Thursday, January 26, 2017

The Executor's Roadmap - Part 1: Death and the Funeral

This series of articles will cover the many stages that an executor (now also known as an "Estate Trustee") must pass through in managing the affairs of a deceased- from the immediate aftermath of death, to the final distribution of the Estate. Even if there are no legal challenges or disputes ahead, a "simple" Estate Administration can take hours of stressful work. This series of articles is designed to alleviate some of that stress, by providing a roadmap to what may lie ahead. This articles are general guides and are not a substitute for legal advice.
The process of administering an estate in Ontario has many phases that often stretch out over a year, or more. But when a loved one or friend dies, there are first things to tend to. The biggest and most immediate is usually the funeral.

There are many stages involved in becoming an Estate Trustee that are impractical or impossible to complete before arranging the funeral. Nevertheless, arranging and paying for the funeral is an important step in the proper administration of an Estate.

When an Estate Trustee has been named in a Last Will, arranging the funeral is often the Trustee's responsibility.

If the deceased has left a last will, and it is possible to see it before the funeral, it will indicate who is appointed as Estate Trustee, if that's not already known. Unfortunately, it's not always possible to view the Last Will in the commotion before the funeral. It may be in a safety deposit box. stored at a lawyer's office or be in some other hard-to-access location.

The deceased's next of kin may not be able to get access to the Last Will right away. In some cases, the deceased may not have written a Last Will at all, or a Will that is known may be missing and need to be located.

If there is no Last Will, section 29 of the Ontario Estates Act gives the Court the power to appoint the deceased's next-of-kin as a Trustee. If a dispute over the Estate has already begun, and there is no consensus as to who the Trustee should be, the Court has the power to appoint an Estate Trustee During Litigation.

If the Last Will can be found, however, the Will may provide guidance as to how the funeral should be planned. First, the Will may give an idea as to how many assets the Estate and what legacies the Estate has to pay. If this information is available, it can guide you in setting a budget for the funeral.

The Will may also include the deceased's funeral instructions, or instructions about a prepaid funeral. These instructions are usually not legally binding. A Last Will, with a few exceptions, is legally binding only as far as property is concerned.

A funeral, strictly speaking, concerns the physical body of the deceased, and is outside the scope of the Will's authority over property. Nevertheless, it is generally wise to follow the instructions in the Will regarding funeral, if possible.

How is the funeral paid for? Many people now pre-arrange for the expense to be paid out of a small life insurance policy sold by the funeral home. Otherwise, it may be possible to pay for part of the expense through the Canada Pension Plan's death benefit.

It is often the case that the assets of the deceased are frozen when the funeral is being arranged, and the Trustees must pay the expenses out-of-pocket.

Some out-of-pocket funeral expenses can be paid out of the assets of the Estate, in priority to taxes and other debts. But not all expenses may be eligible. Determining the funeral arrangements and how they will be paid is often the first major duty the Trustee tends to.

It is important to understand that not every funeral expense can be charged to the estate, especially when the Estate has limited assets. A basic principle, that has existed in English law since before Confederation, is that there are costs of laying the dead to rest:
the undertaker’s and grave digger’s necessary services [...] in addition to those pertaining to religious exercises; also the cost of a plain coffin or casket, the conveyance of the remains to the grave, and the grave itself; all these being essential to giving the remains a decent funeral.
These costs can be charged to the Estate. (Widdifield on Executor's Accounts (5th ed., 1967)), pages 1-2). If an Estate, however, is bankrupt or in danger of not being able to pay all of its debts, and if there are funeral expenses that are primarily for the benefit of the mourners, such as:
pall-bearers in needless array; carriages for mourners, and especially carriages for casual strangers; floral decorations, refreshments, hired musical performers, and the processional accompaniments of a funeral [...]
These cannot be charged to the Estate.

Sometimes, family members may attend to funeral arrangments, long before the existence of a Will is on anyone's mind.  In such cases, it is prudent to ensure all family members and likely executors are on the same page as to the budget and level of extravagence in funeral arrangements. It is possible that disputes can arise as to the necessity of certain expenses.

Most importantly, anyone conttributing to payment of any funeral-related costs should ensure that copies of invoices, cheques. receipts and other proof of payment are maintained, in support of subsequent claims for reimbursement from the Estate.  

Before, during, and after the funeral, and still before the Estate Trustee is formally appointed by the Court, it is important to account for existing assets of the Estate, and secure them. More on this in Executor's Roadmap- Part 2
- Paul B. Adam, Toronto

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