Even though it is very difficult to start settling an estate, it is important to begin by taking the first step and not balking. For some people, sorting through the belongings of their loved ones helps them deal with their grief. It lets them to reminisce about the good times they had together. On the other hand, some people prefer to have all the estate-related matters sorted by someone else.
Is There a Will?
Settling an estate means concluding a deceased loved one’s personal and financial affairs. It is carried out by the executor, who is named in the will and is responsible for the proper administration of the process. If there is not a will, an estate is distributed according to the law. It is a complex and time-consuming process and you should always seek professional legal advice.
First of all, it is important to locate the will and verify whether it is valid. The document should be reviewed to make sure that there are no legal issues. A probate court can determine that a will is legal and approve a trustee (executor).
If there are no legal issues and the executor is identified according to the will, the executor can either renounce his or her appointment or start taking action in regard to the estate. Once he or she takes on the role of the executor, he or she is liable for conducting the administration of the estate in accordance with the will, established trust law, as well as the applicable provincial and federal laws.
Settling an estate takes at least half a year. On average, it ranges between 12 and 18 months. But in the case of complex, multi-jurisdictional estates, it can take years. It depends on numerous factors, such as the nature and location of assets, the type of debts, and the claims against the estate, the financial arrangements, and the complexity of the will.
Responsibilities of the Executor
Basically, an executor is considered the deceased person’s personal representative, who carries out their wishes as stated in the will. Acting as the executor involves an abundance of duties that can vary according the complexity of the estate. Overall, there can be around 70 different administrative responsibilities that the executor needs to take care of.
The executor must identify, locate, and protect all the assets of the deceased. Moreover, he or she has to determine all the debts, liabilities, as well as taxes and pay them. This includes notifying government departments and financial institutions where the deceased held accounts, closing them, redirecting mail, reviewing insurance coverage, opening an estate account, advertising for creditors, distributing bequests to beneficiaries, overseeing business interests, et cetera. When communicating with different institutions, the executor will have to show proof of death and a copy of the deceased’s will to demonstrate the authority to act on behalf of the estate.
It is very important that the executor communicates with the beneficiaries. Together, they should review the terms of the will, create a timeline for completing the administration, and determine how the personal assets will be divided. Beneficiaries must receive sufficient information and be treated fairly and equitably. This includes regular reports informing the beneficiaries of the executor’s activity as well as an accounting of the estate administration, including a schedule of distribution. The executor should also request an approval for compensation from the beneficiaries if they plan to charge a fee. If they do not approve the compensation, the executor will have to get the compensation approval from a court.
The executor has to advertise for creditors and claimants to make sure that all debts and obligations are identified. If he or she ignores this duty and a valid claim comes up on the estate after the assets have been distributed, they might be liable for those debts.
When all debts are paid, all obligations satisfied, and all releases returned, the executor can distribute the assets, provide a final accounting to the beneficiaries, and proceed with closing the estate account. The responsibilities of the executor require knowledge and a vast understanding of the financial matters of the deceased. The executor may and should seek advice from accountants and lawyers when administering the estate. Furthermore, many banks offer full and partial service estate settlement packages. However, it is the executor who is fully liable for the actions regarding the estate.
A professional estate sales service will take care of most of the tasks concerning an estate sale. They will stage the home, sort the belongings, appraise the items, advertise, and sell the items. The value of the items will be assessed so that you can choose from price recommendations. A professional service will have antique reference books and household item price sheets and will discuss rates with you. The rate can be discussed and is usually a percentage of the revenue from the items sold.
It is important that your liquidator keeps you informed and answers your questions. Always check the references of the liquidator you are about to hire. Make sure that the service is insured and bonded and that you have a complete understanding of the contract you have signed. Do not assume that the price includes removal of all unsold items. Liquidators might charge you additional fees for cleaning the home. So make sure you have checked what is in your contract.
Hiring a professional is a smart choice for people who are emotionally attached to the items. Moreover, if you are selling high-value items, then you should preferably consult numerous professionals. Professional services are best if you are not good at handling confusion, crowds, and organizing or simply do not have enough time. On the other hand, if you have a low-valued estate and are certain of values, you will be able to manage the sale yourself.
Do Not Wait Too Long
In many cases, people have to deal with homes where belongings have accumulated for years. If you are planning to sell the home, you will soon realize that clutter is a problem. Not only does it discourage potential buyers, but it also affects the selling price of the home. It is important to start sorting the clutter well before selling the home. In addition to working with an estate sales professional, hiring a home stager can increase the property’s selling price and speed up the whole process.
There are no inheritance taxes in Canada, but that does not mean that selling an estate has no tax implications. You do not need to report the value of the estate at the time you receive it. However, if it takes some time to resolve the estate, and if there is an increase in value before you sell it, you need to record the fair market value as it passes into your possession. Therefore, you should obtain an estimate of fair market value from a qualified appraiser when you inherit it. Once you sell it, you will have to pay capital gains tax, which will be calculated from the remainder of the difference between the fair market value when you first obtained it and its value at the time of sale. You should get an appraisal for every part of the estate that could increase in value and could be eventually sold.
There are many aspects that need to be considered when dealing with an estate. It can be a complex and unpleasant process, but if you keep in mind the most important elements, you can go through it quickly and effectively. There are many economic and legal considerations, so always seek professional advice before you start dealing with an estate sale.
Your real estate agent can recommend excellent estate sale professionals and work together with them to dispose of the contents and maximize the sale price of a property (if there is one to sell).