Must an executor immediately cash in assets with a maturity date?

When a testator passes away leaving assets that have built-in maturity dates, how should those be dealt with? Must they be cashed in right away? This question was recently asked by a reader, and his question with my answer appear below.

"My father had some money invested in a GIC for one year. The expiry date is September 2013, but my father died February 2013. Can I wait for the expiry date in September to receive the GIC or do I have to dissolve it now since he has already passed away?"

You don't say in this question whether you are the executor of the estate or the beneficiary of the GIC, or possibly both, so let's talk about both of those situations.

Executors have some discretion as to when they cash in or sell assets of the estate. The discretion is there so that executors can carry out their responsibility of making the most of the estate by taking advantage of market conditions, tax losses, or whatever else is available. Each executor must consider each asset individually. In this case, if your father has the funds invested at a wonderful interest rate that you're pretty sure you won't be able to get yourself, you might want to keep it invested to take advantage of that rate.

Ideally, the executor and the beneficiary will have a conversation about the assets to give the executor an idea of what would work best for the beneficiary. However, the beneficiary also needs to realize that the executor may have more on the go than just one asset, and must consider the estate as a whole. For example, if the rest of the estate has been wound up except for this one asset, and the executor just wants to get the tax return done and finish things off, it might not make sense to delay all of that. Remember that as long as the GIC is in your father's name, tax receipts for interest earned will go to the estate.

There is no law that says every executor must cash in every GIC immediately. The executor should first look to the will to see whether there are any specific instructions or timelines to follow (usually there are none, but if there are, the executor must follow them). Usually executors are  under pressure from beneficiaries to get things done quickly and efficiently.

Normally when a GIC is invested for a set period of time, cashing it in before the expiry date will result in a penalty or loss of interest. However, the death of the owner of the GIC is an exception to that general rule. This means that the GIC could be cashed in early without any loss.

You asked whether you can wait for the expiry date to cash the GIC. As is always the case in legal situations, the question isn't whether you can do something; the real question is whether you should do it.

Where do I find the deceased's accounts and investments?

A reader has asked me a question that I hear frequently, so I'm sharing the question and my answer with all of you. Here's the question:

"When a person passes away, how do you locate all their accounts and investments if you don't have an updated list? Is it as simple as using their SIN card to locate them?"

I don't think you're going to like my answer, because there is nothing simple or easy about this. It usually takes a lot of legwork to find a deceased's assets and liabilities.

Having the SIN card is definitely helpful, as banks and other asset-holders can search their databases using a SIN card. This can be helpful since many people may have the same or similar name, but only one person will have a particular social insurance number. It should make searching easier.

The problem is determining which banks or brokers or investment advisors to ask. There is no place that you can enter a SIN and come up with a comprehensive list of everything a person owns in various institutions. You will have to ask one bank or advisor at a time. It used to be worse; at least these days you can go to any branch of a bank and get a search of all branches of that bank. In the not-so-distant past you had to approach each branch individually.

So how do you know which banks or advisors to ask?

Check paperwork at the deceased's home and office. Look for statements and bank books of course, but also any correspondence such as insurance offers.

In these days of paperless banking, fewer and fewer people leave paper statements around. If you don't have access to the deceased's computer, you're going to have to do it the hard way.

If you see a credit card in the deceased's wallet, check the bank that issued the card. People frequently get credit cards from the same place they do their regular banking.

Check to see which banks have branches close to the deceased's home or place of work. Most people choose to bank where it's convenient for them. Seniors in particular tend to choose the branch closest to home, within walking distance if possible.

If you have access to the deceased's past tax records, check to see which banks issued T5 slips for investments. There should be a copy of each T5 attached to the deceased's copy of a filed return.

When you check with a bank, whether or not you are successful in locating a bank account, ask the personnel to check the bank's investment arm as well. The major banks all have investment advisors attached to them (Scotia McLeod, RBC Dominion Securities, etc). Also remember to ask about safe deposit boxes, because many people will store original share certificates, deeds to the house etc. and you can often find clues there. For example, look at the deed to the house to see whether there is a mortgage registered against the house; the title will tell you which bank holds the mortgage.

Remember that many people have assets in more than one bank. So the fact that you've located an account in, say, Scotiabank, doesn't mean that you should stop looking.

