Is an Executor Personally Liable for Estate Debts in British Columbia?
This answer covers the law of British Columbia.
An executor can be personally liable for estate debts if they distribute the estate while debts remain unpaid. An executor's basic duties include listing all assets and debts, paying valid debts, filing tax returns and distributing the estate.
Two timing rules matter most. You must not distribute within 210 days after the grant is issued unless the court orders otherwise, though there are exceptions, such as when all beneficiaries and everyone who could bring a wills-variation claim consent. Before distributing, you must also obtain a clearance certificate from the Minister of National Revenue, and distributing without one makes you personally liable for the unpaid tax, up to the value of what you distributed.
A notice to creditors in the Gazette can set a deadline of at least 30 days for claims. The court may excuse an executor from personal liability for a breach of trust if they acted honestly and reasonably and ought fairly to be excused, but you should not count on that. The order in which different creditors are paid depends on the estate, so confirm it with a lawyer before paying anyone.
Key takeaways
- Distributing the estate while debts remain unpaid can make you personally liable for them.
- You must not distribute within 210 days after the grant is issued unless the court orders otherwise, with exceptions such as consent from everyone affected.
- Distributing without a CRA clearance certificate makes you personally liable for the unpaid tax, up to the value of the property distributed.
- Request the certificate on Form TX19 only after all returns are filed, assessments are received and all amounts are paid or secured.