If you have been named as an Executor in someone’s will you have a serious obligation that involves estates, tax, family, real estate and business law. Navigating all these areas of law can be tricky. Here are some issues to keep in mind when administering an estate.
Reading the Will
As a starting point you should sit down and read the will to try to determine what property the estate has and how the deceased wished to have it distributed. An Executor has a lot of liability, not only to the beneficiaries (the people named in the will who are to receive something), but to the Canada Revenue Agency (CRA) as well. Hiring a lawyer for guidance at the beginning of the process, rather than part-way through the process, will ensure that you are apprised of how to minimize your personal liability.
Spotting Tax Issues
Getting the best possible tax treatment for the estate could save money that will ultimately go to the beneficiaries. One of the main considerations is whether the estate meets Graduated Rate Estate (GRE) status, which allows for taxation at progressive marginal rates as opposed to being subject to the highest tax rate. To ensure this, an Executor must confirm certain things such as whether all the contributions to the trust are a result of the individual’s death and the estate designates itself as a GRE in its tax return.
An Executor also has to determine if any beneficiaries reside outside of Canada and whether the estate has owned real estate in the last 60 months prior to distributing the non-resident beneficiary’s portion. If so the estate could be subject to a 25% withholding tax on the non-resident’s portion.
Filing a Court Application for an Executor Certificate of Appointment (Probate)
If the estate has assets worth over $30,000 and/or owns real estate, the Executor will most likely have to file an Application for a Certificate of Appointment of Estate Trustee with (or without) a Will. The filing process can be treacherous when it comes to providing all necessary supporting documentation, which includes that the Estate Administration Tax be calculated and submitted with the application. Having an experienced lawyer complete the court process will avoid delays as well as several trips to the Estates Court before the application meets the court’s approval.
If you find yourself named as Executor of a will the lawyers at Grinhaus Law Firm can help you navigate this process with confidence and ease. For more information on this topic, feel free to call or email us to see how we can help.
PLEASE NOTE: THIS IS NOT INTENDED TO BE LEGAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. IT IS IMPORTANT THAT YOU CONSULT WITH A LICENSED PROFESSIONAL.