How can an executor stay involved while the lawyer processes the paperwork?

Some executors or administrators of estates will hire a lawyer and ask that the lawyer take care of the entire estate from A to Z. More commonly though, executors and administrators want to be more involved than that. They want to keep costs low, keep the estate file moving along, and maintain control of the estate. Recently a reader in exactly that situation wrote to me, and I'm sharing the answer here.

"My father recently passed away and unfortunately does not have a will. I am trying to wrap my head around what exactly I need to do to get things straightened out. I've spoken to a lawyer and he has outlined what is required and I do need to give him some more information so that he can start the necessary process but if I am able to do some thing(s) myself, then by all means I am willing to tackle them."

There is a lot of opportunity for an executor (or, as in this case, an administrator) to take on tasks to keep legal costs low and to keep the estate file moving as efficiently as possible.

During the initial stage of the file, the lawyer will be gathering information to put together an inventory of assets and debts, as well as a list of beneficiaries and family members. You can supply a list of names, addresses and birth dates, and call around to family members to come up with information that might be missing.

You can also go through your father's house to find paperwork such as bank statements, investment statements, insurance policies, title deeds, property tax assessments, pink slips for vehicles, credit cards and bills of sale. All of these items contain vital information such as account numbers that will save the lawyer a lot of time. You can save even more time and money if you are able to go to the banks yourself to get updated statements (that isn't always possible for administrators, but it is for executors).

If there is a house, cabin or land to be sold or transferred to a beneficiary, you can save time and money by arranging to get appraisals. I recommend that you get at least two for each piece of property.

Once the lawyer interprets the law for you so that you know who is going to be a beneficiary under the intestacy laws of your province, you should notify them of what's going on. Once you have the grant of administration, you may wish to set up a day for everyone to get together and divide up the personal and household items.

Your lawyer may ask you whether you want to open an executor/administrator's bank account or have him run everything through his trust account. You can do it either way, but it's cheaper to do this yourself, unless there are beneficiaries who don't trust you to handle the funds. As an administrator (rather than executor) you won't be able to open the bank account until the court has issued you the letters of administration.

When it comes time to prepare an accounting to the beneficiaries, the lawyer should draft the Release documents. But you can save a lot of money if you prepare the statements yourself. Please understand though that you have to prepare a proper accounting that deals with all payments into the estate and payments out. If you prepare something inadequate or misleading and it ends up in court, you won't have saved any money or any time.

If you would like more of a step-by-step guide, pick up my book called Alberta Probate and Administration Kit. Even though the majority of the forms in it are for Alberta, there are also executor's accounting forms that can be used anywhere in Canada, and plenty of information, tips and ideas that apply to executors and administrators across the country.

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 debts should be listed on the estate inventory?

Executors and estate administrators are required to complete an inventory of the estate which includes a detailed listing of assets and debts. I'm frequently asked by executors for help or information about which debts should be included. In this post I'm going to provide some general rules about what should be included and what should not. While forms and details will vary from province to province, the information given here is general.

The first rule of including debts is to include all debts that existed at the date the person died. All assets and debts must reflect the date of death value. A mistake that many executors make is to leave out debts that were paid shortly after death. For example, when the deceased died, he may have owed $300 on his Visa credit card. If his executor paid the bill a month later, the Visa bill still needs to be included in the inventory. Yes it was paid later, but that is irrelevant to the inventory, which is a snapshot of the financial picture on the date of death.

Funeral expenses are always included. If they total more than a few thousand dollars, it would be a good idea to list the components of the funeral bill (services, casket, plot, flowers etc) separately. In some jurisdictions, there is a dollar limit over which you must break down the components individually.

You must include any outstanding tax liability, including income tax and capital gains tax. This might apply to the last year of the deceased's life, or previous years in which a return wasn't filed, or to the estate itself. Tax debts should be identified by the calendar year to which they apply. If you don't know exactly how much tax is owing, you should include an estimate, preferably an estimate supplied by an accountant.