The cold hard fact is that it is often an immense amount of work to figure out what another person owned, particularly where most records are kept on a computer that you can't access. This is why estate planners are always suggesting that people make an updated list of assets and liabilities.

As I said, you're probably not enjoying this answer one little bit, but unfortunately there may not be an easier way.

Which assets does an executor deal with and which are outside of the estate?

This reader has questions about the powers and responsibilities of an executor and trustee, and which assets fall within their control. This information is essential to the estate administration process, so I thought I'd cover it here for all to read.

Here's the question:

"When an estate is probated do all assets fall under the probate or can some things be dealt with before hand such as banks, life insurance and investments and if something needs to be done through probate can we proceed at that time? If the executrix/trustee is not a joint tenant of the house, who is responsible for selling the house? Would it be the joint tenant or the trustee?"

Parts of this question are quite clear to me, though I'm not sure I understand the part about dealing with assets "before hand". I'll get to that, though.

All assets owned solely by the deceased fall into the estate. The two types of property that don't fall into an estate are both mentioned in the reader's question. One type is an asset that is jointly owned by the deceased with someone else. The other type is an asset with a designated beneficiary. These are usually life insurance policies, RRSPs, RRIFs and pensions.

Note that this does not include RESPs, which do not go to the child named in the plan, but stay in the deceased's estate.

If the house was owned by the deceased and a joint tenant, on the death of the deceased the ownership passes to the other joint owner. It would be up to the other owner to arrange for the title to be changed. Please note that where the joint ownership is between generations, such as between a parent and a child, this is THE OPPOSITE. Joint title doesn't automatically go to the child joint owner when the parent dies. The child is deemed in law to be holding the title on trust for the estate, and it's for the executor to deal with.

If the house was not held in joint tenancy but was held just by the deceased alone, it becomes part of the estate and it's the executor's job to sell it or transfer it in accordance with the will. This cannot be done before probate is issued by the court.

I'd like to get into the part about dealing with assets before hand. If the question is whether any of the assets can go out to the beneficiaries before the deceased actually dies, the answer is no. To me that seems starkly obvious but I'm asked the question frequently enough to know that not everyone sees it that way. If the person hasn't died, keep your hands off their assets even if they have named you specifically as beneficiary.

Once the deceased has passed away, the executor should advise any joint owners of the death of the deceased and tell the joint owner it's up to them to change the title. The executor should advise life insurance companies of the death of the deceased, and let the insurance company deal directly with the person named as beneficiary in the policy. The executor should also advise the bank that holds the RRSP or RRIF and let the bank deal directly with the beneficiary who will receive the funds. The executor should co-operate by giving copies of the death certificate etc to allow these other parties to get on with the business at hand. Probate is not required for these transactions.

The deceased certainly can - and should - deal with these assets before death by naming the beneficiaries on the life insurance, RRSP etc. During the estate planning process, joint assets and beneficiary designations are part of the same big picture that includes the will and power of attorney. It all has to fit together.

Anyone with this type of question who lives in Alberta can check out my "Alberta Probate Kit" book, as it covers these topics in much more detail.

Just what are the assets of an estate?

It's important for an executor to have a thorough understanding of which assets are in the estate he or she is trying to administer, for several reasons. The executor has to create an inventory of assets and liabilities, which is sworn to be accurate and filed at the court. Also, the executor is personally liable for errors and negligence, and neglecting to deal with an asset would certainly count as negligence. Also, the executor usually has to answer a lot of questions from beneficiaries who are counting on the executor to be the most informed person in the group.

Some assets cause problems for executors just by their existence, and often the problem has arisen because nobody really understands whether those assets are in the estate or not. So let's try to clear up those misunderstandings.

As a general rule, assets that are held in joint names with a right of survivorship are not in an estate. This is because when the deceased person died, all of his or her right in the property automatically transferred to the surviving joint owner. An executor doesn't have to deal with the jointly owned property if he or she is looking after the estate of the first joint owner and does not have to include it in the estate inventory. All the executor has to do is inform the surviving joint owner of the death, and provide a death certificate.

The exception to that general rule is an asset that is held between a parent and an adult child as joint owners. Now those joint assets are to be considered as being held in trust by the child when the parent dies. Unless there is clear evidence that the parent did in fact want the child to own the joint asset, it must be paid into the estate and looked after by the executor.

