Helpful Tips for Executors When Dealing with Banks
From providing the death certificate to establishing the estate account, this is what executors need to know.
A key challenge executors face when administering an estate is dealing with the banks where the deceased held their accounts. Banks don’t want to expose themselves to potential legal issues by releasing funds to someone who is not legally entitled to receive them and are also bound by privacy legislation not to disclose information about client accounts to an unauthorized person.
Executors can help smooth the estate administration process by being prepared and working with the bank’s dedicated estate settlement department. Arguing with a bank employee is unlikely to help the situation, so providing the information they request in a timely manner is your most efficient option. If the bank says they need a particular document from you, just give it to them and follow the procedures request.
As one of the first steps of the estate administration process, banks will ask the executor for a death certificate for the deceased. Funeral homes generally provide around 10 copies of the original death certificate, and executors can typically ask for more if needed. Executors will need to provide these certificates to a number of companies, including the Canada Revenue Agency, the estate lawyer, and the provincial court, as well as any bank, life insurance company, or investment company where the deceased had accounts. The bank will also require a copy of the Will and identification for all the executors.
In Ontario, probate is a legal requirement for any estates with a total probatable value in excess of $50,000 CDN. As a matter of course, banks will freeze all accounts of the deceased, upon notification of their passing, if they have any reason to believe that the probate threshold will be met. Banks generally require a certificate of probate from the executor to prove the Will is valid and that the executor is the authorized personal representative for the estate administration before releasing any funds. However, if the estate is small, a bank may exercise its discretion and not require the executor to obtain probate. In those cases, the bank will release funds to the executor but will likely require them to sign an indemnity to protect the bank from potential liability.
When the bank is initially notified that an account holder has died, it will freeze the deceased’s accounts. However, banks generally will allow certain payments, such as probate or income tax to government agencies or funeral fees to funeral homes. They may also allow for the payment of other immediate expenses, such as lawyer’s fees or utility bills. The bank generally will make these payments directly to the payee and not to the executor.
Once the executor has received their Certificate of Appointment of Estate Trustee, they will typically establish an estate account into which they can consolidate the deceased’s assets and make payments on behalf of the estate. Establishing a dedicated estate account is highly advised, since as an executor, you are personally accountable to the beneficiaries from the date of death.
In some more complicated cases, it may be advisable not to consolidate all the deceased’s accounts. For example, if a payment or distribution from the estate needs to be made to a payee or a beneficiary in another province (or country) and the deceased held an account in that province (or country), it may be practical to leave that account open to make these payments.
While the bank will help the executor as they administer the estate, executors should keep in mind that banks aren’t able to provide legal or tax advice. For that, executors should consider seeking advice from an estate lawyer or accountant. Banks may be experts on their own policies and procedures — regarding their own products and services — but do not look to them for advice on other matters related to the estate-settling process.
When the time comes to make distributions to estate beneficiaries, the bank will want a letter of direction signed by the executor (or executors) and a copy of the Certificate of Probate. The bank will then issue a cheque to the executor or to the estate, not to the beneficiaries directly. The executor will deposit the cheque into the estate account for later distribution to the beneficiaries.
Tips for making estate administration easier
Retail staff at the bank will typically refer the executor to their estate department. The executor should ask for a direct phone number for first contact with the bank’s estate department to save themselves from having to go through the main contact centre each time they call. Executors should also note the bank’s file reference number for the estate, because the bank will keep detailed notes of conversations with the executor. This will streamline things.
Executors should communicate with the bank in writing — either email or letter — whenever possible. When meetings occur in person or over the phone, executors should take notes so they can hold the bank accountable for any agreements made, and to prevent any misunderstandings later on.
Each time they meet with bank representatives, executors should take along identification and the estate file with all documentation. Executors should also be prepared to repeat the “story” of the estate — the key details about their estate administration — to bank representatives. It’s uncommon for a bank to assign a specific individual to one file.
How can you make your estate easier to administer, when the time comes?
The quality of your Estate Plan, in conjunction with your Last Will and Testament, will determine how difficult, time-consuming, and expensive your estate is to administer. For a preliminary consultation to discuss creating, updating, or formalizing your Estate Plan, contact us. We can potentially save your estate many thousands of dollars that will end up with the government (taxes), courts and lawyers without an effective Estate Plan. Probate is not mandatory for all estates, and our Estate Plans always aim to keep our clients’ estates out of probate, whenever possible.
