Utilities are not a debt, but an expense. Don't include ongoing expenses in the inventory.

      A future debt, to me, would be a tax liability, or the repayment of a loan. These things exist at the time the person died.

      Lynne

      Delete
  5. Under Ontario law, is it required or expected that the Executor will provide a clear, concise and detailed accounting of bank transactions for any bank accounts held jointly between the deceased and a named residual beneficiary, (a beneficiary also listed as Executor)?

    Can the acting Executor ignore this step?

    What happens if he/she does?

    When should this accounting be provided?

    ReplyDelete
    Replies
    1. I'm assuming that you are talking about transactions that occurred after the deceased passed away.

      The answer to your first question depends on the relationship between the deceased and the joint owner. Normally a joint account is not part of an estate so there would be no reason for you to expect an accounting of it. The account would belong to the surviving joint owner, even if that person is also, coincidentally, a beneficiary.

      But...and there's always a but...if the surviving joint owner was a child of the deceased, the picture is exactly the opposite. In that case, the account is considered to be an asset of the estate until evidence is found of the deceased's intention for the account. You may want to talk to a lawyer about the specifics of the case because it's a bit complicated for a simple blog post, but what I've stated here are the basic rules.

      If the joint surviving owner IS a child of the deceased, you might start by asking about the evidence of intention.

      Lynne

      Delete
  6. Hi Lynne, thank you for allowing me to share this on your blog, and for commenting on this. I can see this may not be truly black and white.

    Essentially there are four siblings who are residual beneficiaries. My brother was made Joint (I think the banks refer to this as POA) on my mother's account(s) in 2012 according to the acting Executor (my mother's brother), to facilitate in my mother’s day to day banking needs. Her brother also had POA over her accounts as well.

    When she passed away I understood that these POA’s may have ended, and that her brother's POA (if it extended beyond her banking affairs) ceased as well. Once the acting Executor filed for Estate Trustee and was granted by the Court, an alternative Probate account was set up and all remaining funds from my mother's account(s) were transferred to this new account.

    My brother, having POA over her account(s) was also named Executor but to my knowledge he has not acted as Executor other than to take instruction from the acting Executor (my mother’s brother).

    According to the acting Executor, my brother was only made joint to help my mother with her banking, and in the Executor’s own words, the accounts belonged to my mother, so I assume they would form part of the estate.

    And herein lies the rub. These two people have had ready access to my mother’s account(s), one having POA since 2012, the other having POA very possibly since 2007 when my Dad passed away.

    Two of my siblings and me are uncomfortable with this fact, sighting the real possibility that these two POA’s may have used, or removed funds from her account(s) over time without providing any accounting of the transactions.

    The big concern is that less than two weeks after my mother passed, my mother’s brother and my brother were shredding banking information ahead of applying for and received Probate status. My sister witnessed this. Our lawyer did point out to the Executor’s lawyer that this action appeared suspicious late last fall.

    The lawyer / Executor sloughed it off as my brother shredding his own VISA statements, but you can see the inference here that something untoward may have occurred.

    My feeling is that there should be an accounting going back to when my mother’s brother was first made POA on her account(s) as well as from the time my brother was made POA.

    This would serve to eliminate the concerns of the remaining three other siblings. It would serve to explain why my mother was virtually penniless on the day she passed when she should have had a large cash reserve based on her monthly income and expenses.

    I don’t know if I should simply have our lawyer write to the Executor’s lawyer to request open and full disclosure concerning the custody of the account(s) from inception of POA to present, or write to the Executor myself to convey this same message.

    ReplyDelete

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