Choosing a liquidator is a challenging yet necessary decision you must make when preparing your will. Your liquidator will be responsible for making important decisions on your behalf when you pass away.
In this article, we will cover the basics you need to know before choosing a liquidator in Quebec so you can feel confident in your decision.
What is a liquidator of a will in Quebec?
A liquidator is the person who will help execute the wishes outlined in your will, distribute funds to your legatees, and can act on behalf of your business and financial interests when you die. The liquidator is the person or people appointed by the testator to administer their will, and to ensure their final wishes are fulfilled. In the rest of Canada, this position is called an executor.
Who can be my liquidator?
Any person over the age of majority (18 in Quebec) can act as your liquidator. This person is typically a relative or friend - for example, a spouse or sibling - though you can also appoint a trust company or professional company to act in this capacity.
Why do I need to name a liquidator for my estate?
It’s important to name a liquidator because they will be the person in charge of taking care of your estate. If you do not appoint an executor in your will, your heirs will either share the role among themselves, one or more of your heirs will act as liquidator, or they will appointment someone who is not an heir to be liquidator. The person or people that acts in this role may not be someone you would have wanted.
Responsibilities of your liquidator include paying off debts, recovering money owed, paying your final tax return, and distributing assets and legacies to your legatees. Your liquidator is also responsible for handling your funeral and burial wishes, including the organization of your funeral or cremation.
When you prepare your will, you appoint the liquidator to follow the direction laid out in your will. They may collect debts, pay bills, sell property and/or businesses, file your final tax return and distribute assets in accordance with the direction in your will. There’s a lot to do and it’s an important job.
They also have to communicate with the heirs on a regular basis to keep them happy with the progress of the estate settlement, as well as advertising for creditors (best done through NoticeConnect to save on costs), deal with creditors, courts, lawyers and the Canada Revenue Agency. It can be time-consuming and stressful so it’s important to choose the right person or people. Be sure to name a backup liquidator in case the first one you name is unable to fulfill the role for any reason.
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What are the duties of a liquidator?
Being someone’s liquidator can be a big responsibility.
Some responsibilities and duties of a liquidator include:
- Organizing your funeral and burial wishes
- Paying off estate debts
- Recovering outstanding debts owed to the estate
- Distributing assets to legatees
- Communicate with heirs and legatees
If you are unexpectedly named a liquidator of an estate, and you are unable or unwilling to take on the responsibility, you can always choose to not accept the role. However, if someone lets you know that they would like to name you as their liquidator, it’s important to let them know if you are uncomfortable with the role sooner rather than later, so they can choose someone else!
If you know you’ve been named a liquidator of someone’s estate, it’s usually helpful to speak with them to ensure you understand their wishes as well as know where you can find a copy of their will!
How does a liquidator differ from a trustee in Quebec?
A liquidator and a trustee are two different roles, but the same person can fulfill them (on Willful, you select one person to fulfill both roles). The difference is that liquidators take care of the entire estate administration process, and once that is completed (typically in 12-18 months), their role concludes.
If you have minor children when you pass away, Willful wills trigger the creation of what’s called a testamentary trust, which holds assets in trust until the age at which you stipulate in your will (for example you may choose for the child to receive their inheritance when they turn 18, 21, or 25 on Willful). Your trustee manages that trust (filing tax returns, releasing funds for the child's care to their tutor, etc.). In their role as trustee, they would only handle the trust (assets that are being held for legatees), and work with legatees named in that trust. While the liquidator’s role ends as soon as the estate administration process is complete, a trustee may act in that role for a much longer period of time.
Can I choose two different people to act as liquidator and estate trustee?
At this time, Willful only provides the option to appoint one person to act in the role of both liquidator and estate trustee.
Can I appoint more than one liquidator in my will?
You may want to appoint multiple liquidators - for example maybe you have two people you want to share the position, or you’d like to appoint a professional liquidator in tandem with a family member. It’s important to ensure your liquidators get along and are clear on your wishes, as appointing two people can lead to disagreements. With the Willful platform, you can currently only choose one liquidator, but we are working on the ability to appoint a co-liquidator, and the ability to appoint a professional liquidator.
We highly recommend choosing a backup liquidator. Your initial choice may be unable or unwilling to perform in this role, so it’s important to have someone else who can step into this role if needed. There is a spot to add a backup on the Willful platform in the liquidator section.
Can I appoint a corporate liquidator?
Yes - A professional liquidator can be a trust company, an individual, or a financial institution - they specialize in closing up estates, and you may want to appoint them if you don’t have a family member who you feel would handle this job well. Your liquidator can also hire someone to help after you pass away to guide them through that process.
What is the difference between an executor and a liquidator in Quebec?
In Quebec the official legal term is ‘liquidator’, however, in the rest of Canada, this role is generally referred to as an ‘executor.’ Liquidators are often referred to as executors and executors are often referred to as liquidators, so the terms are used interchangeably. The roles and responsibilities are the same, although there are nuances in estate administration in Quebec vs. the rest of Canada.
Can I appoint a liquidator in another province outside Quebec?
