1. What Does an Executor Do?

2. What Does Alberta Law Say?

3. Costs and Considerations

4. When Should You Speak With an Estate Lawyer?

5. How Bridgestone Law Can Help

Introduction

Being appointed as an executor is both an honor and a significant legal responsibility. Most executors are family members or close friends who have little or no experience administering an estate, yet they are suddenly expected to manage legal documents, financial institutions, taxes, beneficiaries, real estate, and court procedures.

Fortunately, most executors perform their duties responsibly and successfully. However, there are several common mistakes that can create unnecessary delays, increase administration costs, damage family relationships, and, in some cases, expose the executor to personal liability.

Understanding these mistakes before beginning the administration can help executors avoid many of the problems that commonly arise during probate and estate administration in Alberta. Careful planning, good communication, accurate record keeping, and obtaining professional advice when appropriate are often the best tools an executor can have.

What Does an Executor Do?

An executor (referred to in Alberta legislation as a personal representative) is responsible for administering the deceased's estate according to the will and Alberta law.

Their responsibilities commonly include:

• locating the original will;

• identifying and protecting estate assets;

• determining whether probate is required;

• paying valid debts and taxes;

• communicating with beneficiaries;

• maintaining accurate records;

• distributing the estate; and

• completing the administration of the estate.

Because the executor owes legal duties to both the estate and its beneficiaries, every significant decision should be made honestly, carefully, and in good faith.

What Does Alberta Law Say?

Under Alberta's Estate Administration Act, personal representatives must administer an estate honestly, in good faith, and with the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances.

The law recognizes that executors are often not legal professionals. Executors are not expected to be perfect, but they are expected to act reasonably, preserve estate assets, keep proper records, and carry out the terms of the will.

Many executor mistakes occur not because of dishonesty, but because the executor is unfamiliar with the legal process.

Mistake One: Distributing the Estate Too Early

Perhaps the most common mistake executors make is distributing the estate before all obligations have been addressed.

Beneficiaries are understandably eager to receive their inheritance, and executors often feel pressure to distribute funds as quickly as possible.

However, before making final distributions, an executor should generally ensure that:

• estate assets have been identified;

• valid debts have been paid;

• administration expenses have been satisfied;

• tax obligations have been addressed;

• sufficient records have been prepared; and

• enough funds remain available for any outstanding liabilities.

Distributing an estate too early can become a serious problem if additional creditors come forward or the Canada Revenue Agency later determines that additional tax is payable.

Many executors choose to obtain a CRA Clearance Certificate before making the final distribution to reduce this risk.

Mistake Two: Poor Record Keeping

Good records are one of an executor's strongest protections.

Every dollar received and every dollar spent should be supported by documentation.

Executors should retain:

• bank statements;

• receipts;

• invoices;

• investment statements;

• tax returns;

• correspondence;

• photographs of valuable assets where appropriate;

• copies of distributions; and

• signed Receipts and Releases.

Without proper records, it can become difficult to answer beneficiary questions or demonstrate that estate funds were handled appropriately.

Good record keeping also makes preparing the estate accounting significantly easier.

Mistake Three: Failing to Communicate With Beneficiaries

Many estate disputes begin because beneficiaries feel they are being ignored rather than because the executor has done anything wrong.

Estate administration often takes a year or longer, particularly where probate, tax issues, or real estate are involved.

Providing reasonable updates can help beneficiaries understand:

• what has been completed;

• what remains outstanding;

• why delays have occurred; and

• when they can reasonably expect distributions.

Regular communication often prevents misunderstandings from becoming unnecessary disputes.

Mistake Four: Failing to Protect Estate Assets

Executors have a duty to preserve estate property during the administration.

This may include:

• securing vacant homes;

• maintaining insurance;

• arranging property maintenance;

• protecting valuables;

• collecting money owed to the estate;

• supervising investment accounts where appropriate; and

• taking reasonable steps to prevent avoidable losses.

For example, failing to notify an insurer that a property has become vacant may jeopardize insurance coverage if damage later occurs.

