Estate Trustee/Executor

  • What is the difference between an estate trustee and an executor?
    • “Estate trustee,” “executor,” and “personal representative” are all different names for the same role. “Executor” used to be the legal term used to describe the person in charge of administering someone’s estate after death. It has since been replaced by “estate trustee,” although “executor” is still used.
  • How do I become an estate trustee?
    • Most often, the estate trustee (or estate trustees, if there is more than one) is named in a will. The will gives the named estate trustee the power to administer the deceased’s estate immediately on death.

      In most cases, the estate trustee will still have to apply to court to get a “certificate of appointment of estate trustee.” This certificate ensures that the estate trustee’s authority to administer the estate is recognized by third parties (for example, a certificate of appointment of estate trustee is usually needed before the estate trustee can sell land owned by the deceased).

      If the will does not name an estate trustee, or the named estate trustee is unable or unwilling to act, then, with the consent of the majority of the beneficiaries of the estate, someone else may step in to fill the role.

      If there is no will, the law creates a hierarchy of people who are entitled to act as estate trustee. The person with the first right to act as estate trustee is the spouse of the deceased, followed by adult children, then any other adult descendants, then the parents of the deceased, then the adult siblings.

  • Do I have to be an estate trustee?
    • No. If you are named in a will but do not wish to act as estate trustee or you have priority to act as estate trustee where there is no will, you can “renounce” (or give up) the position. You will likely be asked to sign a form saying that you renounce the position so that someone else may be appointed in your place.
  • Who should I pick to be the estate trustee of my estate?
    • An estate trustee must be at least 18 years of age and of sound mind. The trustee can either be an individual or a corporate trustee, such as a bank. You do not have to choose one of the beneficiaries of your estate to be the estate trustee – the estate trustee does not have to inherit under your will.

      Other things you may consider when choosing your estate trustee include whether the intended estate trustee is familiar with your assets, family members, and intended beneficiaries; whether your intended estate trustee will be comfortable managing the financial aspects of the administration of your estate; whether the intended estate trustee is likely to outlive you; and whether the intended estate trustee lives near you.

      You may also wish to consider asking your intended estate trustee whether they would be willing to act before naming that person in your will.

  • What does an estate trustee do?
    • The estate trustee is responsible for the entire administration of the estate, starting on death. This includes making the arrangements for the funeral of the deceased. The estate trustee is responsible for gathering the assets of the deceased, paying all the debts and liabilities of the deceased (including filing the deceased’s terminal tax return), and dividing the remaining assets between the beneficiaries of the estate. One of your duties is also notifying the beneficiaries to let them know they may inherit under the estate.

      The estate trustee is allowed to hire professionals to help her with her duties where necessary, such as accountants and lawyers.

      If the estate trustee is uncertain about how to divide the assets of the estate she should apply to court for help interpreting the will. A lawyer can help guide the estate trustee through this process.

  • Do I get paid to be an estate trustee?
    • Often the will itself sets out whether the estate trustee will be paid and how much. If the will is silent on this point (or there is no will), an estate trustee has a general right to take a fee for her work under Ontario’s Trustee Act. Usually, a trustee’s fee is no more than 5% of the value of the estate. The fee the trustee takes for her work administering the estate must be included in her income for the year for tax purposes.

      There is no requirement that an estate trustee take a fee for her work. However, if she chooses to do so, the fee is paid out of the assets of the estate.

  • Is an estate trustee personally responsible for paying the debts of the estate?
    • Generally, all debts and liabilities are paid out of estate assets. An estate trustee will not be personally liable for estate debts unless the estate trustee pays out the estate assets to the beneficiaries and does not hold back enough money to pay the debts of the estate.

      The payment of estate taxes are also given a special priority over other debts. If the estate trustee pays money out of the estate, even if it is to pay other debts of the estate, so that the estate’s taxes cannot be paid from estate assets, then the estate trustee will be personally liable to pay the estate taxes up to the value of the property distributed.

      As a result, estate trustees are often advised to pay all estate debts, including taxes, before making any payments to the beneficiaries of the estate. Estate trustees also frequently do not make a final distribution from the estate before obtaining a clearance certificate from the Canada Revenue Agency, which releases the estate trustee from personal liability for paying the estate taxes.