Executor Liability in BC: Mistakes That Can Make You Personally Responsible

Being named executor is a position of trust. Under the Wills, Estates and Succession Act (WESA), you must administer and distribute the estate and account to the beneficiaries and creditors, and you are judged on how you do it.

Personal liability does not require bad faith. It can follow from paying out too early, skipping a step or guessing instead of asking. Here are seven mistakes that can create personal exposure, with the rule behind each and how to avoid it.

1. Paying beneficiaries within the 210 days

The rule. Under WESA s 155(1), you must not distribute the estate within 210 days after the grant issues unless the court orders it. You can distribute sooner with the consent of all beneficiaries and everyone who could bring a wills variation claim (s 155(1.1)) or, if there is no will, all intestate successors entitled to a share (s 155(1.2)). A third route lets you proceed without some consents if you set aside unlocated beneficiaries’ gifts and shares and enough to meet any variation claim, but you are then liable for any loss unless you can show you set aside the right amounts (s 155(1.3)–(1.4)).

The risk. If a claim succeeds after you have paid out, the estate may not have enough left to satisfy it, and you can be answerable for the shortfall.

The fix. Wait out the period or get consents from everyone section 155 lists. After 210 days, still check that no variation claim or other proceeding affecting distribution has started; if one has, you need the court’s consent (s 155(2)). Our guide to the 210-day rule explains the consents.

2. Distributing before the CRA clearance certificate

The rule. Before distributing property under your control, the Income Tax Act requires you to obtain a certificate from the CRA confirming that the tax owed by the deceased and by you as legal representative has been paid or secured (s 159(2)).

The risk. If you distribute without one, you become personally liable for the unpaid amounts, up to the value of the property you distributed, and the CRA can assess you at any time (s 159(3)).

The fix. File the final return and any estate returns, wait for the notices of assessment, then apply on Form TX19 and keep a holdback until the certificate arrives. The CRA says a complete request can take up to 120 days to assess. Our article on CRA clearance certificates covers the process.

3. Paying beneficiaries before creditors are dealt with

The rule. WESA s 154 lets you publish a notice to creditors in the BC Gazette requiring claims within a stated period of at least 30 days. When it expires, you may distribute having regard only to the claims you then know about, and you are not liable for claims not presented in time (s 154(3)–(4)).

The risk. Without that notice, a creditor who surfaces after you have paid out can leave you exposed, and recovering money from beneficiaries is slow and uncertain.

The fix. Publish the notice early, go through the deceased’s mail, statements and records for debts, and keep a reserve for anything still unresolved.

4. Mixing estate money with your own

The rule. WESA requires you to account to beneficiaries, creditors and others to whom you owe that duty (s 142(2)(b)).

The risk. If estate money has passed through your personal account, it can be hard to show where every dollar went. A beneficiary who is not satisfied can take the matter to court and, in a serious case, apply to have you removed (s 158).

The fix. Open a separate estate account, run every receipt and payment through it, keep invoices for expenses, and maintain a running ledger from the start. Our step-by-step guide to executor duties sets out the record-keeping in sequence.

5. Letting estate assets lose value

The rule. Your job is to administer the estate (WESA s 142(2)(a)), and land vests in you to hold as trustee for the people entitled to it (s 162(1)–(2)). Where you hold estate money in trust and invest it, the Trustee Act sets the standard: the care, skill, diligence and judgment of a prudent investor (s 15.2).

The risk. An uninsured house that is damaged, a vehicle left to deteriorate or investments left unmanaged can lead beneficiaries to claim the loss from you.

The fix. Secure and insure property promptly, tell insurers about the death and ask about vacancy conditions, and get advice before making investment decisions with estate funds. If a house is involved, our article on mistakes when selling an estate house covers the common traps.

6. Putting yourself in a conflict

The rule. You hold estate property for the beneficiaries, not for yourself (WESA s 162(2)(a) for land), so your own interests cannot come first.

The risk. Buying an estate asset yourself, hiring a family member’s business without telling the beneficiaries, or favouring one beneficiary invites a challenge. The court can remove an executor who should not continue in office (s 158(3)); our article on removing an executor explains how those applications work.

The fix. Disclose any personal interest, get an independent valuation, and obtain the informed written consent of all beneficiaries, or the court’s approval, before any transaction you benefit from.

7. Guessing instead of asking

The rule. An executor can apply to the court for its opinion, advice or direction on a question about administering the estate (Trustee Act s 86, applied to personal representatives by WESA s 143(1)). Acting on that direction is treated as discharging your duty on that point (Trustee Act s 87).

The risk. If you press ahead on an unclear will or a disputed claim and get it wrong, the consequences can fall on you. The court may relieve an executor who acted honestly and reasonably and ought fairly to be excused (Trustee Act s 96), but that relief is discretionary and comes after the fact.

The fix. Get legal advice early. For a genuine question of interpretation or a deadlock among beneficiaries, consider an application for directions before you act.

Acting as executor? Get advice before you distribute anything

Our probate and estate lawyers can help you apply for the grant, deal with creditors and the CRA clearance process, prepare consents and estate accounts, and advise you before you make any distribution.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.