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Invest Well, Live Well: Our top tips for executors

Being appointed as an executor is an honour and tremendous responsibility. When asked after the fact, most executors would never want to do it again because of the time, energy and personal liability.
Invest Well Live Well Eric Davis Keith Davis

Being appointed as an executor is an honour and tremendous responsibility.

When asked after the fact, most executors would never want to do it again because of the time, energy and personal liability. Recently, we provided some estate-planning strategies that may help ease the transfer of assets and help save taxes.

As a follow-up, we want to emphasize some tips that executors could use if they must deal with an estate:

1. Silence is golden until it comes to estates. Keep beneficiaries in the loop with progress, the next steps and timelines. Consider using e-mail as it acts as a document showing your detailed correspondence.

2. Do not allow anyone to keep the original will, remove staples or write on it. Most financial institutions will make a copy and stamp the copy to note they saw the original.

3. Stay organized. There are several books and checklists available for executors to help tackle an estate one step at a time.

4. Keep copies of all transactions. There is an incredible amount to cover as an executor and should anything come into question, you will want to have copies of everything. Make notes as to who you spoke with and the outcome.

5. Avoid paying costs from your own account. Banks and credit unions will create an estate account to pay household or pertinent estate bills when presented with a bill or invoice.

6. Automate household bills (electricity, property taxes, house insurance, strata, gas, garage, city utilities, etc.) to help ensure they do not lapse.

7. Get help. It is natural to feel overwhelmed. Rely on a knowledgeable financial advisor, lawyer or accountant. In addition, you could opt for executor assistance, whereby you consult with professionals who regularly deal with processing estates.

8. We typically suggest moving all the investments into secure, liquid and guaranteed vehicles to help preserve the estate values and limit executor liability should the investments drop between death and disbursement. Beneficiaries tend to be upset if they receive less than anticipated.

9. Investigate all insurance possibilities, such as personal policies, work or group insurance, credit card, mortgage and debt policies, annuities, segregated funds, etc.

10. Consider applying the taxable CPP death benefit (a maximum of $2,500) towards the estate's taxes.

11. One helpful tax provision to keep in mind is the ability to use net capital losses from prior years to reduce other income on the final return, the return for the year before the death or both returns. For example, if the deceased lost money on Nortel or Bre-X, they may be able to apply those losses against any income. Ordinarily, capital losses can only be used to reduce capital gains, where available.

12. Upon the granting of probate, it is common to disburse a portion of the estate. However, it is generally not recommended to distribute all the estate proceeds until you have a clearance certificate from the Canada Revenue Agency.

13. Money and emotions are a powerful and volatile mix. If the estate is contentious, we strongly recommend professional guidance to help protect yourself, as well as the beneficiaries. The estate, in most cases, will cover professional fees. 

It is difficult to cover all the potential issues regarding executors. There are several resources we are happy to share with you. Since executors can be personally liable for errors, we feel it makes good sense to seek professional assistance.

Stay safe and, until next time, Invest Well. Live Well.

Written by Eric Davis. his document was prepared by Eric Davis, vice-president, portfolio manager and investment advisor, and Keith Davis, investment advisor, for informational purposes only and is subject to change. The contents of this document are not endorsed by TD Wealth Private Investment Advice, a division of TD Waterhouse Canada Inc.-Member of the Canadian Investor Protection Fund. All insurance products and services are offered by life licensed advisors of TD Waterhouse Insurance Services Inc., a member of TD Bank Group. For more information, call 250-314-5124 or email Keith.davis@td.com.