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 Ed@EstateTherapy.com.

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

Email

Notified � Delivered �

2. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered �

3. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered �

172 EXECUTOR KUNG FU

4. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered �

5. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered �

6. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered �

Executor Kung Fu Tools 173

Will Notes

Cash Bequests Under the Will

1. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

2. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

3. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

174 EXECUTOR KUNG FU

4. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

5. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

6. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

Executor Kung Fu Tools 175

Will Notes

Beneficiaries of the Estate

1. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

2. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

3. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

176 EXECUTOR KUNG FU

4. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

5. Name

Address

Relation

Item

Tel Fax

Email

Notified � Delivered � Receipt �

6. Name

Address

Relation

Item

Tel Fax

Email

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

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For where your treasure is,

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Matthew 6:21

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Estate Planning and Estate to the Heart: How

to Plan Wills and Estates for Your Loved Ones.

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cations as an expert in estates and is a

frequent guest on television and radio. As a

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wills.

Ed is a member of the Ontario Law Society of Upper Canada,

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and Estate Practitioners (STEP), Canadian Association of Professional

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Other EstateTherapy™Products

Estate to the Heart:

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Choosing Executors:

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About Wills:

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