If the deceased person owned real estate as a tenant-in-common with another person, the deceased person's share of the real estate is included in the estate.

Another asset that is not going to be part of the estate is a life insurance policy that names a specific person as beneficiary. Again, the executor isn't responsible for looking after this. The executor should let the insurance company know that the policy owner has died and provide a death certificate but after that, it's up to the beneficiary to get the money paid out.

If the insurance policy named the estate as the beneficiary, then it is the executor's job to get the money paid to the estate so that he or she can deal with it.

If the deceased owned assets such as RRSPs, RRIFs or LIRAs that name an individual as the beneficiary, the executor's duty is once again restricted to advising the plan holder (e.g. bank) of the death of the owner and providing a death certificate. If any of these plans name a beneficiary who has already passed away, the funds will be payable to the estate and in that case it's the executor's responsibility to look after it.

Usually the household goods of a married (or common law) person are only included in the estate if the spouse does not survive.

Vehicles, equipment, collections etc that are in the name of the deceased only are included in the estate. In fact, any items of any kind, from land to digital assets, that are owned by the deceased alone are included.

When the executor is preparing the inventory of the estate for filing at the court, he or she must include all assets that the deceased owned on the date of death, even if that asset has been sold or given away on the day in the inventory is done. For example, if Joe owned a car on June 19, the day he died, then his executor sells the car on July 30 and prepares the inventory on July 31, the car should still be shown on the inventory. This is because the inventory is intended to be a snapshot of the deceased's financial situation on the date of death, not on some random later date.

What does it mean that a "will speaks from death"?

The laws of individual provinces and territories in Canada state that "a will speaks from death". This is an important operational concept that has an impact on what is covered by your will and what is not. The concept means that regarding your property (real and personal), your will is treated as if it were made immediately before you die.

For example, you might have made a will in 1995 leaving everything to your spouse. At that time, not owning a crystal ball, you would not have known exactly what you would own when you pass away, but you made a will that refers to "all my property". Does this mean "all your property" that you owned when you made the will, or "all your property" that you own when you die?

In 1999, you bought a house.  In 2002 you began an investment portfolio. If you should pass away in 2011, your will is not restricted to assets you owned in 1995 when the will was made. On the contrary - it includes the house and portfolio you obtained after you made the will because the will is treated as if you made it right before you died.

The "speaking from death" concept is a method of ensuring that all property, regardless of when it was obtained relative to the will, is dealt with by the will.

If my name is on my Dad's account when he dies, do I own it?

I notice that in the majority of questions I'm asked about parents and adult children owning assets together, the question contains the words "my name is on it".  I'm not surprised that so many people are uncertain about the ownership and ultimate destination of assets when this is the full extent of the information available to them. Your name can be "on" an asset in more than one way, and even then, there are other circumstances that may affect whether or not you will own that asset after your parent passes away.

The first fact that you must clarify is whether an asset is held jointly with a right of survivorship, or whether it's held as tenants-in-common ("TIC"). You are likely to find the TIC situation only with real estate, including mines and minerals titles, and not on bank accounts. The fact that there are two names on a land title does not necessarily mean that the title is jointly held.

To know for sure whether land is held jointly or as TIC, you must read the title itself (or a search of title, which can be done through a lawyer's office or a registry). If the title is TIC, you will see wording such as "each as to an undivided one-half interest" or some variation on that.

If you are a TIC on a title, you will own only your share of the title when the other person dies. The other person can dispose of his share in his Will, or if there is no Will it will be divided on intestacy.

If an asset is jointly held, this usually gives rise to a right to survivorship. This means that when one of the owners dies, the other owner continues to own the whole asset. This is commonly seen in bank accounts and investment accounts, as well as real estate.

Once you have established whether you own something jointly or as TIC, you have taken the first step. As mentioned above, if you are a TIC, you have your answer. But if you are a joint owner, the question is not yet fully answered.

The complication arises whenever an asset is owned inter-generationally. The usual situation is between a parent and a child, though it could also be between an aging relative and his or her niece, nephew, grandchild, etc. In these situations, our highest court has said that when there is an account held intergenerationally, and the parent is the one who actually put the money in, on the death of the parent the money is deemed to be held in trust for the parent's estate. This is drastically different from what used to happen automatically with joint accounts.

