Tips for executors when dealing with banks | Advisor.ca (2024)

A key challenge executors face when administering an estate is dealing with the banks where the deceased held their accounts.

Banks, understandably, don’t want to expose themselves to liability by releasing assets to someone who is not entitled to receive them. They are also bound by privacy legislation not to disclose information about client accounts to an unauthorized person.

However, executors can help smooth the estate administration process by working with, not against, the bank’s dedicated estate settlement department, said Tom Junkin, senior vice-president of personal trust services with Fiduciary Trust Canada in Calgary, part of Franklin Templeton.

“Don’t be a square peg in a round hole,” Junkin said. “If the bank says they need [a document] from you, don’t even try to argue with them — just get [it] and follow the procedures they want you to follow. Life will be much easier.”

At the start of the estate administration process, banks will ask the executor for a death certificate for the deceased.

Funeral homes generally provide at least 10 copies of the original death certificate and executors can typically ask for more, if needed, said Irit Gertzbein, estate lawyer and principal with Gertzbein Law in Toronto.

Executors will “need one for the Canada Revenue Agency, one for the lawyer, one for the court, one for each bank,” Gertzbein said. The deceased may have held accounts at multiple banks, so executors need quite a few copies, “and only originals are acceptable.”

The bank will also ask for a copy of the will and identification for all the executors (if there are more than one).

Banks generally require a certificate of probate from the executor to prove the will is valid and that the executor is the authorized personal representative for the estate administration.

However, if the estate is small, a bank may exercise its discretion and not require the executor to obtainprobate.In those cases, the bank will release funds to the executor but will require them to providean indemnityagainst the bank’s potential liability.

Once the bank is aware that an account holder has died, it will freeze the deceased’s account. However, banks generally will allow payments, such as probate or income tax, to government agencies and for funeral expenses to funeral homes. They may also allow for the payment of other immediate expenses, such as lawyer’s fees or utility bills.

The bank generally will make the payment directly to the payee and not to the executor, said Monique Charlebois, an estate lawyer in private practice in Oakville, Ont. and a former senior estates counsel with the Office of the Public Guardian and Trustee in Ontario.

Once the executor has received probate, they will typically establish an estate account in their own name into which they can consolidate the deceased’s assets and make payments on behalf of the estate.

Establishing a dedicated estate account is highly advised, Junkin said, since “as an executor, you’re required to account to the beneficiaries from the date of death.”

In some cases, however, it could be advisable not to consolidate all the deceased’s accounts, Gertzbein said. For example, if a payment or distribution from the estate needs to be made to a payee or a beneficiary in another province and the deceased held an account in that province, it may be practical to leave that account open to make the payments.

“It depends on what [amount] has to be paid, where it has to be paid, where the money is right now, where the beneficiaries are located, what relationship the deceased had with each bank and which way will be the least resistant way to do things,” Gertzbein said.

While the bank will help the executor as they administer the estate, executors should keep in mind that banks aren’t able to provide legal or tax advice, Junkin said. For that, executors should consider seeking advice from an estate lawyer or accountant.

“I would consider [banks] to be experts on their own policies and procedures regarding their own products and services,” Junkin said. “I would not look to [them] for advice on other matters related to the estate.”

When the time comes to make distributions to estate beneficiaries, the bank will want a letter of direction signed by the executor (or executors), and a copy of probate. The bank will then issue a cheque to the executor or to the estate, not to the beneficiaries directly. The executor will deposit the cheque into the estate account.

“I’ve never seen a bank willing to issue a cheque [directly] to the beneficiaries,” Junkin said. “They’re not going to assist you in administering the estate, because they don’t want the liability.”

Tips for making estate administration easier

Retail staff at the bank will typically refer the executor to their estate department.

“My service experience with major banks in the last two or three years has been very good,” said Junkin, speaking specifically about estate administration. “They’ve upped their game.”

Junkin said the executor should ask for a direct phone number on first contact with the bank’s estate department to save themselves from having to go through the main contact centre each time they call.

Executors should also note the bank’s file reference number for the estate, because the bank will keep detailed notes of conversations with the executor. “It will streamline everything,” Junkin said.

Executors should communicate with the bank in writing — either email or letter — whenever possible, but when meetings occur in person or over the phone, executors should take notes so they can hold the bank accountable for any agreements made, Junkin said.

Each time they meet with bank representatives, executors should take along identification and the estate file with all documentation: “Bring another copy of probate even though you gave them one already.”

Executors should also be prepared to repeat the “story” of the estate — the key details about their estate administration— to bank representatives, Junkin said, as it’s “very rare” for a bank to assign a specific individual to one file.