The time required to settle an estate in Canada often gets frustrating for heirs. More often than not, these are unavoidable and legitimate delays. Executors are found dragging their feet otherwise. More so if they wish to continue using certain assets or properties. The legitimacy of the delays should not be a mystery. The process of settling an estate should be transparent and hassle-free.
We discuss the aspects of settling assets or properties in this article for your benefit, including how long does an executor have to settle an estate in Canada.
Checklist for an Executor to Settle an Estate in Canada
Here is a list of things an executor in Canada needs to do to settle an estate:
Acquisition of a Death Certificate: Obtain the formal death certificate from the office that is responsible for vital statistics.
Apply for Probate: Put the will before the court to validate it and obtain the legal authorization to act.
Notify Beneficiaries and Creditors: It is important to inform any creditors and beneficiaries listed in the will of the deceased’s passing.
Open an Estate Bank Account: Create a bank account for the estate and use this account to handle all of the financial transactions that are associated with the estate.
Distribution of Assets: In accordance with the terms of the will, distribute the residual assets among the different beneficiaries.
File Estate Taxes: Fill out and send in any required estate tax forms.
Close the Estate: When all of the tasks associated with the estate have been finished, the estate account should be closed, and a final report should be given to the beneficiaries.
Keep Records: For both legal and tax considerations, it is important to keep thorough records of all actions made in the capacity of executor.
What are the Major Responsibilities of a Will Executor to Settle an Estate in Canada?
The job of a will executor comes with so many important responsibilities. Here are some of the things they need to do:
Locating the Will
Locating the will is the first and most crucial task for a will executor. This document contains the last wishes of the deceased person. It can be in a safe or with a will & estate lawyer, and the will executor must track it down.
Valuing and Safeguarding Estate Assets
The will executor must assess the value of the deceased person’s possessions and property. This includes everything from houses and cars to jewelry and personal items. They are responsible for ensuring these items are safe and well-maintained until they are distributed according to the will.
Funeral and Burial Arrangements
Planning the funeral and burial arrangements is another role of the will executor. They may need to make decisions per the deceased person’s wishes or follow family traditions. This includes choosing a burial place, organizing the ceremony, and handling related expenses. In this capacity, the will executor guides the grieving process and ensures the final farewell is respectful and meaningful.
They must first and foremost honor the wishes documented in the deceased person’s will or any pre-arranged instructions. This means taking into account specific requests, such as the type of service, the choice of readings or music, and any unique traditions the person held dear.
Ascertaining and Valuing Assets
The will executor’s job is to gather all the financial information, such as bank accounts, investments, and valuable items like artwork. They need to assess the total value of these assets and ensure that they are properly accounted for.
Debts and Liabilities
The will executor also must identify and manage any debts and liabilities the deceased person may have had. This involves notifying creditors, settling outstanding bills, and ensuring financial obligations are met using the person’s estate.
How Long does an Executor have to Settle an Estate in Canada?
Surprisingly enough, there is no specific timeline or deadline for keeping estates open in Canada. All estates are unique in terms of nature and their requirements. However, executors must meet certain tax requirements associated with each estate.
There is a term called “executor’s year”. It suggests an estate needs to be settled within a year after the decedent’s death. Courts might allow executors to proceed to prove that they are still moving along the process in good faith.
What are the Responsibilities of Executors in Settling an Inherited Estate?
Executors play an important role in settling inherited properties. Following are the major aspects:
Notifying Beneficiaries
From the day the will gets filed in Probate court, executors should notify the beneficiaries within the following 3 months. The time needed is less than that. There are instances where beneficiaries got notified within the first month or the first two.
The frequency of these progress notifications doesn’t have a fixed schedule or standards. Beneficiaries do hold the right to check for updates from the executor. It’s good practice to discuss the course of action and the plans with the executor when or before s/he starts the process.
Timeline for Settling a Will
The time limit for settling a will is not strict or even specified. However, judges expect that the executor will take reasonable action on the will and settle the estate within the first year. This might not always be possible due to legitimate legal reasons.
An heir might not be of legal age, for example. This would mean that s/he will inherit the property only after 21 years of age. In such cases, that particular estate can’t be closed or settled before the heir comes of legal age. The executor can’t do much about such situations, and the heir has to wait to be of legal age.
Timeline for Distributing Funds
After the probate period, distributing funds requires between 6 months to a year. Beneficiaries sometimes end up slowing down this process. Each beneficiary might be required to provide signed documents to the executor for the sake of verified and accurate distribution. In such a case, one of the beneficiaries might be holding back or be unable to provide, and the entire process would get slowed down due to that.
Executors Cheating Beneficiaries
There have been situations when the executor was found to be living at the house that the beneficiary is entitled to inherit. However, you are legally allowed to bring a challenge against the executor once the timeline exceeds the executor’s year.
