Accounting for Law
Estates & Wills & Trusts

Keep meticulous accounts as estate trustee to avoid liability

Administering an estate is a big role with a large amount of responsibility and fiduciary obligations attached to it, Toronto estates and trusts lawyer Suzana Popovic-Montag tells AdvocateDaily.com

“It’s definitely not for the faint of heart,” says Popovic-Montag, managing partner of Hull & Hull LLP. “While being named estate trustee can be a sign of trust and respect, it can sometimes lead to a feeling that 'no good deed goes unpunished.'

“At the end of the day, the compensation is about five per cent of the value of the estate, which for the most part appears reasonable. Of course, there are exceptions when matters get complicated or contentious.”

The first thing she advises clients to do when administering an estate is to attempt to locate any will or handwritten documents that might contain funeral or other testamentary directions.

The trustee should also determine if there are any guardianship issues.

“If there's a minor child, who is going to take care of them if something has happened to the parents?” Popovic-Montag notes. “Consider who might bring an application for guardianship.”

If the estate trustee does not have the affidavits of execution for the will, then he or she will have to track down witnesses and prepare the documents so that they can be provided to the court with the application for probate, she says.

A big part of administering the estate is locating all of the assets and determining the liabilities. “You also have to locate all the beneficiaries,” Popovic-Montag says.

In the case where an intestate estate is split between a surviving spouse and the children, but there’s a suspicion the deceased may have other children born out of wedlock, there is an obligation to try and locate them as well.

“There could be children outside of the marriage,” Popovic-Montag says. “It can be helpful to look at a family tree or ask other family members for information. Beyond that, a Google or social media search could be fruitful.”

She says she may advise executors to hire a private investigator or a genealogist to find missing beneficiaries.  

“There are so many steps that need to be taken in order to protect yourself because as an executor, you are personally liable,” Popovic-Montag says. “You have to keep meticulous accounts because, at the end of the day, someone can allege that you took too long to file the tax returns and now there's interest and penalties.

“There is a large amount of blame that can fall at your feet if you don't get advice and actually deal with the estate properly,” she says.

The time it takes to wrap up the administration depends on the size and the complexity of the estate, she says, but executors are typically given a year before beneficiaries can start pressing for their money.  

“But if it's a complicated matter and there are cross-border assets or liabilities, it could take much longer,” Popovic-Montag says. “It really just depends on what's involved. You have to locate and secure all assets, file tax returns and make all required payments before even considering paying out any beneficiaries.”

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