Are you wondering how to be an executor in Manitoba? Our lawyers can help you make the process of settling an estate faster and easier.
What steps are needed in estate administration? First, you need to know that estate administration is a general term. It encompasses all the legal work required to deal with a deceased’s assets. When a loved one passes, there are many factors that come into play for estate administration, as legal service providers by P.J. Richer Law Corp for Estate Attorneys of Manitoba we follow the steps set out by the Canadian estate law as it applies in Manitoba.
What if there isn’t a will? Find the answer in the FAQ below.
While anyone can act as an executor on their own, the reality is that working with a lawyer almost always makes the process go faster and more smoothly. With our team working for you, we can help you avoid mistakes that can lead to litigation.
As of November of 2020, the government of Manitoba eliminated probate fees.
A Manitoba executor automatically receives her or his power to act from the will by virtue of the Wills Act, but organizations such as banks and credit unions will rarely hand over control of the deceased’s assets to an executor without letters of probate.
The purpose of probate is to protect these institutions from liability to others (such as other heirs) who may question the validity of the will or the right of the executor to act. Letters of probate protect the institutions. Once these institutions receive a copy of the letters of probate, their liability ceases. Essentially, probate protects them in the event that an executor acts inappropriately or even illegally. Aggrieved parties cannot sue the bank or credit union.
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An executor can be reimbursed for expenses, including travel expenses. An expense paid by the executor becomes a debt of the estate. For example, if an executor pays for a funeral out of pocket, the executor can reimburse himself for those expenses. The same applies to administrators.
The executor is NOT responsible for the funeral. Although, the executor will be responsible to pay the funeral expenses. The law recognizes that on death, funeral arrangements must be made quickly. So, even if a will specifies certain funeral instructions, the executor will not be held accountable if those are not respected.
In order to apply for probate, the executor must complete an application. While it is possible to complete the application without the assistance of a lawyer, we don't recommend it.
The process for application is riddled with internal rules that are not published anywhere. You discover them through the process of application.
The court routinely rejects applications. When it does, it provides the reason for rejection. This is how one learns. It’s not uncommon for the same application to be rejected numerous times. Sometimes, once the "examiner" discovers a problem, that person stops the review immediately without checking the balance of the application. After addressing the problem cited, the same application can be rejected again for something further down in the application. Why couldn't someone review the entire application the first time? (this question is rhetorical....) For this reason, it is advisable to work with a lawyer who has experience in making these applications. It can save you a lot of time and trouble.
When completing the application for probate in Manitoba, an executor must list all of the deceased's assets in the application. However not all assets are included. While this seems contradictory, let us explain....
Technically and legally speaking, all of the deceased's assets are included. However, the law deems that certain assets are distributed as “inter-vivos” gifts. What does this mean? inter-vivos is a Latin term that means "while alive". In the case of life insurance policies, RRSPs, RRIFs, and TFSAs, named beneficiaries receive the payout as an inter-vivos gift, in which case those assets do not fall into the deceased's estate. They are therefore not included in the inventory. In these cases, it’s as though those assets bypass the will entirely.
In the case of real property, if a deceased is registered as joint tenant on title, then that person's interest ceases to exist and the joint tenant, usually the spouse, automatically becomes the sole title holder. So, like inter-vivos gifts, joint properties are not included in the inventory.
For personal property, the executor must provide a reasonable valuation.
If the deceased lived in a care home and simply owned some clothes, a chair and a television, the valuation could reasonably be $200. The valuation must be included even if the cash value is not realized. Many people simply donate these items to charities or simply throw them out.
Courts do not concern themselves with how personal items are dealt with. The question you must ask is, how much could I sell these items for on Kijiji or in a garage sale. In the court's eyes everything has monetary value, even if it does not amount to much. Conversely, if the deceased lived in a 1,200 square foot home at the time of death, an executor must assess the fair market value of the items. This doesn't mean that one must find similar used sofas for sale online and proceed with each item in the same way. But it does mean that the valuation must be reasonable and defensible.
