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Estate Administration Explained: Roles and Responsibilities of an Administrator

Estate Administration Explained Roles and Responsibilities of an Administrator

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Learn about the roles and responsibilities of an estate administrator, including managing assets, paying debts, filing taxes, and distributing the estate.

Estate Administration: Roles and Responsibilities of an Administrator

When someone passes away in Alberta, their estate may be left with outstanding personal and legal matters, like needing to give away the deceased’s property or pay off the deceased’s debts. Resolving such matters is known as “estate administration”. The person who is responsible for representing the estate to resolve such matters is called the estate administrator (also known as the personal representative or executor).
In this blog, we’ll explain what estate administration is; the roles and responsibilities of an estate administrator; and other estate administration topics that may be of interest if you are preparing for the administration of your own or someone else’s estate.

What is Estate Administration?

An estate consists of everything a person owned (assets) and owed (liabilities). Common examples of assets and liabilities include the following:
Assets & Liabilities
Assets Liabilities
1 Real estate 1 Utilities
2 Bank and investment accounts 2 Taxes
3 Pensions and benefit plans 3 Mortgage and credit card payments
4 Amounts receivable from insurance 4 Obligations under other types of contracts
5 Personal items like vehicles and jewelry 5 Claims related to lawsuits
Assets
1 Real estate
2 Bank and investment accounts
3 Pensions and benefit plans
4 Amounts receivable from insurance
5 Personal items like vehicles and jewelry
Liabilities
1 Utilities
2 Taxes
3 Mortgage and credit card payments
4 Obligations under other types of contracts
5 Claims related to lawsuits

The legal process of managing the estate of a deceased person is known as estate administration.

The main goals of estate administration include:
  • Protecting the deceased’s property;
  • Resolving who will receive the deceased’s property and in what circumstances; and
  • Resolving the deceased’s outstanding legal obligations.
Estate administration must be carried out in accordance with applicable laws. If the deceased left behind a will, the estate administrator should review the will to ensure it is legally enforceable. If the deceased did not leave behind a legally enforceable will, the estate administrator may have to administer the estate in accordance with intestacy laws.

Who is an Estate Administrator?

An estate administrator is someone who is legally allowed to administer an estate. This person is also known as a personal representative or executor.
  • Designated in the deceased’s will; or
  • Someone who applies to the court for the right to administer the deceased’s estate in absence of a will.
The estate administrator is usually an adult who is close to the deceased, such as their spouse, adult child, parent, sibling, or friend. It is also possible for the court to appoint a professional administrator who is unrelated to the deceased.
If the deceased did not leave behind a will, certain people have priority to apply to become the estate administrator. For example, the court is more likely to appoint the deceased’s spouse as the administrator than the deceased’s parent or sibling. However, there may be exceptions depending on the circumstances. Each circumstance is unique in that regard.

How is an Administrator Appointed?

Whether or not a will exists, a court may need to officially appoint an administrator. The process generally involves:
  • Filing a Grant application with a court;
  • Providing the court with certain documentation, such as the person’s will (if there is one) and death certificate;
  • Giving the court a list of the deceased’s assets and liabilities; and
  • Demonstrating to the court that the applicant has the right to apply to become the administrator.
A successful applicant will receive either a Grant of Administration or Grant of Probate from the court, giving them the authority to act on behalf of the estate. Without a Grant, many organizations are hesitant to release assets to the administrator. A Grant is also necessary for certain real estate transactions. For the differences between a Grant of Administration and a Grant of Probate, see Forum Law LLP’s other blog on that topic.

Key roles of an Estate Administrator

Being an estate administrator is a serious responsibility. The role requires honesty, organization, and diligence. Below are examples of the estate administrator’s responsibilities.

1. Identifying and Securing Estate Assets and Liabilities

One of the administrator’s main responsibilities is to identify all assets and liabilities of the deceased. For example, the administrator may have to:
  • Contact financial institutions to see if the deceased had accounts or a safety deposit box;
  • Compile a list of the deceased’s property and debts; and
  • Apply for pensions, life insurance and other benefits payable to the estate.

