Sandy Lyons of Grant Thornton Ltd. explains that, when you die without a will, any prior verbal wishes to family and next of kin can be set aside

Sandy Lyons is a licensed insolvency trustee with Grant Thornton Ltd.’s consumer insolvency team in Calgary.

Sandy Lyons
Sandy Lyons

Why do so many people not have a will?

Lyons: It can be a matter of cost, not wanting to look at and plan for end of life, a lack of understanding and knowledge of what steps must be completed by loved ones and family members who will be left behind, or the belief that if there are no assets and just liabilities left at the end of the day that a will is not necessary.

Why is it important to have one?

Lyons: Having a will ensures that you control what will happen after your death. When a person dies intestate, or without a will, then the applicable legislation dictates how matters will be dealt with. This can often conflict with the prior verbal wishes that have been expressed many times to family and next of kin.

Having a will and appointing an executor who is knowledgeable about your affairs ensures that the estate is administered in a timely and cost-effective manner. It also ensures that your wishes are carried out as fully as possible.

It’s important to note that an executor is not personally liable for the debts of a deceased estate. An executor has a duty to administer the estate in a proper manner in terms of inventorying assets, liquidating the assets to pay estate creditors and costs of administration, and to distribute the remainder to beneficiaries.

When this is not possible, the executor should seek the advice and assistance of the family lawyer, a licensed insolvency trustee, and other professionals who are well versed in ensuring the estate is administered in a manner that an executor doesn’t attract liability for not administering the estate effectively.

When should people get a will?

Lyons: While this is different for everyone, the rule of thumb is usually when your first big life change happens. Anyone who has reached the age of 18 can create a will, but we often see wills being made when people get married, start a family, buy real estate, start a business, obtain life insurance, accumulate net worth or have health problems.

What happens in a situation where a deceased has debt?

Lyons: After a thorough review of the assets and debts of the deceased estate, if the executor determines that there will not be enough funds and assets to pay the accumulated debts of the deceased individual, the executor may choose to have the insolvent death estate file a bankruptcy. This will ensure that the estate assets are properly liquidated and distributed to the various classes of creditors, accordingly to the provisions of bankruptcy laws by the appointed licensed insolvency trustee.

Executors are relieved of the stress of the obligation of dealing with the creditors and beneficiaries when an insolvent death estate is assigned into bankruptcy and a licensed insolvency trustee is appointed.

What are the steps to be taken if a deceased has debt?

Lyons: It’s best for an executor or an appointed administrator to be proactive and inform creditors right away that the person has passed away, to curtail ongoing services that are no longer required, and ask for current statements of account and advise the creditors they will be notified as soon as more information is available.

An inventory of assets and liabilities should be accumulated and evaluated by the executor or administrator with the assistance of the family lawyer and other accounting and financial professionals.

The executor or administrator, upon determining that the assets are sufficient to retire the debt in an orderly fashion, would proceed to liquidate the assets and pay the creditors as quickly as possible to reduce any ongoing costs of interest and late payment fees and penalties, and to create a remainder interest that can be distributed to the beneficiaries.

Alternatively, if the executor or administrator determine that the liabilities exceed the value of the assets, then the executor or administrator should review matters with a licensed insolvency trustee and legal counsel to determine the best course of action to deal with the assets and liabilities. This is often done by having the death estate file a bankruptcy assignment and vesting the responsibility of dealing with the assets and liabilities, testamentary expenses, and filing of final income tax returns with the licensed insolvency trustee.

If an executor or administrator has a deceased death estate assigned into bankruptcy, the involvement of the executor or administrator is reduced and responsibility for actions taken after the date of bankruptcy eliminated. However, the licensed insolvency trustee may require the further assistance of the executor or administrator during the bankruptcy administration.

– Mario Toneguzzi


lyons will death

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

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