Executor Duties Checklist: Decisions for the Estate

This is the sixth of a series on the duties of an executor. Think of it like a checklist, with everything an executor needs to take care of. To make this list as comprehensive as possible, we’ve divided the series into 12 parts.

To view the series in its entirety, follow this guide:

Part 1: Handling Immediate Matters
Part 2: Gathering Documents and Funeral Planning
Part 3: Notifying Accounts and Collecting Information
Part 4: Tying Up Loose Ends
Part 5: Taking Inventory
Part 6: Decisions Regarding the Estate
Part 7: Administrative Duties
Part 8: Applying for Benefits (For Spouses/Beneficiaries)
Part 9: Managing the Trust Account (If Applicable)
Part 10: Distributing Assets
Part 11: Filing Taxes
Part 12: Finalizing the Estate

As an executor, you’re tasked with making decisions that impact the estate - and how the estate is distributed.

As part of that process, you may need to seek outside counsel (like an estate attorney) or even undergo a legal process, like probating the will.

In this guide, we outline scenarios in which you might need an estate attorney or undergo the probate process.

The role of an estate attorney

Estate attorneys specialize in the distribution of property and the management of assets when someone dies. They also specialize in working with individuals who are preparing their estates in the event of their death to help ensure a more seamless distribution of assets after their client dies.

Situations in which an estate attorney is recommended

There is no will

The aftermath of dying without a will, and the legal implications, varies by state and province. In general, governing bodies will pass assets on to closest living relatives - like spouses, children or parents.

However, this may give way to more complex issues and breed conflict between family members who may feel they were owed or promised certain items. Or, if assets need to be sold and the funds distributed among the deceased’s children.

Complex family situations

Situations where there are blended families, or there may be animosity and miscommunications about assets between family members, can create legal trouble for an estate. This might be a situation where you want to consult an estate attorney to help smooth out any conflicts between family members

The estate is valued over the inheritance tax threshold

Across the United States, the majority of states don’t have an inheritance tax or an estate tax. However, at the federal level, estates valued at over $11.7M or more are subject to additional estate taxes. Estates are valued at fair market value, rather than the price originally paid on things like property and investment funds.

These cases are rare. In fact, 99.9% of estates are not subject to estate taxes.

Larger, wealthier estates are often more complex because they come with more investments and there needs to be someone responsible for navigating the complexities of paying for estate taxes - while ensuring the remainder of the estate is divvied up according to the will once taxes have been paid.

It’s important to note that surviving spouses or children of the deceased do not have to pay estate taxes.

In Canada, there are no estate taxes or inheritance taxes. The only taxes an estate is required to pay are income taxes and those associated with liquidating accounts that result in capital gains taxes.

The estate is bankrupt

If the estate is bankrupt, it can be more challenging to decide how to sell assets to cover outstanding debts. First, it’s important to remember that just because an estate has no funds to cover debts, doesn’t mean it’s bankrupt. Estates have to be formally declared bankrupt.

Working with an estate lawyer can help you determine what your liability is as the executor of the estate. They can also guide you through the legalities of paying debts.

The Trustee Act outlines that all debts in an insolvent estate are to be paid, without any preference or priority to creditors, apart from secured debts, such as a mortgage, which receive priority. As executor, funeral expenses (as long as they are reasonable and not extravagant) can be paid for first with any assets sold.

The deceased owned a business

Business ownership can get complicated, especially if that business was jointly owned and there are other stakeholders involved.

If the deceased ran a sole proprietorship, you should be able to follow the succession plan outlined in their will. If there was no will, that’s when an estate lawyer is especially important. The business will be passed on to next-of-kin according to succession, which can create conflicts within families. Businesses also come with contracts that will need to be evaluated.

In the case of a jointly-owned business with two partners, without proper documentation or a clearly defined plan for selling the deceased’s portion of the business to other partners or outside parties, the partnership dissolves and accounts are closed. An estate lawyer can help you navigate this situation and work with the living partner. If there are multiple partners, an estate lawyer can assist with negotiations and determining how the business will be passed on between surviving heirs and the living partners.

Understanding probate requirements

What is probate?

Probate is a court-supervised process to authenticate the will of the deceased. As part of probate, the executor will be required to locate and determine the value of the deceased’s assets, pay final bills, file and pay taxes and distribute remaining funds and assets. Probate also gives you official recognition as the executor over the estate.

Probate laws vary by state and province, so if you need to undergo the probate process it’s best to consult local experts.

Should you probate the will?

Probate can protect you, as the executor, from liability. When acting on behalf of the estate, especially complex estates, this can add a layer of comfort to an executor.

In some cases, a will may not need to go through probate court. This is usually only the case in very simple estates where everything is jointly owned or will be passed directly to the spouse.

The following are cases in which an executor should file for probate:

Banks, pension plans and insurance companies require it: There may be cases in which a particular institution will refuse a will that hasn’t been probated. In this case, you’ll have to file for probate in order for the assets held by that institution to be released to beneficiaries.

There is property involved with the estate: Probate is almost always required when property is involved. Land and property transfers can be complicated, often involving institutions that require proof the will is valid and the executor is recognized as the administrator of the estate.

The will is contested or there is potentially litigious conflict: Despite the deceased’s best intentions, when it comes to money and assets, conflicts can arise within families. Going through probate can help avoid a scenario in which a frustrated family member or business partner contests the will.

The deceased had no will: In cases where the deceased did not have a will, an executor will need to be appointed by the court in order to proceed with the estate.

Next in the Executor Duties Checklist, handling administrative duties.