ROLE OF THE EXECUTOR - What you need to know

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1 RBC Estate and Trust Services ROLE OF THE EXECUTOR - What you need to know Janice Domaratzki Investment Advisor RBC Dominion Securities Claudia Morrison Regional Trust Advisor RBC Wealth Management

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3 Agenda 1) Wills 2) Executor Duties & Responsibilities 3) New Rules for Executors 4) Selecting Your Executor 3

4 What happens if You die without a Will? - Your estate will be administered and distributed under the provincial intestate succession legislation where you lived. You become incapable without a Power of Attorney for Property? - All your financial activities will be stagnant until a proper Attorney is appointed, through a court application 4

5 5 Will Planning

6 Where to begin? Before you draft your Will consider Family situation Needs of beneficiaries Objectives and wishes Types of assets Registration of assets Choice of Executor Legal obligations Tax and probate issues 6. 6

7 The composition of your assets In your estate Outside your estate Probatable Assets solely in the Deceased name Joint assets Named beneficiary life insurance, RRSP s and RRIF s Unique assets TFSA 7. 7

8 Duties and responsibilities of an Executor The overall role of the executor is to administer and settle the estate of the deceased according to their final wishes as expressed in the Will according to provincial law: Funeral arrangements and secure valuable assets Locate, value and collect all estate assets Apply for probate Pay off any debts Notifications, cancellations, dealing with real estate Understand the risks with any investments and take action Prepare and file Estate Information Return with Ministry of Finance 8

9 Duties and responsibilities of an Executor Communicate with beneficiaries regular accounting and updates Pay or deliver any legacy gifts Make distributions to the residual beneficiaries Keep a good record of all accounting transactions Prepare and file tax returns Obtain Clearance Certificate Seek professional assistance when needed (lawyer, accountant, professional executor) 9

10 10 New Rules for Executors

11 What Changed & Why Were Changes Required? The Estate Information Return (EIR) was created by the Ontario Ministry of Finance Prior to January 1, 2015, detailed information regarding estate assets was not required when applying for a probate certificate. There was no requirement to provide supporting documentation to back up the asset value reported. Consequently, some believe that asset values were being conservatively estimated, and in some cases, significantly under estimated. The EIR includes: Information about the deceased and the executor List and description of each estate asset (some estate assets such as household contents can be grouped together). 11

12 What Information Is Included In An EIR Form? Assets that should be included: Real estate in Ontario (less encumbrances) Bank accounts Non-registered investments (e.g. stocks, bonds, trust units, options) RRSPs, RRIFs, TFSAs if proceeds pass through the estate (e.g. no named beneficiary other than Estate ) Vehicles and vessels (e.g. cars, trucks, boats, ATVs, motorcycles) All property of which the deceased had beneficial interest even if legal title was held by someone else 12

13 What Information Is Included In An EIR? Assets that should be included: Jointly owned assets without a right of survivorship (e.g. joint tenants in common - JTIC) All other property, wherever situated, including: Goods Intangible property Business interests Insurance, if proceeds pass through the estate (e.g. no named beneficiary other than Estate ) A calculation of applicable probate tax is also included 13

14 What Assets Are Excluded from the EIR? Real estate outside Ontario Canada Pension Plan (CPP) death benefits Assets that pass outside of the estate including: - Jointly owned assets with a right of survivorship (JTWROS) - RRSPs, RRIFs, TFSAs with a named beneficiary other than Estate - Insurance proceeds paid to a named beneficiary other than Estate 14

15 Concerns of the Executor Acceptance of personal responsibility in case of an error Criticism from family members and heirs Dissatisfaction among family members excluded from the Will Conflicts of interest Difficulty in administering due to travel distance, time constraints or insufficient knowledge Difficulty in taking care of financial issues during a difficult time 15

16 Choosing your Executor Things to consider Trustworthy, and can reliably carry out the instructions in your Will Capable of making fair decisions and balancing conflicting interests Willing and able to put in many hours of work over two or more years Knowledgeable in legal, tax and administrative issues Residency implications Multiple executors Likely to survive you Communication skills 16

17 Estate Planning Are You Prepared? 60% haven t spoken to an advisor about an inheritance plan Will we out live our money? 10 years past healthy - POA Financial Plan Now Consolidate today to help tomorrow Tax efficient wealth transfer 28% plan to leave an inheritance to a charity Gifting now vs. inheritance 17

18 18 Questions?

19 Disclaimer This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc. (RBC DS)*, RBC Phillips, Hager & North Investment Counsel Inc. (RBC PH&N IC), RBC Global Asset Management Inc. (RBC GAM), Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the Companies ) and their affiliates, RBC Direct Investing Inc. (RBC DI) *, RBC Wealth Management Financial Services Inc. (RBC WM FS) and Royal Mutual Funds Inc. (RMFI). Each of the Companies, their affiliates and the Royal Bank of Canada are separate corporate entities which are affiliated. *Members-Canadian Investor Protection Fund. RBC advisor refers to Private Bankers who are employees of Royal Bank of Canada and licensed representatives of RMFI, Investment Counsellors who are employees of RBC PH&N IC and the private client division of RBC GAM, Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC DS. In Quebec, financial planning services are provided by RMFI or RBC WM FS and each is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI, Royal Trust Corporation of Canada, The Royal Trust Company, or RBC DS. Estate and trust services are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies or RMFI, clients may request a referral to another RBC partner. Insurance products are offered through RBC WM FS, a subsidiary of RBC DS. When providing life insurance products in all provinces except Quebec, Investment Advisors are acting as Insurance Representatives of RBC WM FS. In Quebec, Investment Advisors are acting as Financial Security Advisors of RBC WM FS. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, RBC WM FS, RBC DI, Royal Bank of Canada or any of its affiliates or any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. Registered trademarks of Royal Bank of Canada. Used under license Royal Bank of Canada. All rights reserved. 19