It’s impossible to talk about wills and will administration without mentioning executors. After all, executors play an important role in estate planning. They’re responsible for carrying out the wishes of the deceased, ensuring a smooth distribution of assets, and settling the estate's affairs.
In this article, we’ll discuss what an executor can and cannot do by looking at executor responsibilities and limitations, how they communicate with beneficiaries, what happens when an executor oversteps, and more.
Executor's Role and Responsibilities
The person who takes on this role may have executor powers, such as accessing property, managing assets, and more, but they also carry many responsibilities. Because of this, executors are often considered the glue that connects all aspects of estate settlement together.
With that in mind, here are some executor responsibilities and duties:
1. Locating and Managing Assets
Executors are tasked with identifying and safeguarding all assets which are part of the deceased’s estate. This includes real estate, bank accounts, investments, personal belongings, and any other items of value.
The executor must keep these assets in good condition to be given to beneficiaries later.
2. Paying Debts and Taxes
Before distributing estate assets to beneficiaries, the executor needs to settle any outstanding debts and taxes owed by the deceased. These debts and liabilities include the settlement of funeral expenses, and outstanding bills such as unpaid utility charges, rent, or mortgage payments. The executor must also address credit card debts, personal loans, and outstanding medical bills, plus any unpaid taxes, both income and property-related.
The executor handles all these liabilities by identifying creditors, notifying them of the deceased’s passing, and arranging for the payment of legitimate claims. They must file the deceased's final income tax return and, if applicable, the estate tax return.
The executor is also accountable for handling probate-related costs, including court fees and legal expenses, as well as any claims or judgments against the estate.
3. Locating, Interpreting and Executing the Will
The will is the guiding document for the executor's actions. It outlines the deceased's wishes regarding the distribution of assets, appointment of guardianship for minors, and other important matters.
This means the executor must locate and then interpret the will accurately and make sure it’s faithfully administered. Their role also means they must adhere to legal requirements and consider the best interests of the beneficiaries too.
4. Communicating with Beneficiaries
Executors must keep beneficiaries informed about the progress of estate administration, including any challenges or delays. Open dialogue helps manage expectations and fosters a sense of trust among all parties involved.
More about executor and beneficiary communication later on!
5. Distributing Assets
Once debts, taxes, and administrative expenses are settled, the executor is responsible for distributing the remaining assets to the beneficiaries as outlined in the will.
6. Resolving Disputes
In some cases, disputes such as challenges to the will, can happen among beneficiaries or with third parties. When this happens, the executor will need to play a mediating role and try to fix conflicts amicably.
7. Closing the Estate
The final responsibility of the executor is to formally close the estate. This means filing the necessary documents with the court, obtaining the court's approval for the distribution plan, and ensuring that all loose ends are tied up.
Once the court approves, the executor's responsibilities are considered fulfilled and all matters relating to the estate have been settled.
What are the Limitations of an Executor?
Executors cannot do whatever they want. Legally, because of estate management limitations, executors cannot:
- Act on the will before the testator has passed. A person’s estate only forms upon their death. So even if a person knows they’ve been named executor, they have no power over the testator’s estate or how they manage it while the testator themselves is still alive. Since executors are often those trusted by the testator themselves, such as a spouse, friend, or legal representative, they might be able to give advice to the testator if they’re asked, but unlike a power of attorney for personal care, who assumes responsibility in cases of incapacity, an executor’s role only begins after the testator passes.
- Engage in self-dealing. This is considered stealing and encompasses illegal behaviour such as using estate assets for the executor’s own benefit or engaging in transactions that would create a conflict of interest. An executor cannot use the assets of an estate they are responsible for to pay off their own mortgage, for example, nor can they take an heirloom watch for themselves. The executor must never use estate assets as if they are their own, or they may face legal consequences.
- Alter the will by signing it in place of the deceased or by changing any aspect of it. Only the testator can sign their will and make changes to it while they’re alive. This means an executor cannot add additional clauses to a will, change or remove anyone named within (such as beneficiaries, co-executors, or guardians), manipulate legacy gifts, or anything else. If the person who made the will wants to update it, they can make their changes through a codicil or by executing a new will. The new will would then only become legal after being signed in front of two witnesses, after which any previous version of the will would be automatically revoked.
