When someone passes away, their estate is divided among their beneficiaries. But who gets paid first? In this article, we will explore who gets paid from an estate in Canada and the order in which they are paid. We will also look at some factors that can affect this process.
Being an Estate Representative and Settling the Estate
A probate representative manages the estate of a deceased person. Your estate includes your assets and your liabilities.
Other terms for estate representatives include trustee, executor, liquidator, and administrator.
You may be named in a will as the representative of someone else’s estate. If you agree, you will be responsible for carrying out the instructions in the will when that person dies.
Even if you are named in the will, you do not have to accept responsibility to be the representative of the estate. If you do not agree, the responsibility will fall to an alternate estate representative if one is named in the will.
If there is no alternate probate representative, or if there is no will, liability will be determined based on provincial or territorial law.
Financial Implications of Being an Estate Representative
As an estate representative, you are responsible for paying all of the deceased’s debts and distributing what’s left to the beneficiaries. This can be time-consuming, so it is important to understand your responsibilities before accepting the role.
The estate representative can expect to receive several bills after someone dies, including funeral expenses, taxes and any debts the deceased owed. Usually, Public Trustee will have to pay these bills out of their pocket and then be reimbursed by the estate.
Sometimes, the estate may not have enough money to cover all the debts and expenses. In this situation, the estate trustee may have to decide which debts to pay first. The order in which debts are paid is called the “order of priority.”
The following is the order of priority for debts in Canada:
1. Funeral expenses
2. Taxes owing to the federal government, such as income tax and capital gains tax
3. Taxes owing to the province or territory, such as probate fees
4. Money owed to creditors, such as banks or credit card companies
5. Money owed to beneficiaries
The order of priority for debts can be different in other countries. For example, in Canada, funeral expenses take precedence over paying the deceased’s income tax debt.
If you are an estate representative, you may want professional help from a real estate lawyer to understand your responsibilities and the financial implications of being an estate representative. Do you want to know more about whether all wills must be probated in Canada? Read this article.
Responsibilities of an Estate Representative
Some of the responsibilities of the Public Trustee include:
- Making funeral and burial arrangements
- Searching for the last will of the deceased
- Paying for the upkeep of the estate
- Locating and notifying all beneficiaries named in a will, or by law, if there is no will
- Obtaining an estimate of the value of property
- Application for probate (probate)
- Completing a final tax return for the deceased, as well as all declarations required for probate
- Sending notice to creditors of the person’s death
- Payment of all debts of the deceased
- Division of property according to the will (or by law if there is no will)
- Providing financial information about the inheritance to beneficiaries.
Our Will and Estate lawyers also assist executors, or estate trustees, navigate the probate process seamlessly, including when obtaining a Certificate of Appointment of Estate Trustee with or without a Will and administration of estates. Want to know more about what are the requirements for a will to be valid in Canada? Read this article.
When processing an estate, you should consult with a real estate lawyer who will answer all questions or concerns you may have. You may also want to check with your financial institution to see if they have any information to help you with probate.