Reference Articles >Duties of an estate trustee

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This article reviews the rights and obligations of an estate trustee from the estate trustee's point of view   

General

The person appointed to administer your estate is called an estate trustee. Your estate trustee is a fiduciary.  This means they are bound by principles governing the law of trusts and legally hold your property for the ultimate use of the beneficiaries of the estate. 

Where there is a Will, the estate trustee derives his or her authority from the document.  The responsibility of the estate trustee starts when that person acknowledges the appointment by taking on the role of estate trustee. The estate trustee can renounce the appointment before accepting it. However, once accepted (either formally or informally) the estate trustee may only resign in accordance with the terms of the Will or by court order.

Where there is no Will the person who will administer your estate (called the estate trustee without a Will) derives their authority from the grant of the Court and that authority extends only to the jurisdiction of that grant and only from the time the grant is issued. This means an application has to be made for the Court to issue the grant (formerly called Letters of Administration). The rights and powers of an estate trustee without a Will are not transmissible. 

It is important to remember that there is a distinction between the estate trustee’s role and that of the solicitor providing legal advice to the estate trustee.

Income Tax Filing Deadlines and Requirements

There are various income tax deadlines and requirements. The following is a sample:

• Regular Form T1 Terminal Year Return – in general, where a taxpayer dies before November in a calendar year, the return must be filed by April 30 of the next calendar year.  Where the death occurred in November or December, the return must be filed within 6 months of the date of death.  An exception is made where the property passes to a spousal trust, in which case the Terminal Return can be filed within 18 months of the date of death.
• Prior Year Return – where the death occurred before May in the terminal year, the return for the immediately prior year is due within 6 months of death.
• Partnership or Sole Proprietorships Stub Period Return – subject to the same filing deadline as T1 Terminal Returns.

• Testamentary Trust Stub Period Return – subject to the same filing deadline as T1 Terminal Returns.

• Rights or Things Separate Return – the return must be filed by the later of 1 year from the date of death or 90 days after the mailing of a Notice of Assessment for the Terminal Year.
• Election to Opt Out of the Spousal Rollover or Election Regarding Spousal Rollover of Resource Property – these elections are to be made in the regular Terminal Return.
• Election Under Subsection 164(6) to Carry Back a Loss from the Estate’s First Taxation Year to the Terminal Year – that election must be made in writing by the later of the filing deadline for the Terminal Return and that of the Estate’s first taxation year.
• Election to Pay Deceased’s Taxes in Yearly Installments under Subsection 159(5) ­– the election Form T2075 must be filed by the filing deadline for the T1 Terminal Year Return.
• Clearance Certificate – The application can be made and the Certificate must be received from Canada Revenue Agency before the Estate Trustee distributes the final property of the deceased’s Estate to the beneficiaries.

Role of the Estate Trustee

The role of the estate trustee is embedded with certain rules of conduct.  The rules of conduct require an estate trustee to:

• act prudently and honestly;

• follow the directions contained in the Will or other governing document or intestacy rules;
• treat all beneficiaries with an even hand unless otherwise directed in the governing document;
• not delegate his or her authority to make decisions in connection with the administration of trust property to anyone else;
• not personally profit as a Trustee from his or her dealings with trust property or with beneficiaries;
• not place themselves in or act or perceive to be acting in conflict with the best interests of a beneficiary;
• keep and maintain records and produce accounts upon reasonable notice; and
• not unreasonably delay the estate’s administration.

The first duty of the estate trustee is to examine the Will. Then the estate trustee should do the following:

• Make appropriate funeral arrangements and pay for this expense. 

(b)  the deceased may have had a prepaid funeral arrangement

• Retain a solicitor.

• Locate the Last Will and Testament of the deceased.

• Establish who the beneficiaries are and obtain their names and addresses, and if they are minors, their ages and their parents’ names and addresses.  If they are incompetent, who their personal representatives are.

