Area of Law: Wills, Estates and Powers of Attorney
Answer # 144
Executors / Personal Representatives / Estate TrusteesRegion: Ontario Answer # 144
An executor is an individual appointed in a Will to carry out the terms and directions of the Will. The executor can administer the estate with or without an appointment from the Court. If there is no Will, there cannot be an executor.
If there is no Will, or if the executor cannot or does not want to do the job, the Court will appoint someone to administer the estate. This person is called the Administrator.
If there is a Will, but it doesn’t appoint an executor, the Court can appoint someone called an administrator with the Will annexed.
The term personal representative is used in the Trustee Act. It can refer to any of the following:
- administrator, or
- administrator with the Will annexed.
A trustee is an individual who has been appointed to hold the property in a trust for the benefit of any beneficiaries of that trust. This person is called an estate trustee. This term can refer to any of the following:
- personal representative,
- administrator, or
- administrator with the Will annexed.
In addition, the term estate trustee with a Will can refer to an executor, or an administrator with the Will annexed.
Who can be a Personal Representative or Executor?
You can appoint more than one personal representative, and you can also name an alternate personal representative, who would step in if your personal representative was unable to act.
Generally, you can select anyone to be your personal representative or executor provided they are at least 18 years old and able to understand what is expected of a personal representative. If you select someone who is under the age of 18 or not able to understand the role of a personal representative, the law will appoint a different personal representative. Above all, your personal representative should be someone you trust, and you should talk to them about being your personal representative before deciding to appoint them in your Will.
Duties of a Personal Representative or Executor
Your personal representative or executor is responsible for performing a number of duties to ensure that your property goes to the people you have chosen, and that your personal affairs are wrapped up in an orderly manner following your death. Although these duties may vary depending on your particular situation, your personal representative generally:
- assists with funeral arrangements,
- finds out where your bank accounts are,
- makes a list of all the things you own and all of your debts,
- cancels all of your credit cards,
- files your final income tax returns,
- distributes property to your beneficiaries, and
- maintains complete records of all transactions performed in the administration.
It is important to prepare a complete list of debts because all debts must be paid before gifts are paid out to beneficiaries. Gifts to beneficiaries may be reduced by the amount needed to pay the debts. To make sure that all debts are paid off, personal representatives often run a small ad in the local newspaper, called a Notice to Creditors and Claimants, asking any creditors to come forward. If the personal representative believes the claim is legitimate, they may accept it and pay it from the estate funds. If the personal representative is unsure about the claim, he or she can ask for written proof of the claim, or, depending on the amount or complexity of the claim, can consult with the estate lawyers before paying.
Your personal representative or executor owes an obligation to your estate and its beneficiaries to prudently administer the estate. For example, personal representatives must maximize the assets that will ultimately be available for distribution, which may require the investment of certain assets if they will not be distributed in a timely manner. If they fail to fulfill their obligations in good faith, they can be held personally liable.
Typically, a personal representative should call in all assets of an estate and prepare for their distribution within one year, which is often referred to as the “executor’s year”. Beyond one year after death, a personal representative should be able to provide an explanation to beneficiaries as to why distributions have not yet been made and provide a proposed distribution schedule.
Compensation for estate trustees
Under the Trustee Act, the fees paid to the estate trustee (which is your executor, administrator or personal representative) are to be fair and reasonable. The general rule is that an estate trustee can receive a total of 5% of the value of the estate. It should be noted that the 5% is a total fee, not a yearly compensation. The 5% guideline is based on the following:
- 2.5% of money received from capital and from revenue, and
- 2.5% of money spent from capital and revenue (called disbursements).
In addition, the trustee may have been guaranteed a particular fee as indicated in the deceased’s Will. Also, personal representatives or executors are reimbursed by the estate for most of their expenses.When reviewing the fees claimed by an estate trustee, the Court generally considers the work needed to be done by the trustee and the complexity of the estate. The five factors the Court considers are:
- Size and value of the estate,
- Level of care and responsibility required, and risk assumed by the trustee,
- Time required to properly administer the estate,
- Skill and ability needed and shown by the trustee, and
- Degree of success in administrating the estate.
Care and Management Fee, or Special Fee
However, a trustee can charge more, and the Court may agree they are justified.
In some circumstances, on the claim of an estate trustee, the Court may make an award for a care and management fee or a special fee. Where such a fee is awarded, the Court will usually allow a management fee of 2/5 of 1% or 4% per year of the average market value of the estate assets. This may be awarded to compensate the estate trustee in cases where:
- an estate is taking a number of years to administer,
- where extra or specialized work by the estate trustee is necessary,
- where there are taxation problems,
- where there are many categories of beneficiaries, or
- if there is a lawsuit started by the estate or against the estate.
For more information about Wills, visit the Ontario Ministry of the Attorney General website. Wills are extremely important documents and relatively inexpensive to have prepared professionally. If you want to make sure your Will is legal and clearly expresses your wishes, you should consult a lawyer.
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