If challenged, the court might make the decision to remove or replace the executor or get the resolution of the estate moving faster.
Executors Refusing to Pay or Release Property
Unless the executor is the sole beneficiary according to the will, they don’t have the authority to take everything. It is part of their fiduciary responsibility. The purpose of the executor is to carry out the wishes of the decedent. They are not legally authorized to refuse any payment to beneficiaries unless a provision in the will instructs them to do so.
If there is a doubt regarding the executor’s activities in good faith, you have the legal right to take the beneficiary to court.
Executor’s Record-Keeping Accountability to Beneficiaries
It’s a legal obligation for executors to maintain and provide detailed records of expenses and debts for and to beneficiaries. Beneficiaries can hold the executor accountable for malfeasance in the event of misappropriating or misusing estate funds by the executor.
Taking Possession of Inherited Properties in Canada
Transferring the title to the beneficiary is the executor’s responsibility. The executor is also responsible for providing the time, date, and location to sort out any necessary documents and handing over the property ownership.
What Purposes Can an Inherited Property be Used for?
Once the ownership of the property is transferred to the beneficiary, s/he can choose to rent it out, move in there, use it as a vacation home, or any other legal purposes for that matter. However, there are several considerations regarding it, starting from the property condition to the remaining mortgages.
Every action taken and related to your inherited property has financial impacts on you and your family. It’s a good idea to get sound legal and financial counsel from your real estate lawyer and accountant before making such moves.
Inheriting a Property in Canada with Siblings
If you inherit a house or a property with siblings, it can get stressful at any point. You and your siblings might end up disagreeing, which could lead to conflict. There may be contests regarding staying in the house, selling it, or splitting the proceeds. One easy solution would be renting the property out and splitting the rent amongst all the siblings equally.
Often, one of the siblings offers to buy another out. The use of promissory notes to pay the amount or share over longer periods of time is quite popular for such circumstances. However, if the conflict and disagreement persist and no one can reach a common ground for a solution, suing for partition is the only option left. Doing this implies that you are requesting the court to order selling the property. It’s an expensive process and can and most likely will cut into your profits. Also, doing so generally damages relationships between siblings.
All things considered, the best thing to do for such cases is to reach a mutual agreement. Who can meet all financial obligations, who has the most need of it, and all other legal implications to consider for drawing a fair agreement.
Taxes Payable on Inherited Property in Canada
Inherited properties don’t usually require estate taxes. However, you have to take care of all associated expenses that come with the property. Following are the payable taxes for different arrangements:
- Capital gains taxes for upon selling the property at a profit (applicable for inherited houses and not purchased ones)
- Property taxes for keeping the property
- Rental income taxes for renting the property out
- Homeowner’s taxes for moving into and living in the property
What Is Probate In Canada?
Probate is a legal process that happens when someone passes away in Canada. It serves to confirm the authenticity and legality of the will.
When probating a will, the will executor is responsible for initiating the legal process by submitting the will to the court. They ensure that the court recognizes the will as the deceased’s final wishes and oversees the distribution of assets according to those wishes. This involves dealing with legal paperwork and ensuring everything is done correctly.
Executor Compensation in Canada
Being a will executor is a significant responsibility, and in Canada, there are guidelines for receiving compensation for their work. The will executors can receive payment for the time and effort they put into their duties.
The amount they can be paid is determined by specific rules and regulations. These rules ensure that the compensation is fair and reasonable for the will executor’s hard work. Moreover, they also manage the deceased person’s estate and fulfill their wishes as outlined in the will.
Final Words
Inheriting a property might be an anticipated event. However, it can get complicated and stressful if the executor and the beneficiary don’t have their interests aligned. Hopefully, the discussion above has rendered sufficient information and suggestions regarding the settlement of inherited estate and executors.
FAQs
How long does an executor have to distribute a will in Canada?
There is no strict and specified timeline for distributing a will for executors. However, the rule of thumb, according to common law, is that the executor needs to wrap up or settle an estate according to the will within one year of the decedent’s death. This is also called the executor’s year.
How long after probate can funds be distributed in Canada?
In case of a probate requirement, the funds or estates can’t be distributed until 210 days have passed after probate is granted and there were no claims against the estate. If all parties with a potential claim on the estate sign a form stating there won’t be any challenges against the will, the funds and estates can be distributed sooner.
How long does an executor have to settle an estate?
An executor has one year after the decedent’s death to settle. This is called the executor’s year. However, there might be delays due to legitimate reasons.
Does an executor have to update beneficiaries?
An executor is obligated to beneficiaries to provide updates on the course of action, state of the settlement process, any expenses incurred relating to the property, and the date, time, and location for ownership transfer of the property.