Vehicles are fairly easy to value. You can find information online and through certain tools such as blue book values. Even if the car is a collector car, valuations are relatively easy to find. Online sales platforms such as AutoTrader make it easy to determine values today.
These items are a little trickier to value. In order to determine the value of estate jewelry and art, an executor may have to hire an appraiser. It really depends.
If the deceased picked up a stock wall hanging at a garage sale, then you may be able to simply include the value in the overall personal property valuation. However, if the artist is a relatively renowned artist, then one should have the piece appraised. The same principle applies to jewelry. The jewelry may only be worth the weight of the precious metal, or it may be more valuable depending on the designer or age. When in doubt, obtain an appraisal.
An executor must also include the value of any debts owed to the estate. The executor should make reasonable efforts to recover money owed to an estate. Once recovered, the funds will be added to the estate.
Once an executor or administrator receives the letters of probate or administration from the court, he or she can approach all of the institutions who demanded or requested the letters from the executor or administrator.
The funds should be centralized and deposited into one account, usually designated as the Estate of so-and-so. From these funds, the executor or administrator can pay all of the debts, including reimbursing him or herself for out-of-pocket expenses.
While no hard schedule exists, executors and administrators should execute their duties within a reasonable time. This includes the application, settling of liabilities, and distribution to beneficiaries. In general, you should expect most wills to take more than a year to settle. Some will take several years depending on their complexity.
We often hear that a person is an executor and trustee. What does that actually mean? Is there a difference? The answer is yes, there is a difference between trustee and executor. However, when we draft wills, we almost always appoint the same person as executor and trustee.
The difference is that an executor is the person who assumes the assets of the deceased on death.
We are often asked who gets paid from an estate first? The executor’s first responsibility is to deal with the deceased's liabilities. Most of the time this means paying all of the deceased’s debts including their terminal tax return. It can also mean dealing with unresolved legal matters, such as lawsuits.
Once the debts are paid or legal matters settled, the balance of the estate goes to the beneficiaries. Until the liabilities are settled however, the actual amount owed to the beneficiaries remains unknown.
Let’s now look at the role of a trustee. A trust cannot exist without the three certainties ((i) The Certainty of Intention; (ii) The Certainty of Subject Matter; and (iii) The Certainty of Objects. In this case, until liabilities are settled, we don't have the Certainty of Subject Matter. Therefore a trust cannot technically exist. The trust doesn’t form until the debts are paid and liabilities are settled at which time the certainty of subject matter crystallizes.
The executor then becomes the trustee who holds the assets, in trust, for the beneficiaries. The difference is somewhat academic, so people shouldn't concern themselves too much about this distinction.
Executors can charge a reasonable fee for performing required duties. There is, however, no typical executor fee. How much do estate executors get paid? It depends...
Courts have stated that executor fees, if not specified in the will, should be reasonable under the circumstances. For example, a deceased leaves $1 million in cash in the bank to an adult child, who is the only beneficiary, and the deceased had no liability. In this case, a court would likely find that, while the estate assets were significant, the work required to administer the estate would have been minimal. An executor would have difficulty charging 5% of the estate or $50,000.
On the other hand, if a deceased leaves a complicated estate with dozens of beneficiaries, debts to be collected, and liabilities, an executor may be justified in charging a fee amounting to a much larger percentage of the estate.
Executors who are Canadian citizens can apply for probate for assets in Manitoba even if they are out of the country for a time. This happens with Canadian snowbirds from time to time, as an executor may be called to begin their duties while temporarily living in the United States or Mexico, for example.
Sometimes, however, a Manitoba will may assign a foreign, non-resident as executor. A foreign executor must provide the court with an insurance bond. If the executor is a non-resident, then the estate would also likely be deemed a non-resident by the Canadian Revenue Agency leading to tax complications. In this case, you should seek immediate legal and accounting advice as different strategies can provide more practical solutions.
When someone dies in Manitoba and that person had a valid will at his or her death, the person or persons appointed as executor(s) automatically receive the legal power to manage the deceased’s assets.
This is done by virtue of the Wills Act of Manitoba. It occurs automatically. The executor(s) has no obligation to obtain permission from the courts. Simple enough? Not quite….