What must happen next is that there must be some written record of whether the parent intended for the money to go to the child by right of ownership. The record must have been made around the time the child's name was put on the account. If no such record exists (and in the vast majority of cases, it doesn't) then the child has to give back the money into the parent's estate.

One of the ways parents are creating written records of their intentions is by making statements in their Wills. This could be a simple statement in the Will confirming that they do or do not want the account or investment or property to go to the child as a true joint owner.

Note that the question of joint owner with right of survivorship does NOT affect husband and wife ownership. The comments I've made in this post are restricted to inter-generational ownership that is usually set up by the parent who mistakenly thinks he or she is simplifying the estate, or just wants help with the banking.

You can see how this area of estate administration is rife with disputes, misunderstandings and hard feelings between siblings. I've said repeatedly that joint assets between parent and child are rarely a good idea, and that is largely because people almost always fail to confirm their full intentions. If a parent just wants help dealing with the banking, then he or she should use a Power of Attorney and leave the joint titles for those who truly want that child to inherit that full asset.

Disbursements before probate

Can a person in charge of an estate pay expenses or bills before receiving the Grant of Probate from the court?

The answer to this question depends in large part on whether that person in charge is an executor or an administrator. If he or she is an executor named in a Will, then yes, it is alright to pay expenses and bills before receiving probate. In fact, in many situations it's the smart thing to do in order to avoid penalties and interest on amounts owing.

If the person is, on the other hand, applying to be an administrator of the estate, then he or she doesn't have the legal authority to do anything on behalf of the estate. Whereas an executor appointed in the Will derives his or her authority from the Will document itself, an administrator has no authority whatsoever until the court says that he or she does. An administrator-in-waiting is just going to have to wait, and the creditors or beneficiaries will simply have to be patient. It's not the fault of the administrator if the deceased didn't make a Will.

As I've often said on this blog, the question in law is generally not "can I do this?" but "should I do this?" Even where there is a Will naming an executor, it might not be a good idea for the executor to start paying bills for the deceased if he or she plans to renounce the executor appointment and let someone else handle the estate. It may have an effect on whether the executor is allowed by the court to renounce. While paying one or two bills is probably not enough to cause a court to refuse a renunciation, things get trickier if the executor is calling himself the executor and making decisions about the deceased's bank accounts while paying those bills.

Sometimes an executor uses his or her own money to pay expenses before probate. This can happen when estate assets are frozen while waiting for probate. If this should happen, the executor is entitled to reimburse himself from estate funds once he or she has access the funds. If the executor makes those payments assuming that there are funds, and it turns out that there are none, the executor is going to be out of pocket with no way of reclaiming the loss.

Protecting estate assets even if the deceased didn't feel the need to

This new article by Laura West discusses an executor's obligation to protect estate assets by placing adequate insurance coverage, even if the deceased person didn't do that. An excellent tip for executors. Click here to read the article.

Do I put my full legal name on my Will?

You would think that when it comes to Will planning, deciding your own name wouldn't be an issue. But for some people it's more complicated than you might think. For example, many Williams are known as Will or Bill, many Elizabeths are known as Liz, Liza, Bess or Beth. Some have nicknames that don't seem to be a version of their names at all. Others (like me) are known by our middle names rather than our first names. It has to be clear that the Will was made by you and not by someone with a similar name.

You also have to look at the name you have used to register your major assets. For example, how is the title to your home registered? What about the shares of your company? How are they registered at the Corporate Registry? Ideally everything, including your Will, bears the same name so that there is no confusion during the probate process.

To be realistic, most of us aren't thinking of our Wills or about probate at the time we buy our homes. We likely registered the property in the name we use most. If you go by the name "Bill Jones" you probably registered your home that way. However, your birth certificate and driver's license likely say "William Jones" and maybe include a middle name as well.

Women who changed their surname on marriage may have assets still listed in their maiden names, such as real property or an interest in a family trust.

Some lawyers I know insist on always using the full legal name, and others don't. My preference has always been to use the full legal name on the Will, and to add "also known as" if the home or other major asset is registered in a different name. For example, a woman who was born "Margaret Susan Jones" but has always been known as "Peggy Sue Jones" would be described in her Will as "Margaret Susan Jones, also known as Peggy Sue Jones".

By doing this, you can avoid problems with proving that the person who passed away is the same person who wrote the Will, and is the same person who owned the asset. I don't suggest that you run out and change the registration of your assets. However, when doing your estate planning with your lawyer, make sure you let him or her know about assets registered in other variations of your name.