- Ignore the interests of beneficiaries. An executor isn’t allowed to choose who gets what from the estate. After all, it’s not their estate! They must follow the wishes of the testator which are outlined within the will, and the executor must always act in the best interests of interested parties based on inheritance laws, beneficiary entitlements, and other legalities. There can be no favouritism towards certain beneficiaries over others, for example. They must remain impartial despite any personal feelings they may have.
- Hinder the value of estate assets by failing to maintain assets or selling them for less than market value. If an executor actively diminishes the value of estate assets, they also reduce the value of the inheritance owed to beneficiaries and potentially hinder the value of any legacy gifts. A reminder that while estate assets may diminish because the executor pays off the debts of the estate to creditors, this is something that is part of their executor duties and is not considered overstepping.
- Get in the way of someone challenging the will. Will contests may complicate the estate settlement and probate process, but that doesn’t mean the executor is allowed to obstruct legitimate challenges. Anyone who is eligible to make a will contest, such as family members of the deceased, a spouse of the deceased, those named in the will, or creditors and have the legal grounds to contest should be treated seriously and respectfully.
What Does an Executor Have to Disclose to Beneficiaries?
Executors are responsible for keeping beneficiaries informed of whether or not they’re entitled to anything in the estate. When the will is probated, the executor must provide notice and a copy of the relevant portions of the will to each beneficiary. This means that residual beneficiaries are entitled to receive a copy of the entire will, while beneficiaries of a specified item of property or stated amount of money are entitled to a copy of the part of the will that includes their gift. All those relevant to the will should be up to date on both the status of the estate and the eventual distribution of the assets.
While beneficiaries can ask for updates from the executor and the executor should comply, there’s no set schedule for how often an executor has to update beneficiaries on the settlement progress.
Consequences of Overstepping as an Executor
Since there are things executors legally can and cannot do, there are consequences for an executor overstepping authority.
Legal proceedings can be initiated by beneficiaries or interested parties to have executors removed, and executors are also not protected from being sued. There are up to 18 areas with supporting case law where executors can be sued personally.
For example, in Ontario, if an executor is also a beneficiary or heir and is found to have benefited from making a mistake in the estate’s management, they can face up to two years in jail.
Not all cases mandate prison time though. In other cases of the executor being sued, they can be fined a percentage of the entire estate.
What is an Example of Executor Misconduct in Canada?
In the case of Walling v Walling 2012, the only beneficiaries of the estate, the two sons of the deceased, sued their uncle who was the estate trustee and executor for malicious intent and his failure to do his duties.
The uncle did not distribute proceeds of the estate, sold assets under value, let others take items belonging to the beneficiaries from the estate, and refused to let the beneficiaries attend their father’s funeral or have any meaningful mementos.
The case concluded with the court settling punitive damages at $100,000 ($50,000 more than the claim submitted by the beneficiaries themselves).
Protecting the Estate and Beneficiaries
As an extra precaution against your executor not properly fulfilling their duties, you can easily assign co-executors or monitors when you make your will with Willful. While co-executors share the legal duties of an executor role and keep each other accountable, a monitor acts like a safeguard, making sure the executor is carrying out their duties properly.
There’s a difference between who could and who should be your executor, but it’s often hard to see on the surface. That’s why considering different aspects of your chosen executor is important, such as if they’re trustworthy, responsible, have the time, or have the capacity.
Other things to consider include whether your chosen executor lives in the same province or country as you or if the executor you’ve already chosen needs to be changed.
If a will assigns only one executor and no monitors, beneficiaries and interested parties have the option of requesting regular email updates from the executor to stay up to date with the estate’s settlement.
Open communication between the executor and interested parties helps keep everyone informed, accountable, and out of court. If communications break down, court action could then become the only option for keeping the executor accountable.
Choose your own executor
When you make a will, you have the power to choose your own executor rather than have an executor appointed by the courts if you pass away intestate. That means you can choose someone you can trust and rely on to execute your estate and do what’s best for your beneficiaries and loved ones.