Organizations such as banks, credit unions, and investment companies are reluctant to provide someone, whom they likely don’t know, with the life savings of a deceased person solely on their word that they are, in fact, the executor(s).
Imagine if you were a teller at a bank, and someone whom you never met provides you with a will (essentially a printed Word document) purporting to appoint them as the executor. Now imagine that this stranger asks you to provide him/her with a bank draft for the amounts in the deceased’s accounts, totaling $248,576. Would you hesitate or would you proceed to cut the cheque without question? That problem is precisely why we have probate.
Probate is required when an institution, such as a bank, credit union or investment company advises the executor that, prior to releasing the funds, he or she must provide letters of probate.
Sometimes, however, probate can be avoided if the deceased has a very small estate (ie. they did not have much money). In this case, and it is up to the institutions to decide, the bank or credit may simply ask the executor to sign an indemnity instead.
How much is “not a lot of money”? It depends on the institution. I’ve seen a bank release $90,000 to an executrix without letters of probate. However, this is rare. Usually, banks or credit unions are more comfortable releasing funds under $30,000. However, even in these circumstances, banks or credit unions may refuse. It is entirely up to them.
The short answer is no. If probate is not required, then the answer is pretty clear. You don’t need a lawyer (in Canada, we use the term lawyer rather than attorney). If you do need probate, things get more complicated. While you can find the required form online neither the courts nor any government official will assist you in completing the forms. The court process is very regulated and court representatives regularly reject documents for various reasons, some of which may appear perplexing. To make matters worse, they provide very little guidance on remedying the problem. I often tell clients that courts are not in the customer service business. A lawyer who regularly practices in the area will understand the requirements and will have learnt the hard way (by having gone through 100s if not 1000s of rejections).
The short answer again is No. An executor does not have a beneficial right to the assets of the estate. However, an executor does become the legal owner of the assets on behalf of the beneficiaries. This distinction is important at law. Someone needs to sign documents, make arrangements to transfer funds, pay bills and write cheques. An executor can only do those things by virtue of his or her role as legal owner. However, the executor’s ability to use those assets are limited to the instructions in the will. An executor must follow the will. If not, he or she will become liable for any misuse.
Yes. As long as the will appoints you executor, you can start liquidating the estate. You can start selling personal property (or giving it away to a shelter). However, you may not be able to liquidate and distribute all of the assets. Institutions such as banks or investment companies may not give you access to the deceased’s funds unless you provide them with letters of probate. Nor will you be able to transfer the title of the house without letters of probate.
Generally, yes. Banks and credit unions generally freeze an account when someone dies to protect the assets.
An administrator’s responsibilities are the same as an executor’s responsibilities to beneficiaries. The difference is that an executor must follow the instructions in the will.
If the testator (the deceased) indicated in his will that he wanted his estate to go to the Humane Society, the executor must write a cheque to the Humane Society. Without a will to guide them, an administrator must follow the law instead.
The Intestate Successions Act of Manitoba outlines how to distribute the funds. I would recommend that you discuss this with a lawyer as some of the rules can be difficult to follow.
An executor can also be a beneficiary. The same goes for an administrator/trix. In most wills, a spouse will name the other spouse as executor and beneficiary. While a conflict can technically occur when one child, relative or friend is named as executor and beneficiary, courts are not usually concerned unless the executor fails to comply with his or her obligations.
As discussed above, an executor must first pay a deceased's debts or deal with any outstanding legal issues.
An executor should also consider posting a legal notice to all potential debtors. You've likely seen these in local newspapers. The notice provides all potential debtors notice that the deceased died and gives them a specific amount of time (usually 90 days) to make a claim.
If the executor fails to publish a notice, then the executor may become personally liable for any debts - provided the debt is not barred by the limitations Act of Manitoba.
The balance of the assets, including personal property, money, real property (not owned jointly), and stocks fall into the estate. These must be valued and included in the inventory.
