What is an Estate?
In general terms, an estate is everything you own (bank accounts, cars, houses, investments, etc.) when you pass away. But more than that, an estate also includes everything you owe.
It is your executor’s responsibility to administer your estate according to the termsof your will.
Your responsibilities as Executor include, but not limited to:
- Making arrangements for the funeral;
- Finding and reviewing the will, gathering information on beneficiaries, and notifying them of their interests;
- Determining the value of property and debts of the deceased;
- Protecting estate property;
- Retaining an estate lawyer and possibly to apply for probate;
- Paying any debts or tax obligations of the deceased and the estate;
- Preparing financial statements and creating an distribution plan.
What is an Estate Return?
Executors are often surprised to find out there are tax filing obligations for an estate itself. A deceased person’s estate is a separate legal entity for income tax purposes. If you’re the executor of someone’s estate, you may need to file an income tax return for the estate, as well as a final personal income tax return for the deceased person. A tax return for an estate is a T3 or trust return.
Choosing your executor should be done with careful forethought. You need to choose someone with the time, ability, and even desire to fulfill their duties.