When it comes to general debts, you are required to include all legally enforceable debts. These frequently include (this isn't an exhaustive list - there are many more possible debts):
- mortgage (when it's not life insured)
- condo fees that were payable but unpaid at the time of death
- rent that was payable but unpaid at the time of death
- unpaid property tax on real estate owned by the deceased
- credit card balances
- the last phone, utilities and other bills for the deceased
- loans and lines of credit, both secured and unsecured
- amounts owing under personal contracts (such as caregivers or those providing household or garden help)
- child support payable under court order, and usually payable under separation agreement though this can be altered by the wording of the agreement

Don't forget to include accrued interest, if applicable.

Generally you would not include debts that were owed by the deceased jointly with another person, when that other person survives. Having said that, make sure you check the contract or other document that created the debt.

Don't include debts that are life insured, as the life insurance cancels the debt at the moment of death.

Remember that any debts having to do with real estate (land or mineral titles) must be documented in writing to be valid.

Depending on the situation, an executor might not be sure that he has accounted for all of the debts. One way of protecting himself from legal liability in this situation is to publish a notice in the newspaper advertising for creditors of the deceased. There are detailed rules about how and where to publish these notices if the executor chooses to go this route.

One final general rule - document everything you can. Don't guess or estimate if there is any way to establish the exact value of a debt. Executors are often called upon to show where they got certain numbers, so keep all items pertaining to debts.

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.

To which assets does probate apply?

I'm often asked by would-be executors to clarify which of the deceased's assets are covered by a probate order and which are not. It would be easy, I suppose, if the answer were simply "all of them", but that's not the case.  The general rule is that the probate will cover everything that the deceased owns, with some exceptions.

One exception is an asset that is owned jointly with another person. Be careful here. Note that the fact that there are two or more names on an asset doesn't necessarily mean that it is jointly owned. When I mention "owned jointly" here, I am talking about true joint ownership with a right of survivorship. This is a legal relationship that is not proved by the fact that multiple names appear, as it is possible for those multiple owners to have other legal arrangements besides joint ownership.

Let's look at an example. If a husband and wife own a house together, they normally buy it in joint ownership with a right of survivorship. This is because the intention is that the house is the family home and when one of them dies, the surviving spouse will continue to own the house and live in it. If the husband, on the other hand, wants to buy a vacation property with his brother, they might decide to hold it as tenants in common. This is because each of them wants to be able to sell their half of the property, and to have their half of the property go to their wife or children should the husband pass away.

How do you know whether the deceased's asset with more than one owner was owned as joint owners or as tenants in common? Read the paperwork. If it's real estate or a mineral title, read the title. If it's an account or investment, read the name on the statement and if that doesn't tell you, call the bank or investment counsellor and ask.

So if you are an executor preparing an inventory of an estate, you do not include assets that were jointly owned with someone else. You do, however, include the deceased's half of an asset that was owned as tenants in common with someone else.

Another exception to the "include everything" rule is any asset with a named beneficiary. The assets you will see most often are RRSPs, RRIFs, pensions and life insurance policies. For example, if a deceased person owned a life insurance policy that he left directly to his daughter, you would not include that policy in the inventory because the money will go right to the daughter and never go into the estate.

An important aside note for estates in which there are RRSPs or RRIFs that are being left to an individual who is NOT the deceased's spouse: the estate has to pay the tax on these assets even though the assets don't fall into the estate. You have to include the tax as a debt of the estate on the inventory.

Are you ready for the exceptions to the exception? You DO include the named beneficiary asset if the asset says it is to go to "the estate" or "my estate". And you DO include the asset if the person named has already died (that would be the daughter in the example above).

Another exception is the RESP. That asset does name a person for whom the money is being held, but that person is not a true beneficiary. By this I mean that on the death of the deceased who owned an RESP, say for his son, the money does not go to the son. It stays in the estate and you do have to list it on the inventory as an asset.

If the deceased was part owner of a business, he or she might have a shareholder's agreement or buy-sell agreement that says the company will buy back the deceased's shares. You do still include those shares on the inventory of the deceased's estate.

