An executor is an individual or institution that is named in a will whose duty is to distribute estate assets according to the testator’s wishes. Acting as an executor can be stressful and time consuming so it is a good idea for a testator to make his or her choice wisely, and for someone who is asked to be an executor to investigate and review exactly what the job entails. Often the executor is the spouse of the deceased. That tends to make the role somewhat more straightforward than it would be for a family member, friend or other acquaintance. In any event, this article covers the duties and obligations of an executor. Arranging the funeral In addition to arranging the burial or cremation and funeral services according to the deceased’s wishes the executor would be responsible in ensuring that family, friends and interested parties (especially employer) have been notified about the death. Family members will most likely assist in this including the posting of the obituary. If there are sufficient funds in the bank account of the deceased the bank will usually release funds to cover the cost of the funeral. Preparing for the task An executor may wish to consider hiring a lawyer to advise and assist. The lawyer will assist with the paper work and ensure that all the executor’s obligations are discharged properly. Accounting and legal fees related to the settling of an estate are paid by the estate. The first group of tasks that a trustee must complete are:
- Locating the will and all relevant documents. It is important to verify that the will in question is in fact the last will of the deceased;
- Locating and itemizing all accounts held in the name of the deceased as well as the balances of each;
- Open a bank account in the name of the estate to pay the estate’s debts;
- Locate and list the names, addresses and dates of birth of all the beneficiaries’ names in the will or other estate documents;
- Notify all beneficiaries of their interests. This includes charities named in the will;
- Locate and verify all life insurance policies on the life of the deceased. Any named beneficiaries of those policies will need to officially notify the insurance companies of the death of the insured. This also applies to any living benefit policies such as disability income and critical illness policies. Often these policies have an additional benefit that is paid at death otherwise you want to ensure that further premiums cease to be paid.
Consider the financial needs of the beneficiaries
- Often immediate family members (i.e. spouse and dependent children) will require immediate funds for living expenses etc. Institutions that held deposit accounts for the deceased should be contacted to determine if any funds can be made immediately available for this purpose;
- Life insurance policies or accounts with a named beneficiary (including RSP’s TFSA’s RRIF’s etc) are sources of funds that can be distributed soon after death. For this reason make sure that death certificates are received from the attending physician or the funeral director. Copies of birth certificates showing date and place of birth may be required as well;
- Any employer should be contacted to determine if the deceased had group insurance or union benefits payable to the estate or designated beneficiaries;
- Application should be made for any government benefits that may be available such as Canada Pension Plan for death and survivor benefits;
- Cancel all credit cards and subscriptions (including online subscriptions).
Protect the estate assets and pay the debts
- Prepare a listing of all assets and debts. If there is a safety deposit box, open it and make a list of all the contents;
- Some assets may require valuation and these assets often include stocks and bonds, non-registered mutual funds, registered plans, business or farm assets and personal belongings;
- Diligently try to locate all creditors and identify and verify any debts to family members as well as loans made to family members;
- Take possession, in your role as executor, of all cash, jewelry and other valuables. Make sure sufficient insurance on these assets is in place to protect against loss. This also applies to all motor vehicles, buildings, recreational property and any other assets of value that should be insured. The common-sense approach would be for the executor to exhibit the same degree of care and attention that the deceased would have during his or her lifetime;
- Set aside funds to cover the valid debts of the deceased including all taxes that may be owing. Also include a sum to cover your compensation, if applicable, as executor;
- File the deceased’s final income tax return including any returns that may be required from the estate. Often, the deceased’s or another accountant can perform this task and the fees for this are paid for by the estate;
- Once the returns have been filed and taxes owing paid, it is necessary to obtain an authorization form from the Canada Revenue Agency confirming all taxes have been paid before assets can be distributed to the heirs;
- REMEMBER – the executor can be personally liable if any distribution of the estate is made before the deceased’s debts, including income taxes, have been paid.
Prepare and submit probate documents
- Probate documents must be submitted to court in order to obtain probate. Probating the will allows the executor to handle the estate of the deceased. Fees will be assessed by the court based on a provincial schedule.