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.

Can an Attorney under a Power of Attorney sell an asset that is specifically left to someone in a Will?

An Attorney acting under an Enduring (Continuing) Power of Attorney has the responsibility of handling the legal and financial affairs for the person who named him or her as Attorney (the person giving the document is known as the donor). The Attorney must approach each and every transaction from the point of view of what is in the best interest of the donor.

Most Enduring Powers of Attorney give only general instructions for an Attorney. If the Attorney must sell some of the donor's assets so that the donor has something to live on, then the Attorney may choose which assets are to be sold, to whom they are to be sold, and at what price. The assets sold may or may not be mentioned in the donor's Will as being left to a specific beneficiary. The Attorney's responsibility is to the donor while the donor is alive, not to the person who might inherit the assets after the donor's death.

Having said that, an Attorney who knows the contents of the donor's Will should do his or her best to work with it, to avoid thwarting the donor's wishes. It would be in the donor's best interests for the Attorney not to mess up his or her plans.

Some Enduring Powers of Attorney contain specific instructions to avoid selling certain assets if at all possible. For example, if a donor has made a Will in which he leaves his lake cottage to his sister, the Enduring Power of Attorney could instruct the Attorney not to sell that lake cottage if there is anything else that could be sold instead. The Attorney must always follow directions in an Enduring Power of Attorney or risk personal liability.

This kind of specific direction is under-used, in my opinion. The only caveat I'd put on that is to suggest that the Enduring Power of Attorney should not have a direction not to sell the cottage under any circumstances. It would be better to phrase it as a direction not to sell the cottage except in dire financial need. That way, if the money from a sale of the cottage is the only money the donor has left and it is needed for living on, it can be used.

I've always been astonished by the number of people acting as Attorney who believe that their role is to do whatever they please with the donor's finances. I believe that people in general are becoming more aware of the limits of the Attorney's role, and it will eventually become harder for dishonest or misled Attorneys to continue to treat the donor's assets as their own. In the meantime, donors should take care to make the strongest document possible. This certainly does not mean a fill-in-the-blank document; it should be one that is personally tailored. Donors should consider putting in requirements for the Attorney to account periodically to other people in the family, or to advisors of the donor.

When the donor passes away, the authority of the Attorney ends. The Attorney must give the Executor of the estate a full financial accounting of everything he or she has done as Attorney. If an asset has been sold contrary to the instructions of the donor, this will be revealed to the executor.

How an estate freeze can help you minimize tax

Here is a good article from the Financial Post about small business owners and estate freeze. This is a really popular form of tax planning that many business owners find to be exactly what they need. Click here to read the article.

(Attached photo by Caroline Blumberg is also from that article).

Can I open an estate account if there is no Will?

If a person passes away without a valid Will, and there are assets and debts to be dealt with, someone must apply to the Court to be appointed as Adminstrator of the Estate. As you can imagine, it takes a while for the family to search for a Will, conclude there isn't one, see a lawyer and bring an application to court.

The weeks or months that pass between the deceased's death and the appointment of an Administrator can be frustrating for the person waiting for the Court Order. There will be pressure from creditors for bills to be paid. There will be a funeral that must be paid for. There may be money arriving from pensions or investments or employment. And of course there will be beneficiaries wanting the estate to move along more quickly.

This set of circumstances may lead the person waiting to be appointed as Administrator in a really difficult position. He or she may be willing and ready to work on the estate, but cannot do anything without the Court authority. If there was no Will and there has been no Grant of Administration, then the would-be Administrator has absolutely no legal authority to spend, deposit, invest or do anything else with the deceased's money.

This means that the Administrator could not open an estate account before being appointed by the Court by a Grant of Administration.

If there were a Will in place naming someone as executor, that would be a completely different story.

While waiting for a Grant of Administration to be issued by the Court, the deceased's next of kin who arranged the funeral may submit the funeral bill (and some other bills) directly to the bank where the deceased had an account. Assuming there is enough money in the deceased's account, the bank will pay the funeral bill directly, without the money ever passing through the hands of the would-be Administrator.

Once the Court has issued the Grant of Adminstration, the administrator can do everything an executor could do, including opening an estate account to deal with the deceased's money.

