Being named an executor can feel like a vote of confidence. It can also leave you wondering: if something goes wrong with the estate, will you have to pay for it yourself?
An executor in Manitoba is not automatically responsible for the person’s debts. Those debts are generally paid from the estate. But an executor can face personal liability if they mishandle estate assets, distribute an inheritance before dealing with obligations, or fail to meet certain duties.
What does an executor do?
An executor gathers and protects the estate’s assets, identifies debts and beneficiaries, handles required tax filings, and distributes what remains according to the will and the law. Some estates also require a Grant of Probate from the court.
You’re managing property for other people, including the beneficiaries. That means keeping careful records and making decisions in the estate’s interests, even when family members are eager to move things along.
If you’re just getting started, our Manitoba executor checklist walks through the practical steps.
Can an executor use money from the estate?
Estate money must be used for estate purposes, not personal expenses. An executor may need to pay legitimate bills, taxes and costs of administering the estate. They should be able to show where the money went.
For example, paying a property insurance bill to protect the deceased person’s home is very different from using estate funds for your own purchase. If money is misused or assets are distributed contrary to the will and applicable law, the executor may have to account for the loss.
Is an executor responsible for the deceased person’s debts?
Usually, the debts belong to the estate, not the executor personally. The risk arises when an executor distributes assets before addressing valid claims and there is not enough left to pay them.
Manitoba’s Trustee Act provides a process for giving notice to creditors that can protect an executor against certain claims they did not know about when they distributed the estate. It does not let an executor ignore a debt they already know exists.
Before making a final distribution, make sure you understand the estate’s debts and any claims that may still come in. That’s one reason our probate and estates team encourages executors to look at the full picture before dividing the assets.
What about the deceased person’s taxes?
An executor handles the estate’s tax obligations using estate funds, but can become personally liable to the CRA if assets are distributed while tax amounts remain unpaid. The CRA says that liability can extend up to the value of the assets distributed without a clearance certificate.
A CRA clearance certificate helps protect the executor from personal liability for covered tax amounts. It is generally requested after the required returns have been assessed and the amounts owing have been paid or secured.
Beneficiaries understandably want to know when they’ll receive their inheritance. If you’re considering an early or partial distribution, speak with the estate’s accountant and lawyer about what needs to be held back first.
Can a surviving spouse or common-law partner make a claim?
Yes, a surviving spouse or common-law partner may have rights under Manitoba’s Family Property Act that affect how the estate is distributed. An executor should check those rights before assuming the will tells the whole story.
The Act generally gives a surviving spouse or common-law partner six months from the grant of probate or administration to apply for an accounting and equalization of assets, subject to exceptions. It also sets out notice requirements for personal representatives. These rules can be especially important in blended families or where the will leaves most assets to someone other than the surviving partner.
How can you lower the risk of personal liability?
Keep an inventory of assets and debts, document money coming in and going out, and avoid promising beneficiaries a distribution date too early. Before distributing the estate, check that you have addressed creditor claims, taxes, and any rights that could affect the beneficiaries’ shares.
You do not have to figure out every step alone. If you’re administering an estate in Winnipeg or elsewhere in Manitoba, contact TLR Law or call 204-925-1900. We can help you understand your duties and decide what needs attention before assets are distributed.
