The Deceased’s Assets and Debts versus Estate Assets and Debts
Unless the deceased’s assets and debts were in joint name or held in trust, the executor must obtain probate before financial institutions will allow them to access and manage the money.
To get started and get probate, the executor must compile a complete list of assets and debts held in the deceased’s name. Your goal is to eventually reduce this list to zero.
Assets in joint name with right of survivorship, with a spouse for instance.
Registered plans (e.g. RRSPs, RRIFs) and life insurance policies with designated beneficiaries are not subject to probate but you’ll still have to track them and ensure they get transferred to the named beneficiaries.
Dealing with Financial Institutions after Probate
Once probate is obtained, financial institutions require assets and debts to be transferred from accounts in the deceased’s name, e.g. Robert Smith, to new accounts with executor signing authorizations under the estate’s name, e.g. “Estate of Robert Smith”.
Use the new estate accounts to consolidate assets and pay bills, debts, taxes, and make cash distributions to beneficiaries.
During this process, the executor must be able to show everything that transpired between the date of death and the final distribution date to answer the #1 question on beneficiaries’ minds: “What’s happened to Dad’s money and when do I get my share?”
We cannot understate the importance of tracking the movement of every asset and debt in the deceased’s name into estate accounts and, eventually beneficiary hands. Mismanaging this process exposes the executor to personal liability risk.