The basics of capital gains tax and the principal residence

As I've mentioned several times in previous blog posts, Canada doesn't currently have any direct death or inheritance federal taxes. But when a person passes away, his or her estate must pay income tax outstanding as well as capital gains tax.

Capital gains tax is the tax paid on the increase in value of certain assets known as capital property. The type of capital property dealt with by executors most often is real estate, though other assets such as the shares of a privately-owned corporation are also capital property.

Capital gains tax works like this. On the day you first acquire an asset, it has a value (called the adjusted cost base). If we are dealing with real estate, the value is normally the price you paid for the property. Over the time that you own that property, it gains in value. The longer you own it, the more likely that the value will increase. On the day you get rid of the asset - by selling it or transferring it under your Will when you die - it therefore has a greater value than it did when you got it. The difference between the value on the day you got it and the value on the day you dispose of it is known as the capital gain. You have to pay tax on one-half of that increase in value.

As an example, let's say Leia buys a house for $150,000. She owns it for many years and when she dies, her executor is going to sell the house. Now it's worth $550,000. The capital gain on the property is $400,000. Leia's estate has to pay tax on half, or $200,000. This doesn't mean that there is $200,000 in tax owing. It means that $200,000 is added to income for that year on the tax return, and the executor will use as many tax deductions, exemptions etc as he or she can to reduce how much tax must be paid.

If the property was worth less at the date of her death than it was when Leia acquired it, she would instead have a capital loss that she could apply to her return.

This is triggered by Leia's death because in law you are deemed to have sold everything you own one minute before you died. This means that even if your executor is not selling the house but is transferring it to a beneficiary, you are still deemed in law to have sold it at fair market value.

There are some exemptions to the rule about capital gains. The one that is important to most executors is that a person does not have to pay capital gains tax when he or she disposes of his or her principal residence. So if the house Leia owned was her principal residence, the $200,000 would not have to be added to her income.

On the other hand, if the house Leia owned was a summer cottage or a rental property, the tax would be owing.

Your principal residence doesn't necessarily have to be the house you live in most of the time. If you happen to own another house that is worth more, you could designate that more expensive one as your principal residence (don't do this without talking it over with your accountant first!).

A married couple only gets one principal residence between them.

Before taking any steps to avoid capital gains tax by setting up trusts or joint ownership or other ideas, you absolutely must speak with an accountant or estate planning specialist about your specific situation. Often people set up schemes to avoid one thing but they haven't looked at the whole tax picture, such as potential tax hits when a property is transferred from an individual to a trust or to joint owners. There may also be other tax solutions available that you hadn't thought of.

What are the executor's duties?

When I talk about executor's duties in this blog, I usually focus on one duty or one detail at a time. However, I think many executors out there would appreciate having an overview of their duties, either as a first-time checklist, or as a refresher of what they learned when they first began working on the estate. So here is a list of what an executor in Canada is supposed to do (note that an administrator appointed by the court has to do these things as well, though he or she cannot do them until they are appointed):

• make arrangements for the disposition of the deceased's remains, as well as any arrangements for funeral, memorial service, etc.


• find out the names and addresses of the beneficiaries and notify them of their interests in the estate.


• list the contents of any safety deposit box owned by the deceased


• make an inventory of all of the assets and debts of the deceased. Give all assets and liabilities a value as of the date of death.


• check that property is insured. Advise the insurance company of the death. Place additional insurance if necessary.


• secure any valuable estate property. Once smaller valuable items have been inventoried, put them somewhere safe where they can't be stolen or damaged.


• arrange for protection and supervision of vacant land and buildings.


• make arrangements for the proper management of estate assets. If there is a business or farm, make sure there is someone running it properly. Sell assets if appropriate.


• apply for a Grant of Probate or Grant of Administration.


• hire a lawyer to advise you on any complicated or unclear issues.


• apply for all pensions, death benefits, life insurance or any other benefits that are payable to the deceased's estate.


• if there is any jointly owned property, advise the other joint tenant of the deceased's death (notice that this list does not include you taking care of the transfer of title. The surviving joint tenant can do that).


• if there are any life insurance policies, RRSPs or any other assets that name a beneficiary other than the estate, notify that beneficiary of the deceased's death.


• pay all of the debts and expenses owed by the deceased and by the estate.


