Is an Executor Personally Liable for the Deceased's Debts in Alberta?

Being named as an executor can be worrying when the deceased owed money. Many people ask whether a bill left behind becomes their own bill. In general, debts are paid from the estate, and the real risk comes from not doing the job properly.

In Alberta, the person who administers an estate is called a personal representative. This article explains where personal liability can arise, what steps give protection, and what happens if the estate cannot pay everyone.

This article covers the law of Alberta.

What the job involves and where liability comes from

One of a personal representative's core tasks is to identify the estate's assets and liabilities and satisfy the estate's debts and obligations. The debts are the estate's debts, and they are paid from estate property.

Personal liability usually comes from how you perform the role. A personal representative is liable for the duties and liabilities imposed by the Estate Administration Act, the will, other law or the Court, and can be compelled to discharge them. You must also act honestly and in good faith, use ordinary prudence and distribute the estate as soon as practicable. A representative with a higher professional skill level, such as a trust company, must use that higher skill when acting professionally.

If you fail to give required notice or perform your duties, the Court may, on application, order compliance, impose conditions, remove you, revoke the grant or make other orders.

Notice to claimants: the key protection

The main protection comes from following the Surrogate Rules on notice to claimants. For an estate with a gross value of $100,000 or less, the notice is published at least once. For a larger estate, it is published at least twice, with 5 days or more between publications.

A claimant must notify the personal representative not more than 1 month after the last notice is published. A late claimant may proceed only with the court's prior consent.

Once you have complied with the notice rules, you may distribute based on the claims you know about and are not liable for unknown claims. There is an important exception: claimants may still pursue the beneficiaries who received the assets. Beneficiaries should understand that a gift is not always final.

Checking and contesting claims

You do not have to accept every claim at face value. A personal representative may require verification of claims and may contest them. A claimant who does not apply within 2 months of notice of contest is barred.

• Keep a written record of every claim received and when it arrived.
• Ask for proof where a claim is unclear.
• Contest a claim you believe is not valid, and note the date you give notice.
• Do not distribute to beneficiaries until you have followed the notice rules.

Leases, contracts and insolvent estates

A deceased person may have been party to a lease or similar agreement that is still running. A personal representative is not liable under an unperformed lease or similar agreement if they satisfy accrued liabilities, validly assign the agreement and reserve funds for future claims. All three steps matter.

If the estate does not have enough assets, valid money claims are paid proportionately, subject to existing mortgages and the common-law priority for funeral and administration costs. Mortgaged property is primarily liable for its own mortgage, unless the will or another document shows otherwise. Paying one creditor in full while others go unpaid can create problems, so get advice before paying anything in an estate that looks short of funds.

When debts have to be paid from gifts in a will, the Estate Administration Act sets the order in which the gifts bear them. Property specifically charged comes first, then residue, general gifts, specific gifts and appointed property, unless the will shows a contrary intention.

What to do next

If you are unsure how to handle a debt or claim, you can apply to the Court for advice or direction on any question about managing or administering the estate. Acting on that direction discharges the duty, but not if the direction was obtained by fraud, concealment or misrepresentation. A personal representative or a person interested in the estate may also apply for directions at any time.

• List the assets and debts you know about.
• Publish the notice to claimants as the Surrogate Rules require.
• Wait out the claim period before distributing.
• Verify, contest or pay claims, and keep records.
• Review any leases or contracts and deal with them properly.
• If the estate may be insolvent, get legal advice before paying creditors.
• Speak with a lawyer or accountant if you are unsure about a step.

Frequently asked questions