(a) life insurance policies – only if the designated beneficiary is the immediate family member;

(b) employment pay – only if payable to a family member and not to the Estate – termination pay;

(c)  death benefit – through an employee pension plan – only if directly payable to the family member;

(d) Search for assets and safeguard such assets until distributed or sold;

(e) search for cash, securities, jewelry and other valuables and arrange for safekeeping (including review of safety deposit boxes);

(f) lock the residence and notify the police that the home is vacant.  In winter, ensure that the house remains heated or drain the pipes to prevent freezing;

(g) examine insurance coverage and ensure Estate assets – motor vehicle, house, furniture, jewelry, art etc. against perils and fire;

(h) for motor vehicles, check the insurance policy for adequate coverage and permitted uses;

(i) dispose of all perishable assets.

• Prepare an inventory of original assets, including a safety deposit box listing, real estate, monies on deposit at financial institutions, personal belongings, life insurance, and interest in an Estate or Trust and any other investments.
• Arrange for a valuation of assets, where necessary, including appraisals.
• Apply for any benefits payable on death, including CPP Death Benefit, life insurance proceeds and death benefits from pension plans or annuities (payable to the Estate).
• Advertise for creditors and prepare an inventory of debts.
• Determine debts and locate evidence regarding loan balances.
• Instruct the solicitor to apply for the appropriate grant or certificate.
• Supply the solicitor with the information required to make the application.
• Collect income generated by Estate assets or payable to the deceased. 
• To the extent that you are able, prior to the obtaining of a Certificate of Appointment, pay bills, mortgage payments, property taxes, income taxes, insurance premiums and credit cards.
• Check leases, tenancy agreements and arrange for payment or collection of rent and give notice as appropriate.
• Banks and other financial institutions may refuse to honour cheques written by the deceased but not cleared prior to their death.  You may have to replace these cheques once you obtain a Certificate from the Court.
• Redirect or cancel subscriptions to newspapers and magazines.
• Redirect mail and cancel health insurance coverage, cable, telephone, club memberships, subscriptions and credit cards.
• Arrange for care of pets.
• In respect of farm property, arrange for care and management of livestock and crops.

Then, once these matters are accomplished, the estate trustee should look to the following things:

• Pay the remaining debts of the deceased.
• Prepare and file income tax returns for the year of death and for any prior years due but not filed at the date of death.
• Make reasonable inquiries for next of kin, if required.
• Consider any claims or potential claims against the Estate and obtain legal advice, if necessary:

(b) assess the rights of any dependants who were financially dependent on the deceased.

• Set aside reserve funds for estimated debts, taxes (including capital gain) and estate trustee’s compensation.

• Prepare and maintain estate accounts for approval by beneficiaries or examination by Court, where appropriate.

• Prepare an interim Release and make an interim distribution to beneficiaries if appropriate.

• Invest assets for establishment of trusts, if the Will directs. You should consult the estate solicitor regarding the application of the Trustee Act.

Then, as final matters to attend to the estate trustee does the following:

• Dispose of or distribute personal belongings in accordance to instructions in the Will.

• Prepare cheques and pay legacies and transfer bequests as provided in the Will.
• Convert investments and other assets (except those specific assets to be given to individuals under the Will or as decided) to cash and deposit to the Estate account or invest the Estate balance and interest earning investments pending final distribution to beneficiaries.
• In terms of investments, review with the solicitor the requirements under the Trustee Act.
• Reregister assets in the Estate’s name, as applicable.  
• Prepare a transfer/deed for conveyance of real property, if required by the Will. 
• Arrange rollover of RRSPs or RRIFs to the spouse, as required.
• Settle and pay all legitimate claims against the Estate.
• File a final T3 Income Tax Return.
• Obtain a Clearance Certificate from Canada Revenue Agency for the final return.
• Prepare final releases, as necessary.
• If there is no Will, distribute assets according to the rules for intestate succession.
• Send releases to beneficiaries together with the Statements.
• Prepare cheques and pay balances to residual beneficiaries.
• If necessary, advise beneficiaries regarding inclusion of income from the Estate in their personal tax returns.
• Close the Estate bank account.