Estate Settlement 101

If you’ve just found out that you’ve been named an estate executor, you probably have a lot of questions. First off, let’s discuss what it means to settle an estate.

Posted on July 27, 2021 by Alex Gauthier
Young couple and estate administrator Advising about settlement

If you’re reading this, it’s probably because you’re at the beginning of what feels like a monumental journey and are unsure how to proceed. You may have just been named the estate executor to someone’s estate after someone who you were close to has now passed away. Or you’ve just discovered you’ve been named, and although the time has not yet come, you want to be as prepared as possible for whatever responsibilities lie ahead. Well, welcome. Settling your loved one’s estate is not an easy task, but it’s a truly honorable one: You’re ensuring that their wishes are being met after they’re gone, and advocating for them after they’re no longer here to do so themselves.

If you’ve just found out that you’ve been named an estate executor, you probably have a lot of questions. You’re probably thinking that you’ll need to hire an army of lawyers, accountants, and other professionals to help you out. While we understand that hiring loads of outside experts may feel necessary, we’re here to tell you that that’s not necessarily the case. There are many things you can do on your own, or with the help of someone who doesn’t charge three figures an hour.

That’s where we come in: ClearEstate wants to empower executors and equip them with the tools and the knowledge they’ll need to make the best decisions for themselves, the estate, and its beneficiaries. And while our platform uses intuitive technology to help you out during the estate settlement process, we’re also a team of real humans who have the utmost compassion for what you’re currently going through. That’s why we’re going to be right by your side for as long as you need us, and provide you with all the information you need in order to make this process as painless and seamless as possible. So let’s dive right in and have a look at what estate settlement is actually all about.

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What is estate settlement

First off, let’s actually discuss what it means to settle an estate and why it’s important. When someone dies, all of their worldly possessions need to be dealt with. This sets off a legal process in which the deceased’s funds are transferred to designated beneficiaries, any outstanding debts are paid off, relevant parties are notified of the death, and funeral arrangements are made.

This is why wills are so important: Without them, the process of deciding who gets what assets and what happens to your loved one’s body may not conform with what your loved one wanted. If you passed away and left no will, then you’re considered to have died “intestate.” This situation makes everything more difficult for those who have been left behind. Instead of following your wishes, the province or territory where you died will be making decisions about your estate. They may even sell all of your property to divide the proceeds among your legal beneficiaries, even if that’s not what you wanted. There’s also no guarantee you’ll be able to have the kind of funeral or burial you wanted. That’s why the best estate settlement occurs by planning ahead: That’s why estate planning is so crucial.

Proper estate settlement ensures that all loose ends are tied up neatly: The will is validated, you’ve received official authorization to act as the estate’s executor, all taxes and debt are paid, the beneficiaries have received their inheritance, and funeral arrangements have been made. As you can probably tell, this is no small feat. That’s why we want to make sure you know exactly what to expect as you embark on this process.

Step 1: Dealing with the will

If we seem to keep harping on about the will, it’s because it’s just that important! And when you’re an estate executor, it’s also one of the first things you’ll need to deal with. Once your loved one passes, it’s important to locate the will as quickly as possible. Hopefully, you and your loved one will have already discussed this beforehand, and you’ll know where the will is kept, as well as being aware of the location of all relevant copies. The will contains information about your loved one’s wishes regarding their funeral and any other important business that needs to be addressed immediately after death. Ideally, the will will also outline who the beneficiaries are and what they’re entitled to, which will make your job much easier.

If you have the will, you can also submit it quickly to the probate court and jump-start the process of settling your loved one’s estate. The probate court will authenticate the will, meaning that it will officially grant you the authority to act on the estate’s behalf as estate executor. Important reminder: The will can only be submitted to the probate court of the province or territory in which the estate holder passed away.

Step 2: Notify all relevant parties

Unfortunately, part of your job as an estate executor entails notifying those who need to know about the death of your loved one. The first people you should contact are close family members, spouses, and friends. How you do this is up to you, and every family is different. Perhaps telling everyone together is more helpful for some, while others might want privacy to grieve.

After that, it’s time to notify more official parties. In order to do this properly, you’ll need to get an official pronouncement of death. If your loved one died in a hospital, a nursing home, or in hospice care, then the doctor or nurse who was present will usually be in charge of issuing the pronouncement and creating a death certificate. If your loved one was receiving government benefits, you’ll have to contact them pretty quickly. You’ll also need to notify the deceased’s landlord, as well as any utility companies they were making regular payments to, such as gas, electric, and their phone company. Creditors also need to be notified. If your loved one left a list of insurances they were paying for, now’s a good time to go through them one by one and call to let them know the insurance holder has passed away.

