DUTIES OF AN EXECUTOR
Including Will and Estate Administrator or Personal Representative
Duties of an Executor
The deceased's Will is the legally binding expression of that person's wishes for the distribution of his or her property. Your responsibility as executor or executrix is to administer the estate and carry out those wishes.
As executor/executrix, you control all aspects of the estate's administration. This extends from identifying and protecting the deceased's assets, to distributing those assets to the beneficiaries. As executor/executrix, you are legally accountable to the beneficiaries.
Executor Duties - A helpful reference is the 'Checklist' of principal tasks.
1. Immediate issues - There are many things that require your immediate attention. These include:
2. Protecting the estate - Your role includes identifying the deceased's assets and protecting them until final distribution. For example, you may need to:
3. Valuing the estate - Once the estate has been identified, it needs to be valued. This may include:
4. Tax issues - While neither the federal nor the provincial government imposes direct death duties, there are several tax issues that arise when a person dies. As a result, you will need to:
5. Administration and distribution - In addition, you will be required to clear the estate and distribute the assets. This may include:
AN OVERVIEW OF AN ESTATE EXECUTOR
The choice of one or more persons or a trust company to be an Executor of an Estate is an important decision to be made, as the Executor is responsible for the administration of the Estate.
The Executor has many duties which include arranging the burial of the deceased; collecting the Estate’s assets; converting the Estate’s assets into money to the extent necessary; settling the Estate’s debts; and satisfying bequests and legacies.
In addition, the Executor must distribute the residue of the Estate to persons entitled to it. In carrying out the Executor’s duties, the Executor has to deal with many potential problems and conflicting interests.
Is the Executor Entitled to Collect a Fee?
In Ontario, the entitlement of an Executor to compensation for his or her efforts on behalf of the Estate is statutory in nature. Specifically, Section 61(1) of the Trustee Act provides that, “A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.”
Certain criteria have been applied in many Ontario cases when fixing the compensation of Executors. In Re Toronto General Trust and Ontario Central Railway, the court considered the following five factors in setting the Executor’s compensation:
Although the above factors provide some guidance in terms of what criteria should govern the calculation of Executor’s fees, they do not provide a clear method for arriving at a value for the Executor’s compensation.
Hence, in an effort to develop some consistency and predictability in the determination of Executor’s compensation, a court recognized guideline has evolved.
It must be recognized that this is only a guideline and is subject to increase or decrease in appropriate circumstances and may also be disregarded altogether in favour of another approach.
The guideline applies percentages to various categories of the Estate receipts and payments and is expressed as follows:
Despite the guidelines, courts still require evidence to justify the quantum of compensation claimed by the Executor. This evidence can include time dockets or estimated time logs.
In a number of cases, courts have awarded an additional allowance to the Executor where the administration of the Estate was made more difficult than usual by reason of conflicting interests among the beneficiaries; where the Estate has involved the management and operation of a company; or where litigation was initiated by the Executor on behalf of the Estate. On the other hand, courts have reduced the Executor’s compensation from the guideline amount in cases where a large Estate which nonetheless was simple to administer was involved or where specific assets were being transferred.
Can a Will Fix the Executor’s Compensation?
The testator can avoid the guideline by providing in the Will the amount that he or she wishes the Executor to receive in compensation. Subsection 61(5) of the Trustee Act provides that “[t]he . . . Will . . . may fix the allowance to be made to an Executor”.
Who Pays the Executor?
In administering the Estate, the Executor will pay out of the Estate any debts of the Estate, as well as funeral and testamentary expenses such as succession duties, estate, gift, inheritance and death taxes. Thereafter, the Executor will distribute the specific gifts. It is from the remaining residue that the Executor is compensated, thereby reducing the residue of the Estate. Therefore, the amount that is left to the residuary beneficiaries will be decreased by the amount of the Executor’s compensation.
If a beneficiary is dissatisfied with the amount that an Executor claims as compensation, the law provides for a fairly summary procedure called ”a passing of accounts” for settling the issue. Each person affected has a right to make his or her views known and to be represented by an estate lawyer at the passing of accounts.