Duties of the Personal Representative of an Estate
“Trustees must act in good faith and be fair as between beneficiaries in the exercise of their powers.”
-Hunter Estate v. Holton, (1992), 7 O.R. (3d) 372 at 379 (Gen. Div.)
Whoever manages the Estate of a deceased loved one is entrusted with a powerful opportunity—to act with integrity, empathy, and wisdom in the midst of loss and grief.
Administering an Estate can also be a burdensome and time-consuming endeavor. It comes with liabilities if the Personal Representative does not adhere to the Will or mismanages the Estate. Therefore, an individual must consider fully the duties and responsibility of the role before deciding to accept or decline that position.
Each Estate situation is unique, and therefore the management of each Estate will be unique. This simplified and generic account of the duties of the Personal Representative cannot replace good counsel from a lawyer for your specific Estate situation.
Who is the Personal Representative?
Such a person is known by different names: executor/executrix, trustee, Personal Representative, administrator, and legal representative. A Personal Representative can be named in a Will or appointed by the court to fill such a position. Several individuals can share the duties.
A Personal Representative owes a Fiduciary Duty
A personal representative of the Estate must act in fairness to and for the advantage of all those benefiting from the Estate. This mandate is not simply restricted to those who are named in a Will as a beneficiary, but also extends to creditors who have a claim against the Estate for debts owed. It also may extend to those not named in a Will, but who, because of their situation, are entitled by law to a benefit from the Estate (such as a spouse, adult interdependent partner, or a dependent child).
Applications/Forms to be Filed at a Courthouse
If the deceased person was customarily resident in Alberta prior to death or if some of the deceased’s property was in Alberta, then the Personal Representative should normally file at the Alberta Surrogate Court, certain forms, such as:
- An Application for a Grant, the “Grant” being the Court’s permission to proceed with the management of the Estate, possibly accompanied by limitations and further directions;
- Notices, which must be served on each person that might possibly benefit from the Estate, whether named in a Will or not, and on the Public Trustee, if a minor child is a beneficiary;
- Several Affidavits or sworn statements, one of which is to be by the Personal Representative(s) in regard to information about the deceased, the Will, the Personal Representative(s), beneficiaries, and the property of the deceased.
The filing of these documents promotes the integrity of the process for all beneficiaries and potential beneficiaries of the Estate. The Surrogate Court is then apprised of the situation surrounding the Estate and can provide direction, such as requiring proof of the validity of the will.
There are an assortment of other forms, that may or may not be needed depending on the particularities of the Estate. It is in your best interest to consult with a lawyer about the forms that need to be filled out in administering the Estate.
The Grant of Probate/Administration
Once the Personal Representative receives the Grant from the court, subject to any restrictions or limitations on that Grant, the Personal Representative can then use this document to conduct the business of the Estate, such as opening an Estate bank account, transferring land into the name of the Estate, and signing contracts on behalf of the Estate.
Also, the Grant will allow the Personal Representative to liquidate the Estate, settling debts and selling property. If distribution of the Estate will not occur for some time, a Personal Representative should consider investing the assets as a prudent investor would.
Dealing with Liabilities
A “Notice to Claimants”, though not required, should normally be published in a newspaper that circulates in the area where the deceased lived. For sizable Estates, this publication should happen twice, with at least 5 days between the publications. This Notice puts potential claimants or creditors on alert to come forward with a notice of their claim within one month of the final publication. If they do not, they could potentially lose their claim against the Estate.
However, there may be other outstanding liabilities that the Personal Representative needs to deal with. Unpaid income taxes, credit cards, outstanding utility bills, lawsuits, mortgages are just a few examples.
Once a Personal Representative compiles a complete list of debts, debts should be paid as they come due. However, a Personal Representative may decide to contest a claim if he or she does not agree to all or a part of it. Also, if there will not be sufficient funds in the Estate to pay all the debts, then the Personal Representative should seek direction from the Court as to how to divide the assets amongst the creditors.