As an executor, you have to do a fair amount of digging to find out everything you need to prepare the inventory, which is an important part of your application to the court to obtain probate. I've simplified the rules here as much as possible, but it's not always easy to apply the rules to individual assets on any given estate. If it's just too much for you, remember that you can always ask a lawyer or a trust company for help with the estate.

Should an executor advertise for creditors and claimants?

Creditors are people to whom the deceased owed money. Claimants are people who say that the deceased owed them money, and who may or may not be correct about that.

When an executor begins the administration of an estate, he or she has to prepare an inventory of all of the deceased's assets and debts. Click here to read my recent post on preparing an inventory. Most of the creditors will be listed on the inventory because the executor will have found paperwork that proves the amount of the debt, the name of the creditor and the nature of the debt, such as credit card bills, and statements from the bank showing the balance owing on a mortgage or line of credit.

But what if there are creditors that the executor doesn't know about? For example, the deceased might have hired a gardener to clear away brush and small trees for $3,000, but did not sign a contract. Or, the deceased might have borrowed money from a friend. Perhaps the deceased had a business as a sole proprietor and didn't keep very careful records, overlooking payment to a supplier. How would the executor know to include any of these debts in the inventory?

The executor finds out about these debts by placing an advertisement in the Legal Notices section of the newspaper in the area where the deceased lived. It advises readers that the deceased has passed away, gives an address where the executor can be reached, and gives a deadline (usually 30 days) for the claimant to give the details of the claim to the executor.

In most jurisdictions, placing this advertisement is optional. An executor can decide whether or not there is any chance there could be an unpaid creditor or claimant out there.

The debts of an estate always have to be paid in full before beneficiaries can receive their shares of the estate. This means that if an executor finds out about a debt after he has paid out the beneficiaries, he may be on the hook to pay it personally. In every estate, the executor must assess the risk of that happening. For example, if the executor is acting on his mother's estate, after having acted as attorney for his mother under a Power of Attorney for the previous five years, he may feel confident that there are no unpaid bills.

If the executor does place the advertisement in the paper, he or she not only reduces the chance of any legitimate creditors being overlooked, but has also shown shown that he/she took extra steps to give the unpaid claimants a reasonable opportunity to make themselves known.

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.

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.

Should I give my executor a copy of my Will?

Although there is never one answer that is right for everyone all the time, there is one thing that is always a bad idea. That is, not letting your executor know that he or she is your executor.

You have some options. You could choose to give your executor a copy of it. On the other hand, you could choose not to give your executor a copy but simply to let your executor know that he or she has been appointed under your Will.

What are your concerns in letting your executor have a copy of the Will? Most clients cite privacy as the main issue. They say they don't really want their executors to know personal, financial and business information until it's necessary for them to have it (i.e. when the client passes away). Perhaps this could be addressed by keeping financial papers only with the original Will, which won't be handled by the executor until after the death of the testator.

Another consideration for some executors arises when one of their children is the executor. They don't necessarily want any of their children to know their plans, because they feel that might cause a problem should they change their plans later. They feel they might have given rise to certain expectations that could end up being disappointed.

Many married couples name each other as first choice for executor, with one or more of the children being appointed as an alternate executor. They often tell the child who is the alternate executor that he or she has been appointed, and that the other parent has a copy of the Will.

Whether or not you give your executor a copy of the Will, you should retain control of the original and let your executor know where it is kept. It is essential that your executor knows where to get the original as it is needed for the administration of your estate. If your executor has to search for it, this will lead to unneccessary delays, and of course the possibility that your executor won't be able to find it. Usually Wills are kept in the bank safety deposit box, the lawyer's office or in a safe at home.

If you've ever prepared an inventory of your assets and debts, perhaps as part of your Will-planning with your lawyer, or w,perhaps ith your financial advisor or pre-paid funeral services, consider keeping that inventory with your Will. This is a great way to help your executor administer your estate, because your executor will know certain important information, such as where you bank and where you hold your insurance policies.