Careful management of estate assets protects both the beneficiaries and the executor.

Mistake Five: Trying to Do Everything Alone

Many executors believe they should handle every aspect of the estate without assistance.

In reality, complex estates often require professional advice.

Executors commonly work with:

• estate lawyers;

• accountants;

• real estate professionals;

• appraisers;

• financial advisors; and

• tax professionals.

Seeking professional guidance does not mean the executor has failed in their responsibilities. In many cases, obtaining advice early helps avoid costly mistakes and makes the administration more efficient.

Practical Examples

Example One: Distributing the Estate Too Soon

Linda is appointed executor of her father's estate.

After obtaining probate, she distributes nearly all of the estate because the beneficiaries are eager to receive their inheritance. Several months later, Canada Revenue Agency reassesses the deceased's final income tax return and determines that additional tax is owing.

Because insufficient funds remain in the estate, Linda must attempt to recover money from the beneficiaries. Some beneficiaries have already spent their inheritance, making recovery difficult and exposing Linda to unnecessary personal risk.

Waiting until the estate's tax obligations were finalized could likely have prevented the problem.

Example Two: Poor Record Keeping Creates Unnecessary Conflict

Mark administers his mother's estate over fourteen months.

He pays numerous estate expenses but keeps only some of the receipts and does not maintain a record of telephone calls, banking transactions, or reimbursements.

When beneficiaries later request an accounting, Mark struggles to explain several withdrawals from the estate account.

Although he acted honestly throughout the administration, the lack of supporting documentation creates suspicion and delays the final distribution.

Maintaining organized records from the beginning would have made the accounting straightforward and significantly reduced the likelihood of disagreement.

Example Three: Lack of Communication Leads to Family Tension

Sarah is administering an estate that includes a home requiring repairs before it can be sold.

Because she is busy dealing with contractors, accountants, and lawyers, she rarely updates the beneficiaries.

After several months without hearing anything, the beneficiaries begin assuming that the administration is being mishandled and disagreements develop within the family.

In reality, Sarah has been acting appropriately throughout the administration.

A few regular updates explaining the progress of the estate would likely have prevented most of the frustration and preserved better family relationships.

Costs and Considerations

Many executor mistakes ultimately increase the cost of administering an estate.

For example, errors may result in:

• additional legal fees;

• accounting fees;

• court applications;

• delays in selling estate assets;

• increased tax preparation costs;

• interest and penalties on unpaid taxes;

• additional property maintenance expenses;

• disputes among beneficiaries; and

• prolonged estate administration.

In some cases, the financial cost of correcting an avoidable mistake greatly exceeds the cost of obtaining professional advice at the beginning of the administration.

Executors should remember that reasonable legal, accounting, appraisal, and other professional expenses incurred for the proper administration of the estate are generally payable from the estate rather than personally by the executor.

When Should You Speak With an Estate Lawyer?

Professional legal advice may be especially valuable if:

• you are acting as an executor for the first time;

• the estate includes a business or multiple real estate holdings;

• beneficiaries disagree with one another;

• the will is unclear or appears incomplete;

• there are concerns regarding taxes or creditor claims;

• the estate includes foreign assets or beneficiaries;

• the deceased died owning significant investments;

• you are considering making an interim distribution;

• you are concerned about potential personal liability; or

• you are uncertain about your responsibilities.

Obtaining advice early often helps prevent small issues from becoming larger legal disputes and provides executors with greater confidence throughout the administration.

How Bridgestone Law Can Help

Most executors want to administer an estate properly but simply have never done it before. Understanding your responsibilities and obtaining advice when necessary can make the process significantly more manageable.

Bridgestone Law assists executors and families throughout Calgary and Alberta with probate applications, estate administration, executor guidance, estate accounting, and legal advice at every stage of the administration process. We can help you understand your legal obligations, avoid common mistakes, work with accountants and other professionals, and administer an estate efficiently while protecting both the beneficiaries and yourself.