Handling the affairs of your aging parents can be a stressful, emotional experience. For many people, seeing their parent’s health diminish and thinking about mortality, in general, is alarming and upsetting.
It takes significant emotional strength to navigate these waters.
One important aspect of handling your parent’s affairs is often overlooked or misunderstood–becoming and acting as the Executor of your parent’s estate.
For this post, we spoke to David Kelman of the law firm Schwartz & Schwartz in Toronto. David has practiced real estate law for twenty years, and he and his firm frequently work on estate matters.
Here’s what you need to know about being the Executor of your parent’s estate…
First of All, What’s the Difference Between an Executor and a POA?
Although the terms are sometimes incorrectly used interchangeably, the roles of Executor and POA, or power of attorney, are quite different. As David explains it, “your power of attorney expires when you do.”
The POA is designed to give someone responsibility for your affairs when you are alive, but no longer able to manage your own affairs. Once a person passes away, the responsibility moves to the Executor. A POA and an Executor can be the same person, however, the process of formalizing the appointment of an executor is more complicated than appointing a POA. More on that below.
Are you currently helping your parents rightsize? Read some of our other great resources to get started:
- Downsizing Done Differently: Our Complete Guide to Rightsizing
- Case Study: How We Moved from 3500 Square Feet to 1000
- How to Help Your Parents Rightsize
- Downsizing Your Life: 5 Tips for an Uncluttered Life
Assigning an Executor
The executor is typically named in the will of the person who has passed away. However, naming an executor is not the only step in the process. There is a formality in approving the executor.
Once the executor is named after a person dies the will needs to be “proved” which is often called Probate. The Executor applies to the Court for a certificate from the government essentially approving the appointment of the Executor, so the Executor can complete the work of carrying out the instructions in the will.
According to David, the Probate process can be lengthy, sometimes up to a year or even more to complete. And your duties as an Executor could be constrained by these court hold-ups. However, in cases of urgency, for example, if there is a pending real estate transaction, the courts can fast-track the Probate application and approve it sooner.
What Can Be Done if There is a Delay in Approving an Executor?
While you’re waiting for the government to approve the appointment of an Executor, you can feel constrained and held up. However, there are a couple of things that you can still do in the meantime, for example, if you are trying to sell a property for the estate.
- Your real estate agent can help you by including a term in the Agreement of Purchase and Sale that stipulates the sale of the property is conditional upon receipt of the approved paperwork. David also recommends inserting language in here that also addresses potential delays.
- Additionally, if there is an Agreement of Purchase and Sale in the works, your lawyer should let the courts know to try and get the process expedited.
What if There is No Executor?
If there is no will or no Executor named, the process becomes much more complicated. Essentially, someone needs to be appointed by the Court. Often someone with a close connection to the deceased will come forward and volunteer to be the Executor, but the process can be more drawn out and expensive.
David’s advice: “Always have a proper will. Even a simple, straightforward will is better than nothing.”
Responsibilities of the Executor
“If you think about it, you know everything about yourself. You know what all your assets are, you know where your things are, you know your accounts and affairs. When a person becomes an Executor, it’s like they’re stepping into your shoes, without actually knowing where the shoes are,” says David.
From a legal perspective, an Executor is the representative of the person who died, taking over all their responsibilities. The Executor must figure out where everything is, and what to do with it when they find it.
“That’s why it’s really important to choose an Executor who is smart, organized, and has the time and ability to handle these situations. Choosing someone you can trust is also critical,” says David.
One of the most obvious tasks is how to handle the owned property. Did the person own a home, cottage, or investment properties? The executor would need to examine the will and decide what to do with the property or properties, in some cases.
Looking for more downsizing content? Check out some of our posts from the past:
- Real Estate Downsizing with Style and Grace: Part 1
- Downsizing with Style and Grace: Part 2
- Real Estate with Style and Grace: Part 3
Many people feel that asking someone to be the Executor of a will is a huge honour, but in reality, it’s a lot of work, and depending on the size and complexity of the estate, it can be quite challenging. And Executors can bear personal liability for errors. “There’s a reason why banks and trust companies charge a lot of money for this service,” says David.
One of the biggest challenges an executor might face, other than delays in Probate court, is dealing with the mechanics of an estate.
“Locating assets, dealing with CRA, banks, service providers, accountants, and lawyers can be some of the biggest challenges faced by an Executor,” says David. Although the tasks themselves are not necessarily hard, there is a lot of running around involved and it can be time-consuming and arduous.
David recommends executors look to the internet for tips early, and reach out to experienced advisors for guidance and help whenever they can. A quick Google search will uncover a lot of important information, tips, and experts you can contact to streamline the process. Note that in Canada every province has a different law around estates so make sure the advice you’re getting applies in your jurisdiction.
Don’t be afraid to use your ‘let me speak to the manager’ voice to get things done efficiently.
The Cost of Being an Executor
Did you know that executors can be paid for their services? Typically an executor is paid up to 5% of the total value of the estate for their work, which makes sense once you consider the legwork involved.
However, there are some other costs involved that might surprise you.
For example, to receive the Certificate of Appointment of the Executor in Ontario, the Estate will need to pay a probate fee of 1.5% of the value of the estate and let’s not forget one of the biggest expenses that an estate should cover–the funeral.
In some of these cases, the fees and costs could be in the tens or even hundreds of thousands of dollars. And, in most cases, these fees must be paid before the Executor is officially appointed, which means that bank accounts are likely to be frozen, and inaccessible to the estate.
What do you do in this case?
David recommends persistence. In some cases, talking to the bank teller won’t get results, but explaining the situation to the bank manager usually results in the bank agreeing to release the funds for these limited purposes. In many cases, the bank will issue official bank drafts or certified cheques payable directly to the funeral home or the Minister of Finance, so that the funeral home releases original death certificates and the probate application can proceed.
Whether you’re estate planning for yourself or your parents or other loved ones, it’s important to operate on sound legal and real estate market advice.
Contact a lawyer and real estate professional to learn more about how to conduct a real estate transaction as the executor of an estate. You can learn more about David Kelman and Schwartz & Schwartz real estate right here.
And, as always, if you have any questions about rightsizing, buying, or selling, don’t hesitate to contact us here.