2. Administering and Managing the Estate

The administrator is responsible for looking after the estate’s assets and liabilities until they can be given away or resolved. For example, the administrator may have to:
  • Open and manage an estate bank account;
  • Take steps to protect the estate’s property;
  • Communicate with beneficiaries;
  • Deal with lawsuits related to the estate; and
  • Hire professionals to help them when necessary, including accountants to prepare income tax and determine if the deceased had outstanding taxes owed to the applicable authority.
The administrator should keep their personal funds separate from the estate’s funds. The administrator should also keep detailed records of the estate’s assets and liabilities to prevent loss of the same.

3. Satisfying the Estate’s Debts and Obligations

Before the administrator can distribute assets to beneficiaries, the administrator must pay off the estate’s legally enforceable debts. For example, the administrator may need to:
  • File and pay the deceased’s taxes;
  • Arrange for payment of the deceased’s utilities and outstanding debt payments; and
  • Decide whether to advertise to potential claimants.
The administrator may need help from experts regarding matters like taxation. If the administrator does not properly resolve the estate’s debts and obligations, the administrator could become personally responsible for them.

4. Distributing and Accounting for the Administration of the Estate

Once legally enforceable debts and taxes have been paid, the remaining assets can be distributed according to the will (if a valid will exists) or according to intestacy rules (if no will exists).
Note that the administrator may need to continue holding onto assets until certain conditions are met. For example, if any beneficiaries are minors, they might need somebody to look after their share until they reach adulthood and act as a trustee in that regard to those funds or property until distribution.
The administrator must:
  • Ensure that assets are distributed correctly;
  • Give beneficiaries proper notice of their interests; and
  • Prepare financial statements, receipts, and acknowledgements, where necessary.
Beneficiaries or the court may request an accounting of the estate, such as documentation showing what happened to the estate’s assets and liabilities. Good record keeping can help protect the administrator from disputes or legal claims.

Legal Duties and Personal Liability

An estate administrator must act in the best interest of the estate and beneficiaries. This includes:
  • Acting honestly and impartially;
  • Avoiding conflicts of interest; and
  • Making informed decisions.
If an administrator mismanages the estate or fails to follow applicable laws, they may be held personally liable for losses. This is why many administrators seek legal advice or other professional guidance.

Challenges Faced by Administrators

Estate administration can be emotionally and practically challenging. Common difficulties include:
  • Handling disagreements with beneficiaries/claimants;
  • Handling complex financial/legal matters;
  • Determining unknown information about the deceased; and
  • Time-consuming paperwork, correspondence, and (sometimes) travelling.
The process of estate administration can take months, sometimes years, to complete, depending on the size and complexity of the estate.

When to Seek Professional Help

An estate administrator should look for professional support when tasks require specialized knowledge outside of the administrator’s field of knowledge (especially if not seeking help could cause detriment to the estate). For example, many estate administrators need help when:
  • The deceased owned many assets;
  • The deceased owed many debts;
  • The deceased left behind a business that needs managing;
  • Disputes arise among beneficiaries; or
  • The estate is involved in lawsuits.
Estate administrators should also seek help if they find themselves in situations where they don’t know what to do next, since the estate administrator could be held personally responsible if their failure to fulfill their responsibilities causes harm to the estate.

Summary

Estate administration is necessary to wrap up an estate’s outstanding affairs, such as who gets the deceased’s property and what happens to the estate’s debts. Estate administrators are responsible for carrying out estate administration in accordance with applicable laws.

Whether you are trying to prepare a will to help your administrator carry out your wishes as smoothly as possible, or you have lost a loved one and need help with carrying out their estate administration, Forum Estates LLP has experienced estate lawyers who can help you take the next steps with confidence and professionalism.