Responsibilities of an Estate Trustee

Responsibilities of an Estate Trustee

Sometimes dealing with an estate can be a very tedious and long process, often taking longer to wind up than ever anticipated. Some people have their estate set up for an easy distribution prior to their death, but more commonly it can be found that administration of an estate is a complicated and often frustrating experience for the estate trustee.

Being Named as an Estate Trustee

Being named in a will as estate trustee is not necessarily an honour or a blessing. It means that the deceased thought highly of you as someone they would trust to handle their affairs after they die, however the tasks expected of an estate trustee do not come lightly and without their own burdens. It is important to note that if you are named as an estate trustee in a person’s will, you can refuse to act in such capacity, leaving the backup person named in the will to act instead. If no alternative estate trustee was named, then interested parties can apply to the court to have their name submitted for consideration and they can become a court-appointed estate trustee. Simply because the deceased named you to be their estate trustee does not seal your fate to comply.

General Duties and Acting as an Estate Trustee

A broad overview of responsibilities of an estate trustee include making funeral arrangements, filing and paying taxes, applying for probate, reconciling debts, passing accounts, and finally distributing the assets of the estate. If you choose to go forward with the appointed position and act as estate trustee, it’s important to know what you are getting yourself into. The estate trustee has a legal obligation to administer the deceased’s will as closely as possible. For instance, if the deceased has named a beneficiary that is seemingly difficult to find such as an estranged friend or a non-existent charity, the estate trustee must show to the court what steps they have taken to locate the named beneficiary, and if unsuccessful explain in full detail why. They cannot simply brush it off as too difficult a task and ignore the bequest.

Liquidating the Estate

Estate trustees are also responsible for liquidating the estate. Estate liquidation can include the sale of all properties, cashing in all investments, and closing out all safety deposit boxes. If the deceased was the type to be organized this may not be a cumbersome task, but if the deceased left very little paper trail and kept their documents in disarray, it could take the estate trustee months to figure out what the total value of the estate is and complete the liquidating process. An estate trustee needs to keep records of all financial transactions and may need to notify and provide confirmation to the beneficiaries and/or the Court the estate has been administered properly.

Accepting Payment

Since the job of estate trustee can be a long process, the estate trustees may take payment from the estate for their work done as trustee. A testator may set a specific amount of compensation for the trustees directly in the Will. If not, the entitlement may vary depending on the size and complexity of the estate, and subject to the supervision of the Court. As a general rule, caselaw suggests that 2.5% of all money that flows in and out of the estate may be appropriate compensation. Another simple method commonly used is to make the calculation of 5% of the assets and income for the estate. Factors a Court will consider when determining an executor’s compensation include the value of the estate, the amount of time needed to perform the required duties, the level of difficulty involved, and the executor’s demonstrated skill and abilities. If the estate trustee is also a beneficiary in the Will, then a decision needs to be made as to how they wish to take their funds. Payments made to the estate trustee are taxable as income, whereas beneficiaries of a Will do not pay income tax on any funds received.

Discussions with your intended estate trustee prior to your death is the best way to ensure that you have named the right person for the job. For further questions about naming an estate trustee please contact Court Coach LLP.

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The material on our website/blog is intended to provide only general information to the public and our existing clients. This information cannot under any circumstances be relied on as legal advice. To obtain legal advice, or to learn how the information on this website may or may not apply in your situation, please contact our office to speak with one of our lawyers.