While it is often the case that an Estate Trustee may be very familiar with the deceased’s financial affairs, it also may be the case that the person appointed or seeking to be appointed as an Estate Trustee may be a distant relative or someone who does not possess an intimate understanding of the deceased’s assets.
This article provides a basic list of items that an Estate Trustee may look into in navigating their role as an Estate Trustee:
1. Locate Assets
A general recommendation would be to start with a search at the deceased’s place of residence. This includes accessing deceased’s personal papers, financial records and tax filings. Common sense suggests that for an individual who maintained a strong online presence, the electronic devices, websites and platforms would need to be explored and reviewed. This will provide information about various accounts and assets the deceased owned. Note that if the deceased did not maintain up to date passwords log, there can be difficulties in accessing websites and information required for the administration to continue.
Once this search is complete, it is necessary to look outside the deceased’s residence. Even when an estate trustee claims full knowledge of the deceased’s financial affairs, it is a good idea to make inquiries with banks and other institutions in the area where the deceased lived. The inquiry would relate to whether the deceased had any personal or investment accounts or any other assets with the institution including any safety deposit boxes. Local brokerage firms should be written to if the deceased had investment assets.
2. Secure Assets
Was cash found at the deceased’s premises? Did the deceased leave behind valuable items such as jewelry that needs to be secured? If so, such items should be gathered and deposited in a safe place. Is the property a rental property? If so, arrangement must be made to collect rent and take over other matters related to running the same.
The Estate Trustee should complete a thorough inventory of all the assets and include things considered to be personal items of the deceased. Items such as jewelry and other household goods may require a valuation and may require more attention and should be held for safekeeping prior to any distribution to beneficiaries. Written records, photo and video evidence of contents will help with any claims from beneficiaries.
For certain items such as cash or payments collected, the Estate Trustee should inquire whether a bank will allow an Estate Trustee to deposit into an account opened for the estate. If the deceased owned real estate, the property must be secured and insured. If the property is vacant, the insurance company should be notified and coverage should be arranged accordingly. The message is to treat the property as if it was your own and take care of the assets in your possession. If a beneficiary is occupying the property, a clear understanding should exist in terms of that individual’s repair and rent obligations, if any. Speak to a lawyer for additional input. Key is to avoid disputes and conflict if there are additional beneficiaries who may feel unfairly treated.
Now that you have a complete list of assets the deceased owned and they are secured, it is important to have them valued. This will be necessary for both tax filings under the Income Tax Act along with detailed reporting requirements imposed on personal representatives in order to file an Estate Information Return. This may apply to stocks and bonds, real estate (personal) or investment use, shares in corporations along with personal items.
The list above is just a starting point for administration of an estate. It is important to protect yourself from liability and ensure that assets are being safeguarded and accounted for in the right manner. Our office provides services to executors, administrators, estate trustees and guides them through this process. Contact your Estate Administration Expert for assistance.
What is the Estate?
When a person passes away, all assets that the individual leaves behind may be referred to as that person’s “estate”. Generally, this could include bank accounts, investments, cash, jewelry, cars, business interests and the like. Sometimes the deceased owns a fractional interest in the asset (such as a part of a company) in which case, the fraction would also be considered a part of their estate.
Upon passing of such individual, the main question that arises is whether there exists a Will or not. In the event that the deceased had a Last Will and Testament, the terms of the Will must be reviewed in order to determine, along with various other items, who would manage the estate and who are the intended beneficiaries.
In the event that there is no Will, Ontario law known as the Succession Law Reform Act sets out the rules and priorities in order to determine who can be a beneficiary of the estate.
During the estate administration process, the Estate Trustee often retains a Lawyer to assist with the process. It is to be noted that there exists a clear distinction between the role of the Lawyer and the Estate Trustee as it is the Estate Trustee who is responsible for decision-making related to the estate, even where a Lawyer has been retained for assistance.
Other things that need to be considered and are often discussed during the initial stages (in no particular order) of the administration are:
- Whether there are particular “wishes” in the Will related to the funeral and or organ donations?
- Are there any U.S. tax consequences as of death (where the deceased had U.S. assets and or citizenship or other connection).
- Consider if there may be any support obligations (stepchildren)?
- Are there non-resident beneficiaries?
- Do other documents (separation or shareholders agreements or orders) exist that need to be reviewed?
- Gather details of the assets including, but not limited to, RRSPs, RRIFs, GICs, Tax returns, insurance policies etc.
- Provide notice of death to family members or others who have an interest in the estate (such as those who have a business interest).
- Identify the deceased’s advisors such as lawyer, accountant, financial planner, who may possess important information.
- Consider and advise of any conflicts (beneficiary disputes; sibling rivalry) that exist with respect to the estate and the terms of the Will.
- Understand and be aware of the entitlements under the Family Law Act along with the limitation period.
- Understand what the role of the Estate Trustee involves, the commitment, the liability that exists along with a complete understanding of their duties and responsibilities prior to acting.
- Realize that prior to acting, an individual may be able to renounce his or her office prior to taking action in relation to the estate.
- Understand the level of diligence required and the need for record-keeping and accounting with respect to the estate.
- Secure and preserve assets including insuring over assets depending on the situation.
- In light of recent case law, consider whether there any joint assets that give rise to a resulting trust?
- Locate and obtain listing of safety deposit boxes.
- Understand the particulars of what constitutes a Graduated Rate Estate.
- Consider whether there are any potential dependent claims that could arise under the Succession Law Reform Act
- Consider whether there are beneficiaries that may be missing and need to be located?
- If necessary, understand the priority that arises under the Succession Law Reform Act for an intestate estate (without a Will).
- Gain access to information about the liabilities of the estate and arrange for payments.
- Close accounts, cards, and advise the appropriate parties and institutions of death.
- Consider whether certain assets need to be insured over.
- Understand that accounting, investment and tax advisors may also need to be retained.
- Know details and amount of the “probate” tax payable
- Be aware of the estate information return requirements of the estate – due within 90 days of issuance of the Certificate of Appointment of Estate Trustee
And many more…
There are various scenarios and steps that may arise as a consequence of death. The estate administration process is a complex process involving an understanding of the role of an Estate Trustee as well as the limitations and liability that are associated. Please be sure to contact an estate lawyer to gain a better understanding in relation to your particular situation.
The above serves as general information and is not intended to be thorough in nature and is not to be relied upon as legal advice.Read More