- Some assets don’t require probate. These include property held in joint tenancy.
Although it may seem like it, this is not an exhaustive list of the duties of an executor. Depending on the circumstances there may be more or less but the list above covers off the main duties and responsibilities of those who serve in the role as an executor. Like most serious endeavors, it is recommended that you always obtain professional advice to ensure that your obligations are discharged properly.
The 2018 Ontario budget features a number of new measures and billions of dollars of enhanced spending across the spectrum, as announced by the province’s Finance Minister, Charles Sousa. Read on for some of the key proposals.
A new sliding scale for personal income tax will be introduced, with seven personal income tax rates which will be applied directly to taxable income, in an attempt to eliminate Ontario’s surtax. The province estimates that approximately 680,000 will pay less tax as a result.
Access to further education will be income linked, with those families with an income of less than $90,000 per year receiving free tuition and families with an income of between $90,000 and $175,00 per year receiving financial aid for tuition costs.
Free Pre-School Child Care
Effective in the Fall of 2020, children aged two-and-a-half until they are eligible for kindergarten can receive free licensed child care.
New Ontario Drug and Dental Program
For those without workplace benefits or not covered by OHIP+, this program offers up to 4.1 million Ontarians a benefit that pays up to 80% of expense up to a cap of $400 for a single person, up to $600 for a couple and $50 per child in a family with two children, regardless of their income.
Free Prescription Drugs
The budget announces the introduction of free prescription drugs for those aged 65 or older, resulting in an average of $240 per year in savings per senior.
Charitable Donation Tax Credit
The non-refundable Ontario Charitable Donation Tax Credit will be tweaked to increase the top rate, remaining at 5.05% for the first $200 but increasing to 17.5% for anything above $200.
Seniors’ Healthy Home Program
$750 is offered to eligible households with seniors of 75 years of age or older to help them to care for and maintain their residence.
R&D Tax Credit
The budget introduces a non-refundable tax credit of 3.5% on eligible costs relating to R&D, or an enhanced rate of 5.5% for eligible expenditures of $1 million plus. Note that this enhanced rate would not be payable to corporations where eligible R&D expenditures in the current tax year are less than 90% of eligible R&D expenditures in the tax year before.
Innovation Tax Credit
The existing Ontario Innovation Tax Credit will see changes to its credit rate in the following way:
· If a company has a ratio of R&D expenditures to gross revenues of 10% or less, they will continue to receive the 8% credit.
· If their ratio is between 10% and 20%, they will receive an enhanced credit rate of between 8-12%, calculated on a straight line basis.
· If their ratio is 20% or more, they will receive an enhanced credit rate of 12%.
Ontario Interactive Digital Media Tax Credit
Eligibility to receive this tax credit will be broadened to include film and television websites.
Working with a professional to help you to make sense of your finances can be a wise move, but for this relationship to work effectively it is important that you understand what to expect from your financial advisor.
What can your financial advisor help you with?
- Defining your financial goals and creating a step by step plan or strategy to achieve them.
- Planning for the future, including for retirement, future education or housing needs.
- Choosing the mix of investments and assets that suit your goals, lifestyle, time horizon and appetite for risk.
- Building a solid estate for your family to inherit in the future.
- Choosing the most tax-efficient methods of saving and investing.
What should your financial advisor inform you of?
- The range of services that they offer and how much and by which method you will compensate them.
- Your mutual responsibilities and obligations towards each other.
- What the planning process will look like and the documents that they will provide you with.
What will your financial advisor need from you or need to ask you about?
- What your financial goals are.
- What your personal circumstances – such as your marital status, any dependents, your job, earnings and tax situation.
- Any investments or assets that you currently have – such as registered accounts, workplace pensions, property etc.
- Your appetite for risk and investment preferences.
- Information on your income and also your outgoings, including debts such as mortgages, loans or credit cards.
- Whether or not you have a will, and its contents.
- Your estate and inheritance planning situation.
If you’re looking to achieve your financial goals, talk to us. We can help.
Get in Touch
Innovative and top performing Insurance Tech Nerd of Financial Tech Tools with over 10 years experience in the financial services industry.