You can choose a liquidator outside your province, but be aware that they may be required to post an estate bond, which is intended to protect legatees from improper administration of the estate. The requirement for posting an estate bond can be waived if your will states that you want your nominated liquidator to serve without bond. However, waiving the bond is up to the judge’s discretion and is not guaranteed. At this time, Willful does not offer the ability to include a clause allowing your liquidator to serve without bond. If this is something you’d like to include in your will, you would need to visit a lawyer or notary.
Can I appoint a liquidator outside Canada?
There can be major tax implications when assigning out-of-country liquidators, not to mention it may be inconvenient for them to travel in order to settle your estate. If you appoint a liquidator who lives outside the country, it may change the residence of your estate to that country, which can have major tax implications. It’s always best to get advice from a professional before appointing an out-of-country liquidator.
Is my liquidator compensated? Do I need to outline compensation in the will?
Yes, liquidators are entitled to compensation. You can either outline their compensation in your will, or create a separate compensation agreement. If compensation is not outlined in the will, the compensation is determined by the heirs or, if they don’t agree, by the court. Typically the amount of compensation will depend on factors like the size of the estate, the effort involved in estate administration, whether the liquidator hired professionals to assist with it, etc. Willful wills do not contain an executor compensation clause.
What is the cost of an estate bond?
An estate bond cost varies depending on a number of factors including the value of the estate the liquidator is administering and the personal credit score of the liquidator. It’s important to note that the total bond amount is not the amount the liquidator has to pay. For most bonds, the bond premium typically ranges between 1-10% of the total bond amount. After posting the bond, as long as the liquidator doesn’t perform any damaging actions to the estate, the bond’s principal is returned once the estate is closed. a liquidator can purchase a bond from an insurance or surety company, where they would have to pay an annual premium on it.
Does my liquidator have to accept the position?
No. A liquidator can refuse the appointment, which is why it’s important to assign backup liquidators, and tell your chosen liquidator prior to appointing them to ensure they’re okay with it.
How do I choose my liquidator?
Here are some important things to consider when selecting a liquidator for your will.
Choose a liquidator who is comfortable with the responsibility
Being a liquidator can be a stressful role, especially under the circumstances. They must be an organized and level headed person, able to make critical decisions during a potentially stressful time.
Choose a liquidator who will be available
Is your liquidator available to take on this role? Choosing someone who is available both physically in terms of location, and mentally is essential. A person who loves to travel or lives off the grid may not be the best person to pick, nor may a person who lives outside your province or outside of Canada (see later in article for more about out-of-province executors).
Choose a liquidator you trust
Although the plan you outline in your will is legally binding, it’s still important to choose someone that you believe will execute your wishes and represent you well after you’re gone.
Choose a liquidator who is likely to be alive
Morbid - we know - but choosing someone who is expected to be alive and in good health after you’re no longer around will avoid any headaches for your family down the road.
Review your liquidator regularly
Like the rest of your will, you should review and update your choice for liquidator as life happens. Monumental moments such as the birth or adoption of a child, moving to a new home, or divorce may trigger you to make changes to your will and to review your chosen liquidator.
What qualities should I look for in a liquidator?
Honest – Although the will provides direction, a dishonest person can still find considerable latitude with the truth and may misinterpret your intention in ways they find most convenient or beneficial.
Ethical – An ethical person will do the right thing even when they can get away with doing the wrong thing. They have a moral compass that guides them when there are no other rules or guidelines.
Organized – Being a liquidator involves a lot of paperwork, documentation, dates and follow-up. A disorganized liquidator is most likely to get into trouble with creditors, heirs or other third parties who may choose to litigate.
Available – Being a liquidator is like having a part time job for one to three years and even longer in some cases. They must have time available. When thinking about who to appoint, consider where they spend their time now. Will they have to give up coaching soccer or teaching piano?
Financially Literate – Estates have become a lot more complicated in recent years and while a successful liquidator can hire professionals to help with their duties, such as the estate tax returns, they should know a little about assets, debts and the basics of taxation.
Impartial – Liquidators are tasked to ‘act with an even hand’, meaning they treat people equally and fairly. This doesn’t mean contravening the will, but rather that in following the will they use good judgment and all the heirs feel they were treated fairly.
Diligent – When executing a will, as in anything, things don’t always go smoothly and follow-up and persistence are necessary. Your liquidator needs to be diligent in holding people accountable for the things they need to do.
Good Communication – The surest way into a courtroom is failing to communicate effectively and timely with all parties affected by the estate. Left unchecked and uninformed, emotions can get out of hand very quickly.
Cool-Headed – When everyone else is losing their minds, the liquidator needs to keep theirs! The cool-headed liquidator can calm people down, share the facts, and get to the bottom of the matter promptly and effectively.
Strong-Willed – Sometimes, people try to get away with things they shouldn’t, such as making up debts owed, or forgetting assets that were borrowed and never returned. A strong-willed liquidator will hold all parties to account.
Is there any personal risk when acting as a liquidator in Quebec?
Acting as a liquidator carries considerable personal risk. You can read more in this blog post from our Quebec legal advisors at Spiegel Sohmer.
Inform Your liquidator
Lastly, it’s important to remember to sit down with your chosen liquidator to make sure they are willing to take on the role, go over the essential responsibilities and to inform them where they can find the most recent copy of your will and other information they may need to settle your affairs.