In the application, the executor must provide a value of the property in the estate. This includes the value in the bank accounts, real property, stocks, mutual funds, funds in RRSPs and TFSAs (unless a beneficiary is named), and the deceased's personal property. The executor must use the estate's fair market value on the date of death. For bank accounts and investments, this is fairly straightforward. The executor can use the value stated in the statements.
For real estate property, the executor may be able to rely on the municipal assessment as long as he or she is confident that the assessed value represents fair market value.
This is not usually a problem anymore, as assessed values now generally reflect fair market value. However, in markets where the price of real estate increased rapidly, assessed values may lag behind fair market value.
If in doubt, an executor should hire an appraiser. The reason we recommend this is because an executor must sign an affidavit swearing that, to the best of his or her knowledge, the valuation correctly reflects fair market value. Swearing false information in an affidavit amounts to a criminal offence under the Criminal Code of Canada. If an executor knows that the assessed value does not represent fair market value, he or she commits a criminal office when swearing the document.
Depending on the date of death, the executor may not be able to complete a terminal income tax return until the following year. In any case, the executor must wait until he or she receives all of the information needed, such as T4, T4A, T4A(OAS), and T4A(P).
Once received, he or she should proceed. If, after the date of death, the estate generated income such as interest or capital gains, the executor must also complete an Estate tax return.
You can do this yourself, but we recommend consulting with an accountant on whether a return must be completed. Once the tax return or returns are completed, an executor or administrator should apply to CRA for a clearance certificate. The clearance certificate will protect the executor from liability should CRA later determine that the deceased owed anything. This can take time.
Once all the debts are paid, provided no other legal liabilities exist, the leftover assets form the residue of the estate.
At this point, the executor must follow the instructions in the will and the administrator must follow the legislation.
The executor must pay out the specific gifts first. Examples include $1,000 to the church, $10,000 to Cancer Care Manitoba, or $30,000 to Uncle Bob.
Then, the executor can pay out to the residual beneficiaries. We recommend that executors proceed with an initial distribution at this time. You should keep a "safe" amount in reserve until the tax returns are completed and CRA issues a clearance certificate.
What is a "safe" amount? This is a judgement call. If the deceased was on a fixed income, and he or she normally received a refund from his or her tax return, then $5,000 or $10,000 would be sufficient. On the other hand, if the deceased owned many businesses and usually owed taxes at the end of the year, more would be necessary.
Lawyers charge for legal services. Assisting an executor or administrator with an application to probate court forms part of the services provided. We also advise executors on duties and responsibilities. In Manitoba, the court established the following schedule for estates of average complexity:
Arguably, an executor or administrator discharges his or her duties when he/she has performed all duties (receives letters of probate/administration, pays debts, distributes funds, and receives a clearance certificate from CRA to confirm that the deceased's taxes are paid). At that point, what should be done with the letters of probate/administration? No hard and fast rule exists.
If the letters are destroyed, an executor could apply to receive a copy of the letters from court. Why would someone keep them? Every now and then, we receive calls from other lawyers or organizations requesting information about an estate that has long been settled. I received a request in 2015 from a lawyer for an estate settled in 1988.
A deceased may receive a benefit years later or the executor may discover assets not included in the original request for probate. In the former case, the organization holding the benefit will try and locate the executor. The executor must then determine whether the benefit should fall into the estate, and if so, file a new application to court to account for the value of the new benefit. In the case of an asset discovered after probate, a new court application must occur and the value of the discovered asset must be included.
Executors should be aware that the Income Tax Act of Canada treats different classes of assets differently. Not only must the executor complete the terminal tax return and estate tax return if the estate generates income, he or she must also be aware of these differences and how they impact the estate.
In the case of real estate property (such as a cottage) transferring to the next generation will likely create capital gains.
In the case of RRSPs or RRIFs on the death of the last surviving spouse, any funds still invested "fall" out of the tax protected investment vehicle and become taxable income.
A prudent executor should consult with an accountant to ensure enough funds are available to satisfy the tax event prior to distribution.
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No, an executor can reside anywhere else as long as he or she is not a minor and is of sound mind. However, if he or she lives outside of Canada, a bond would be required by our Court.
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