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The Estate Trustee's Tasks

The Estate Trustee’s tasks during the Administration of an Estate

Today’s post highlights some important items that an Estate Trustee must turn his or her attention to during the administration of an Estate.

In a nutshell, an Estate Trustee’s role includes tasks such as gathering and managing assets, paying debts and expenses, locating the beneficiaries an distributing the estate to those entitled. However, from start to finish, there are multiple items to be taken care of by the Estate Trustee – some simple but others which can be appear more daunting to the unfamiliar.  Listed below are some of these tasks:

 

Certificate of Appointment: depending on the assets that form a part of the estate, an Estate Trustee may be advised that he or she is required to ‘probate’ a Will which is the process of obtaining formal authorization from the Court. This authorization is formally known as the Certificate of Appointment of Estate Trustee and essentially confirms that based on the information provided, the Will, if one was submitted, would be deemed to be the last known Will of the deceased and lists the appropriate individual(s) as the proper personal representatives of the estate. A similar authorization exists if there was no Will to begin with. In order to prepare this application, it will be important to ascertain value of the estate. There are various rules in relation to which assets form a part of the estate and those that are exempt which are important know as they impact the amount of estate administration tax that may be payable into the court. Along with all this, proper notice is required to be provided to those entitled to the estate.

Income Tax: The Income Tax Act of Canada provides that when an individual dies, there is a “deemed disposition” of assets which may give rise to capital gains (or losses) as at the date of death. To determine these figures, an inventory of assets is crucial along with filing the necessary tax returns – and the estate trustee may be required to file the following returns:

  • T-1 General return – if the deceased had not filed for previous taxation year(s);
  • T-1 Terminal return – covers the year of death;
  • T-3 Estate return – this covers income received from any estate assets including interest earned
  • Final distribution returns
  • Designation of an estate as a Graduated Rate Estate, if applicable, which is entitled to marginal tax rates.

Clearance Certificates: before making final distributions to the beneficiaries, it is important to obtain a Clearance Certificate from the Canada Revenue Agency. The Estate Trustee risks personal liability in relation to the distributions made if it is found later that there are taxes owing which were to be paid. Obtaining this certificate provides assurance to the Estate Trustee that no additional tax is payable.

As one can imagine, a number of other tasks need attention, such as:

  • Searches in relation to any judgments owing in the deceased’s name
  • Preparation of Estate Accounts
  • Preparation of Statement of Accounts as well as releases from Beneficiaries
  • Preparing necessary notice to creditors
  • And many more…

 

As an estate trustee, you are entitled to claim compensation in connection with time spent during estate administration. The calculation is based on a percentage of the estate and depends on the nature of the work involved and the amount is usually determined after the estate administration is completed.

It is highly advised that if you have been appointed as an Estate Trustee or want have such an appointment made by the courts, you speak to a professional to gain a clearer understanding of the nature of the role.

This content is only for information purposes and does not constitute legal advice and should not be relied on as such. Please speak to a lawyer for more details.