Proper, honest, and accurate trust administration is critical because the Trustee is handling assets that belong to someone else. We offer legal advice and support to all trustees, including executors and estate administrators in BC.
Proper, honest, and accurate trust administration is very important because the Trustee is handling assets that belong to someone else. We offer legal advice and support to all trustees, including executors and estate administrators in British Columbia.
Many do not realize that every Will automatically creates a Trust - even in the simplest Will that names the sole executor as the sole beneficiary. A trust is created when the legal ownership of an asset is held by someone different from the beneficiary.
All assets in estates belong to the deceased until they are legally conveyed to the beneficiary. Until the assets are properly distributed, the named Executor in a Will or an Administrator appointed by the Court has the duties and liabilities of a Trustee.
Proper distribution first requires the payment of all estate creditors - otherwise the executor or administrator can be personally liable to any unpaid creditors. Sea to Sky Law™ provides full trust administration support to executors across BC.
What Is a Trust and Why Does Every Will Create One?
A trust exists whenever one person (the Trustee) holds assets legally for the benefit of another person (the Beneficiary). In a trust, the legal title to an asset and the beneficial ownership of that asset are separated: the Trustee's name appears on the title, but the Trustee holds the asset for someone else's benefit, not their own.
Every Will creates a trust by operation of law. From the moment of death until the last asset is distributed to the last beneficiary, the estate assets are held in trust by the Executor (or Court-appointed Administrator). This means every executor is a trustee from the day they take on the role - with all the legal duties and personal liabilities that come with it.
The Core Duties of a Trustee in BC
BC's Trustee Act, combined with centuries of common law developed in Canadian and British courts, imposes strict duties on all trustees:
The duty of loyalty: A trustee must act solely in the interests of the beneficiaries, never in their own personal interest. Self-dealing - buying estate assets yourself at below-market value, for example - is a serious breach of trust.
The duty of care: A trustee must manage the estate assets with the care, diligence, and skill of a prudent person managing affairs for another. This means investing estate assets wisely (not too conservatively, not too speculatively), maintaining insurance on estate property, and keeping clear and accurate records of every transaction.
The duty to act impartially: Where there are multiple beneficiaries with different interests - for example, a life tenant (who receives income) and a remainderman (who receives the capital eventually) - the trustee must balance both interests fairly. Favouring one at the expense of the other is a breach of trust.
The duty to account: A trustee must be ready at all times to provide a clear accounting of all estate assets, income, expenses, and distributions. Beneficiaries are entitled to this information, and a trustee who cannot provide it faces serious legal risk.
The duty to not delegate: Generally, a trustee must exercise their own judgment rather than handing decisions to someone else. A trustee may engage professionals (lawyers, accountants, realtors) to carry out specific tasks, but the trustee remains responsible for the decisions made.
The Practical Steps of Estate Trust Administration in BC
When a person dies, the estate trust administration process in BC typically involves the following steps:
Locating and reviewing the Will, all codicils, and any prior Wills to confirm which is valid and current.
Identifying and valuing all estate assets: real property (confirmed through the BC Land Title Office), bank and investment accounts, registered accounts (RRSPs, RRIFs, TFSAs), life insurance policies, vehicles, personal property, and any interests in businesses or partnerships.
Applying to the BC Supreme Court for a Grant of Probate (if there is a Will) or a Grant of Administration (if there is no Will or no named executor). The Grant is the court document that gives the executor or administrator legal authority to act on behalf of the estate.
Notifying creditors and paying all debts: CRA for income tax, funeral costs, mortgage lenders, credit card issuers, and any other valid creditors. The executor must file the deceased's final income tax return and obtain a CRA clearance certificate before making any final distributions to beneficiaries.
Distributing the net estate to the beneficiaries named in the Will (or, if there is no Will, according to BC's intestate succession rules under WESA).
Preparing and obtaining beneficiary receipts, and closing the estate administration file.
Personal Liability of the Executor/Trustee
One of the most important facts that new executors do not always understand is that they can be held personally liable if they distribute estate assets to beneficiaries before paying all creditors. If the estate has unpaid creditors and the executor distributes the estate anyway, those creditors can sue the executor personally for the amount owed.
Similarly, if the executor fails to file the deceased's final income tax return and the CRA later assesses tax owing, the executor can be personally liable to the CRA.
This personal liability makes proper professional support for executors critically important. Sea to Sky Law™ provides comprehensive trust and estate administration support to executors across all of BC, including guidance on creditor notifications, tax obligations, court filings, and beneficiary distributions. Contact Andrew Liggett BA JD CD today to protect yourself and fulfil your duties as an executor with confidence.