Then it’s time to go through any personal retirement accounts, such as TFSAs and RRSPs. If your loved one named beneficiaries for those accounts, then the transition of ownership of the accounts should go pretty smoothly. Any financial institutions where your loved one had accounts, such as chequing and investment accounts, are next.

Finally, it’s time to contact any subscription services the deceased may have had. This can include magazines, newspapers, and streaming services.

Step 3: Secure personal property

At this point, you’ve submitted the will to the probate court, who will validate it, thereby starting the estate settlement process. In order to assure that everything goes smoothly, the deceased person’s home, valuables, and possessions like their car, their laptop, their phone, and any other important items should be locked up and the keys kept with you or another trusted person. That way, when the time comes, you know that everything is safe and ready for probate.

This is also a good time to set up a forwarding address for any mail your loved one will still be getting. As an estate executor, the most convenient course of action will be to forward all incoming mail to yourself. In order to get your loved one’s mail forwarded, contact the post office and in order to ensure you don’t miss any important letters or documents.

Step 4: Make funeral arrangements

If your loved one already made a funeral plan with a specific funeral home, then this step is fairly easy. If no specific plan is in place yet, you’ll have to choose a funeral home and then—based upon your loved one’s wishes—choose a tombstone or urn, whether to bury or cremate, where the body or the ashes will be laid to rest, and where the memorial service will be held. You’ll also need to plan specifics like who will hold the eulogy, who will be invited to the memorial, and what the itinerary of the memorial should look like.

Step 5: Making an inventory of all relevant assets

At this point, the probate process will be underway and you’ll need to submit an inventory of all of your loved one’s assets so that the value of the estate can be determined and beneficiaries can receive their inheritance. The assets can include bank and investment accounts, insurance policies, real estate, safety deposit boxes, and personal possessions such as cars and electronics to heirlooms such as jewelry and artwork.

There may also be assets that are not included in the deceased’s will, which is why this step is so tedious and sometimes requires some detective work. It’s also an emotionally exhausting stage to be in, which is why it can be incredibly helpful for an estate executor to get some backup: ClearEstate’s platform grants you access to a wide range of professionals alongside an intuitive application that makes gathering and recording assets a breeze. Once a complete inventory of all assets has been completed, the list should be submitted to the probate court.

Step 6: Dealing with taxes

Two things are certain in this life, and those are death and taxes. And unfortunately, an estate executor will have to deal with taxes as part of the estate settlement process. An estate executor will have to file any outstanding tax returns the deceased may have had (including a terminal return). An executor will also have to submit an estate income tax return if any assets—such as investments—earn income during the probate period.

On top of filing any outstanding tax returns the deceased may have had (including a terminal return) and submitting an estate income tax return, the executor will also have to take care of probate taxes. In all provinces except Québec, when an executor applies to the court for probate, a tax must be paid to the provincial government. The tax is based on the value of the estate. In Ontario, for example, probate costs $15 for every $1,000 of an asset value over $50,000.

Step 7: Closing the estate

Once all fees and debts have been taken care of, the executor can petition the court to finally distribute the remaining assets to the designated beneficiaries. The court will usually only grant this step once the executor has provided the probate court with a detailed list of every financial transaction that’s been done on behalf of the estate throughout the probate process.

A note on beneficiaries: As an estate executor, dealing with beneficiaries will be one of your responsibilities. However, this can be a tricky road to navigate, since the death of a loved one brings up a lot of emotions and beneficiaries can often feel abandoned and ignored during the settlement process.

The last thing you’ll want as an executor is to add drama with beneficiaries to your already overflowing plate, so the best thing is to ensure it doesn’t happen in the first place. Make sure that all beneficiaries are well-aware of the time it takes to settle an estate. Most probate proceedings take several months. In Ontario, for example, probate can last up to 6 months.

You should also aim to be as transparent as possible during the entire process, and keep beneficiaries in the loop as to what you’re doing and why. Being open with beneficiaries and checking in with them as much as you can will lend transparency to an often nebulous process and solidify trust. Tell them if you’re encountering obstacles such as a delay in selling property or other estate assets. Explain the next steps you’ll be taking. Beneficiaries will appreciate you letting them in on the process and keeping them informed.

ClearEstate makes it incredibly easy for you to create full transparency for all beneficiaries involved. With the help of ClearEstate’s beneficiary portal, you can ensure that all beneficiaries are able to view the progress of the settlement, receive a summary of what assets they’re entitled to, and keep detailed records of all communications.

Once all assets have been distributed to the relevant beneficiaries and all fees and taxes have been paid, the estate can officially be closed.

If you’re currently feeling overwhelmed with the estate settlement process or would just like some help in making the process quicker, easier, and more efficient, we’re here. Get in touch for a free consultation today.