• decide whether or not to advertise for creditors and claimants. If you choose to advertise, do so in accordance with the law. If there are claims, check them out for legitimacy. Pay legitimate claims from the estate.


• determine how much tax the deceased owes. Have tax returns prepared and filed on time. Pay the taxes before paying beneficiaries. Get a Canada Revenue Agency tax clearance certificate.


• if there is a lawsuit against the estate, hire a lawyer and run the lawsuit on behalf of the estate.


• set up any trusts directed by the Will. Administer the trusts for the length of time and on the conditions set out in the Will.


• answer enquiries from residuary beneficiaries, creditors and other stakeholders.


• prepare executor's financial statements including a proposed compensation schedule and a proposed final distribution schedule.


• distribute the deceased's property in accordance with the Will or with intestacy law.

As you can see, many items on this list are going to break down into smaller lists with several items of their own, but this should give you a general idea of what you'll be expected to do as an executor.

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PLEASE NOTE: The maximum number of comments this system will allow is 200, and this post now has more than 200 comments. IF YOU POST ON THIS THREAD, I WILL NOT BE ABLE TO SEE OR RESPOND TO YOUR COMMENT. Please feel free to ask your question on any thread with less than 200 posts.

How does an executor assign values to estate assets?

A task for executors and administrators everywhere is preparing an inventory of assets and debts of the deceased person. This leads to questions about how the executor knows what values to give to items. Some executors make their lives more complicated by simply guessing values, or by giving artificially low values to try to keep fees lower.

When giving value to items and preparing the inventory, keep two things in mind. One is that it's part of a document that you will swear under oath to be true. So if it is found not to be true, you might be getting yourself into trouble. Second is the fact that an inventory of an estate is potentially seen and used not just by the executor but also by the judge, the lawyer, the accountant, the clerks at the Land Titles Office, the beneficiaries (and possibly their lawyers) and the creditors.

So, having been given the above warnings, how do you give value to assets? Some ideas for different types of assets are given here. You'll notice that having written back-up that proves you didn't just pull a number out of a hat is a good idea.

House, cottage - the best source of value is a property appraiser. If that is just not in the budget, also acceptable are estimates by realtors (get a few) and the appraised value given on the annual tax assessment notice.

Farmland - I recommend that you hire a property appraiser for valuation of farmland. Farm equipment should be valued by a farm equipment dealer.

Investments and accounts - for any accounts, investment portfolios, DRIPs, mutual funds, RRSPs, RRIFs, etc. you should rely on the statements provided by the financial institution. Remember that you always have to assign the value as of the date of death, so if possible get a statement dated that day. If not, get one as close to the date of death as possible and choose the balance that applied before the date of death.

Pension - for private pensions, contact the pension administrator (who should be identifiable by looking at stubs or letterhead in the deceased's records, or by calling the employer) and ask. In come circumstances, you may be given a "lump sum" value that would apply if an amount that would otherwise be paid monthly were to be taken all at once.

Life insurance - request a letter from the insurance company by quoting the policy number. Some policies pay only the face value, while others may have a calculation of face value + savings - loans.

Shares of publicly traded companies - you don't have to look up shares that are held in a portfolio as the financial institution or advisor will value the whole portfolio. But if there are shares held outside of a portfolio, you need to put date of death values on them. You can find these values online on sites for transfer agents or financial newspapers (e.g. Wall Street Journal, Globe & Mail). Make sure you get a historical balance that applied on the date of death.

Shares of private companies - depending on the size and complexity of the company, you may wish to bring in a professional business valuator to determine the value. Another good approach is to have the company's accountant value the shares based on the assets and liabilities of the company. If the business is going to be sold, you could contact a business broker.

Vehicles - your provincial motor association will let you know the book value of pretty much any vehicle. If this isn't available, ask for quotes from dealers and look in publications such as the Auto Trader to see what prices are being realized on similar vehicles.

Household goods - this can be the trickiest of all. If there is a collection of artwork, stamps, coins, hockey memorabilia, rare books, etc, have that appraised by someone in that field. If there is jewelry, have it appraised by a jeweler. If there are antiques, have them appraised by an antiques dealer or estate auctioneer. In most homes, however, the majority of household and personal goods are not commercially valuable. For those items, you can assign a more or less arbitrary number such as $1,000, as you are unlikely to obtain more than that for them if they were sold at an estate or garage sale.