Dealing with the Property of the Estate
Every Estate is unique in that it contains different property and different claims on that property. For instance, a specific piece of land could have been gifted to a certain individual in the Will of the deceased. In another case, it may be difficult to sell mineral rights that are not easily quantifiable. In another Estate, a Personal Representative may need to set up a trust fund for a child until the child reaches adulthood. In yet another situation, certain property may fall outside of the Will, such as an insurance plan that names a beneficiary, and would not form part of the Estate at all. Several individuals may have a claim on the same property. In the case of corporate shares, a unanimous shareholders agreement may dictate what is to happen to these shares upon death.
However, in most cases, the good management of that property will be the responsibility of the Personal Representative. In order to prepare for distribution of the Property, the Personal Representative must be fully aware of the property within the Estate, the claims upon it, and their responsibility in regard to that property.
The Personal Representative will need to file tax returns for the deceased and for the Estate.
These include the following:
- The T1 Terminal Return is the personal tax return for the deceased individual, which must be filed by April 30 of the following year, unless the deceased died between November 1 and December 31, then it must be filed within 6 months after death.
- Any previous tax returns still outstanding by the deceased;
- After the terminal taxes have been filed and paid, the Personal Representative must file a T3 trust return within 90 days of an elected year end: either the calendar year or the anniversary of death.
Prior to distribution of the Estate, the Personal Representative should apply to the Canada Revenue Agency for a Clearance Certificate, so as to alleviate himself or herself of any personal liability for unpaid taxes.
The Personal Representative should consult an accountant or a tax lawyer for the preparation of the tax returns.
A Personal Representative has the duty to give an account of the administration of the Estate to the beneficiaries. Financial statements must show what is received, disbursed, and distributed. Such financial statements must be provided to the beneficiaries at regular intervals. Before any distribution of an Estate, a Personal Representative should obtain from each residuary beneficiary a release, indicating that he or she is satisfied with the accounts.
Compensation of the Personal Representative
It is appropriate for the Personal Representative to be compensated. Certain factors set out in the Surrogate Rules should be considered when determining what is adequate:
- the gross value of the Estate;
- the amount of revenue receipts and disbursements;
- the complexity of the work involved and whether any difficult or unusual questions are raised;
- the amount of skill, labour, responsibility, technological support and specialized knowledge required;
- the time expended;
- the number and complexity of tasks delegated to others; and
- the number of Personal Representatives appointed in the Will, if any.
Compensation may be paid to the Personal Representative if the Will provides for it, if the beneficiaries all agree to it, or if the court orders it.
A Personal Representative may also be reimbursed for expenses that were properly incurred.
Litigation in Estates
Sadly, relationships can disintegrate amongst family members, friends, and beneficiaries as the Estate is administered and distributed. Estate litigation is common, and the Personal Representative can be found liable to beneficiaries, potential beneficiaries, and claimants if the Estate is mismanaged.
If the Personal Representative is in a potentially contentious Estate situation, he or she should consult with an experienced Estate lawyer to find out how to minimize personal liability and manage the Estate affairs in such a way as to be above reproach.
Distribution of the Estate
Prior to distribution, a Personal Representative should be certain that all outstanding matters of the Estate in regard to property and claims on the Estate have been addressed satisfactorily and that the instructions of the Will have been followed.
In certain situations, an interim distribution may be made, as long as there is sufficient money held back to deal with any outstanding claims and liabilities on the Estate.
Advice and Direction from the Surrogate Court
At any time in the process, the Personal Representative can apply to the court for its direction on any matter that arises during the administration of the Estate.
We Want to Help
The Personal Representative has a significant role at a difficult time. Though much care and attention may be poured into the Estate, a Personal Representative who manages the Estate without the advice of experienced counsel may find the process confusing, frustrating, lengthy, and exhausting.
For those who have found themselves in the challenging position of Personal Representative, our door is open to you. At Quantz Law Group, we will truly hear your unique challenges and provide sound guidance and direction. We will assist you in being the best person for the job.
NOTICE TO READER: The summaries of legal rights and remedies described above are general references to the Alberta laws existing at the date of the publication and may not apply to the reader’s individual circumstances. Also, the laws may change. These legal summaries are not to be relied upon as applicable to your individual circumstances and are subject to a complete review of the facts and applicable laws in every case.