Settling an Estate by an Objective Unemotional 3rd Party

In many families settling an estate can be quite difficult and take a long time because the family members don’t get along with one another, don’t speak with each other or just don’t trust each other. This can make an executor’s job that much harder. How would you react as an executor if one of the beneficiaries accused you of hiding something? Are you able to remain objective when there are long-standing issues between you and your siblings? Will you continue to move the estate forward if someone threatens to challenge the terms of the will in court? Is someone bitter because they weren’t selected as the executor? Are the beneficiaries second-guessing your actions and decisions?

The list of possible issues can go on and on… every family is different… so the executor needs to remain objective and unemotional. Either that or the executor can hire someone to assist who will communicate with everyone else. How can these difficult situations be diffused? Better yet, how can we prevent them from arising in the first place? Really, it isn’t that difficult, but it can feel impossible if you’re caught up in the emotion.

The top 3 solutions are these: communication, communication, communication. Beneficiaries deserve to receive frequent status updates, including what has recently been accomplished, what is still left to do, and where any pitfalls may lie. All reports provided should be clear, complete and easy to understand. In a word, transparent.

Next, the financials. Eventually, the beneficiaries will be provided with the financial reports and asked to pass the accounts, so another idea is to provide interim financial reports. You will likely prepare a list of assets & liabilities for probate, so you could start by providing that report. Next, all bank transactions should be recorded, so you could also provide that list. Then there’s the list of revenue & expenses… this report could also be provided, which should clearly show all of the expenses incurred by the estate since the date of death.

What else? Do not procrastinate. It’s so easy to do, with all of the other obligations we have in our lives. If you believe you’ll have to justify your every action, sometimes it’s easier to just put it aside and do something else, but then that task stays on your mind, preventing you from relaxing. Don’t procrastinate, just continue to be objective and complete the task now, not later.

People tend to not tell their ‘story’ to anyone acting professionally and objectively. I rarely hear unreasonable statements. People tend to keep their comments/questions brief and factual. It’s this objective person who can maintain an open dialogue with family members. Not only will beneficiaries say more, they’ll also hear more.

Most importantly, let’s remember why we’re doing this work in the first place: we’re respecting and fulfilling the final wishes of the deceased. Yes, settling an estate can be a big job, but it doesn’t have to be a negative one. Remain objective, professional and unemotional, and the estate will be settled before you know it… without conflict.

Gregg Medwid is the owner and president of Executor Support, a firm based in Coquitlam, BC with expertise assisting executors and administrators in settling estates. The project management expertise and customer service focus Medwid brings to Executor Support ensures questions are answered and help is given when it is most needed.

This article is in no way intended to substitute for competent legal advice.

Gregg Medwid, Owner
Executor Support
gregg@executorsupport.ca
604-999-2106
http://www.ExecutorSupport.ca

Bookkeeping Requirements When Settling an Estate

There is more to settling an estate than just probating the will, selling the house and distributing the proceeds to the beneficiaries. I wish it were that easy! Many people understand that the T1 Income Tax Return needs to be filed for the year of death, but many people are unaware that the estate itself may also need to file an income tax return, known as a T3 Trust Income Tax Return. The accountant will need to be provided with the list of assets & liabilities and the list of revenue & expenses, so these figures need to be documented.

When I speak of bookkeeping requirements, I’m referring to the following:

1. List of all transactions in all bank accounts. In other words, generate a long bank statement that covers many months. I tend to re-create the bank statements, replacing any ‘bank talk’ with easy-to-understand English descriptions, and the new list of transactions shows where every penny went;
2. List of all revenue earned and expenses incurred. An example of revenue is interest earned in the bank, and an example of an expense is the realtor commission for selling the home. Where appropriate I also include cheque numbers and brief descriptions to add context; and
3. List of assets & liabilities. This is the list you would have generated in order to apply for probate.

Creating such financial documents doesn’t need to an onerous task, but the documents do need to be complete, accurate and easy to understand. Keep it clear and simple.

In addition to the tax returns, the beneficiaries need to Pass the Accounts, meaning the beneficiaries need to review and approve the expenses of the estate. In order to add context for the beneficiaries and to keep everything as transparent as possible, I like to also include the list of assets & liabilities as well as the list of bank transactions. All of this bookkeeping data should be provided to each beneficiary.

Some estates are considered to be insolvent, meaning the value of the debts exceeds the value of the assets. In these estates the creditors will receive either nothing at all or only cents on the dollar, but either way, the creditors deserve to receive proof of your statement that there are insufficient funds. The financial documents will need to be provided to each creditor, along with a covering letter explaining the insolvency.

If all of this sounds a little tedious, well, it is. So, here are a couple of ideas which can simplify matters. Firstly, separate your own money from the estate’s money by using an Estate bank account, leaving you with fewer accounts to manage. Next, if the deceased had numerous bank accounts, close all but one of them as soon as possible. Again, this simplifies matters. Lastly, since executors need access to available cash in order to pay expenses, often times it is helpful to open a Line of Credit. Invoices can be paid from the LOC, and the interest expense gets charged to the estate.

Gregg Medwid is the owner and president of Executor Support, a firm based in Coquitlam, British Columbia, with expertise assisting executors and administrators in settling estates. The project management expertise and customer service focus Medwid brings to Executor Support ensures questions are answered and help is given when it is most needed.

This article is in no way intended to substitute for competent legal advice.

Gregg Medwid, Owner
Executor Support
gregg@executorsupport.ca
604-999-2106