The Importance of the Executor25-Apr-17
In the tragic event of the death of an individual, where that individual has made a Will, the executor named under that Will plays an essential role in then administering the estate of the deceased. Those duties are now largely outlined by legislation, including the Trustee Act. In addition, many of the duties of the executor (sometimes referred to as a “personal representative”) are laid out in the Estate Administration Act (the “Act”). Some of those important duties include:
- Making funeral arrangements.
- Obtaining copies of the death certificate and ensuring that the Will is valid.
- Identifying the estate’s assets and liabilities by:
- Making a full determination on the value and liabilities associated with the estate of the deceased.
- Applying for benefits payable to the estate.
- Creating and maintaining records for the estate.
- Communicating with the beneficiaries regarding the distribution and management of the estate.
- Retaining a lawyer to advise about the administration of the estate.
- Satisfying the debts and obligations of the estate (including dealing with any outstanding tax liability issues).
- Accounting for the administration of the estate (including notifying all beneficiaries as to their interests in the estate).
Choosing Your Executor
When making your Will and deciding who will act as your executor, think carefully about who you trust to carry out the list of duties set out in the Act. Choose an executor who is competent, has strong attention to detail, and will not become overwhelmed by the tasks involved in administering your estate.
You may ask, given the long list of duties set out in the Act, what happens if my executor makes a mistake when administering my estate? In the 2009 Alberta Queen’s Bench case of Bibby Estate (Re), Justice Graesser opined that courts should not be quick to punish executors who attempt to carry out their duties honestly and in good faith. Courts recognize that, more often than not, executors are not trained professionals and mistakes happen. That being said, it is quite common for executors to retain legal counsel for estate administration purposes. Legal counsel can make the court applications for probate (the process used to confirm that a Will is legally valid), compile an accounting of the estate’s assets and account to the beneficiaries, work with banks when liquidating assets, report to the beneficiaries (which protects the executor), and obtain releases from beneficiaries to ensure that the process is transparent.
Given all this, it is very important that before appointing an executor, you have a discussion with that person to determine if they are willing to take on the responsibility. No one can be forced to act as an executor if he or she has not yet dealt with the assets of the estate (e.g. paid off debts). Once you agree to be an executor, you are legally bound to complete the task, and can only be relieved of your duties by way of court order.
Can My Executor be Compensated?
Yes, executors can receive compensation from the estate for their efforts. Wills should make specific provision for whether or not an executor is to be compensated. If a Will is silent on compensation, and an executor expends a great deal of time and energy administering an estate, a claim for executor compensation may be initiated.
In the 2017 Alberta Queen’s Bench case of Re Berry (“Berry”), Justice Veit looked at the duties of the executor as laid out in the Act. In Berry, the personal representatives of the estate had requested compensation of 3.5% of the gross capital value of the estate. The respondent argued that the court should reduce the amount of compensation owed on the basis of fairness and because the personal representatives had obtained the help of a lawyer. The respondent also argued that the personal representatives were not owed the amount of compensation that they were claiming.
When determining whether or not to approve the executor’s claim for compensation, Justice Veit reviewed the following factors:
- The size of the estate.
- The care and responsibility required by the personal representative to administer the estate.
- The time required to perform the duties (in this case, the personal representative spent nearly four years administering the estate).
- The skill, ability, and thoughtfulness displayed by the personal representative.
- The success of the administration.
- Any unusual difficulties.
- The need to instruct on litigation.
Justice Veit concluded that although the claim for compensation was on the higher end of what is typically approved, the amount of compensation was fair and reasonable when the totality of the estate administration process was considered.
Choosing an executor is not a decision to be taken lightly. A great deal of time and effort must be expended when administering an estate. Before appointing your executor, have a discussion with that person to ensure they are willing to take on the challenge and do the very best for your estate. As for those individuals asked to take on the role of executor, clearly this is a significant request which carries many obligations, but it is also a clear sign of the trust and reliance placed on you by the person making the request. This is an important, and deeply personal, decision which should also not be taken lightly.
The professionals of the McLennan Ross LLP Wills & Estates Practice Group can assist executors, and individuals preparing their Wills, with all of these important issues and decisions.