Funeral expenses: Why executors should pay them promptly

This article discusses the payment of funeral expenses out of an estate, and why executors should pay them promptly.

The first reason is practical. After death, the funeral home is often the first to provide a service to the estate. It disposes of the body in a safe and respectful manner. As such, the funeral home understandably expects to be paid. To pay this expense promptly will ensure the estate is not later sued for the invoice, and interest charges are not incurred. Moreover, it means there is one less expense for the executors to later deal with.

The second reason to pay promptly, is that the law prioritizes funeral expenses. Almost every will drawn by a lawyer, will include a clause directing the executor “to pay out of and charge to the capital of my general estate my just debts, and funeral and testamentary expenses.”

Thus, the will of a deceased usually expressly requires the estate to pay the funeral expenses. Thus, even in situations where is a dispute over which will is valid, it is very unlikely there will be a dispute over whether it was legitimate to pay funeral expenses. Again, it is simpler to pay those expenses, get them out of the way, and then move on to other issues (like which will is valid etc).

For an example of how the law prioritizes the payment of funeral expenses, we may look to the Alberta decision in Chernichan v. Chernichan Estate, 2001 CarswellAlta 1730, 2001 ABQB 913, [2001] A.J. No. 1429. There, the Court spoke of the “public interest in the prompt and dignified disposal of human remains”, and that the funeral costs should be paid promptly:

14      Where one party pays funeral expenses, he or she is generally able to recover them from any person who has a higher obligation to pay them, even if that person had no input into or even knowledge of the funeral: Schara Tzedeck v. Royal Trust Co. (1952), [1953] 1 S.C.R. 31 (S.C.C.) at p. 37. Funeral arrangements must usually be made in a very short period of time, sometimes before the personal representative is identified, and invariably before probate is issued. The family usually makes the arrangements without regard to who is in a technical sense legally responsible for either making the arrangements or paying the expenses. Because of the public interest in the prompt and dignified disposal of human remains, the law imposes a duty on those ultimately responsible to reimburse the person who actually incurs the obligation. The obligation to reimburse arises in restitution, not in contract, and is founded on considerations of necessity, unjust enrichment and public health: Goff and Jones, The Law of Restitution, (5th ed., 1998), pp. 480-81. Thus the son in Routtu could recover from his father. See also Tkachuk v. Uhryn (1952), 6 W.W.R. (N.S.) 515 (Sask. Dist. Ct.) (daughter entitled to costs of funeral from estate); and Sargent & Son Ltd. v. Buday, [2000] O.J. No. 5476 (Ont. S.C.J.) (estate must reimburse son). The Applicant is therefore prima facie entitled to reimbursement for the reasonable expenses he incurred.

[emphasis added]

Even where an estate is insolvent, funeral expenses have a priority among the debts. Indeed, we find this enshrined in s. 46.2 of the Administration of Estates Act, SS 1998, c A-4.1 which says that reasonable funeral expenses are to be paid in priority to virtually all other debts. The provision reads below:

Ranking of debts

46.2 (1) When the assets of an estate are not sufficient to pay all the debts of an estate, the following debts shall be paid proportionately and without any preference or priority of debts of one rank or nature over those of another:

  1. debts due to the Crown in right of Saskatchewan and to the executor or administrator of the deceased person; and
  2. unsecured debts.

(2) Reasonable funeral, testamentary and administration expenses are to be paid in priority to the claims mentioned in subsection (1).

(3) Nothing in this section prejudices any lien or charge existing during the lifetime of the deceased on any of the deceased’s property

[emphasis added]

We even find that the federal Bankruptcy and Insolvency Act makes clear that funeral expenses have a priority, where an estate has assigned into bankruptcy:

Priority of claims

136. (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

(a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal representative or, in the Province of Quebec, the successors or heirs of the deceased bankrupt;

(b) the costs of administration, in the following order,

  1. the expenses and fees of any person acting under a direction made under paragraph 4.03(1)(a),
  2. the expenses and fees of the trustee, and
  3. legal costs;

[emphasis added]

Thus, there is a super-priority for funeral expenses. In the Chernichan decision referenced above, the Court even held that funeral expenses have a priority even over unpaid taxes owing by the estate. Because the executor, in that case, should have paid the funeral expenses before the taxes (and she did not), she was personally liable to pay any unpaid reasonable funeral expenses.

What if the funeral expenses are unreasonable?

Funeral expenses only have a priority to be paid, to the extent that they are reasonable. We see the qualifying word “reasonable” used in both the Administration of Estates Act, and the Bankruptcy and Insolvency Act.

What then is reasonable? There is some prior guidance from courts, suggesting that the cost of the funeral should be sensible, having regard to the deceased’s financial assets, and other circumstances. Thus, if a deceased died with very little in assets, it is reasonable that their funeral should contain only that is necessary. Indeed, the Chernichan decision held that ‘in insolvent estates only the simplest and most modest tombstones can be charged against the creditors.”

If the executor of a small estate insists on a magnificent and expensive service or headstone, the funeral home should obtain appropriate assurances from the executor (i.e. pre-payment, or a contract stating that the executor will be personally liable to pay the cost, if the estate cannot afford it).

What if the estate bank accounts are frozen?

Some delays in payment are frustrating but legitimate.

In many, even before probate is obtained, a bank will release monies from an account to pay the funeral costs. If an executor says that the bank will not release money to pay the funeral cost, the funeral home should ask the executor to find out why this is.

What about the case of a disputed will, where someone says Will A is valid, and someone argues Will B is valid? In such a case, the bank may be reluctant to deal with any executor until the one true will is determined in a court proceeding (and thus, once this is determined, it will also determine who is the true executor)

Should a will challenge be a good reason to hold up payment of funeral costs? From a common sense perspective, the two conflicting sides should ideally come to a negotiated agreement on the issue of funeral costs. That is, they may agree to immediately pay the funeral costs out of a bank account, on the basis that, regardless of which will is later found to govern, there is no reason the funeral expenses could not be paid in the interim. Of course, the above outcome requires the reasonableness of the two sides, which is never guaranteed in litigation.

What can funeral homes do to ensure they get paid?

If the circumstances of the deceased are complex (i.e. no local family to act as “decision maker” or pursue probate) the only way to guarantee payment is to ask for payment up front, before  providing services. One situation which occurs is there the funeral home does the work, but is left holding its unpaid invoice when no family member will take the effort to take steps to administer the estate etc. If the funeral home has evidence before the funeral that this may occur, the funeral home may wish to ask for money upfront.

Second, a funeral home should always make sure that it is obtaining instructions from the true representative of the estate. This is already required in the Funeral and Cremation Services Act, which requires a funeral home to obtain written authorization from the authorized decision-maker, before providing services (see s. 92). This due diligence should ensure that a funeral home does not do a lot of work at the request of person A, only to find out that person B was the true executor.

If a funeral home has tried all reasonable attempts to secure payment of an overdue invoice, they may need to simply sue the estate. If the bill is for less than $30,000, which most will be, you can sue in Small Claims court. However, note that in Small Claims court you cannot recover any legal fees, if you use a lawyer. Also note that, due to limitation periods, you must sue within 2 years of the non-payment. Indeed, when suing estates, the sooner you sue the better, to ensure that estate assets are not distributed out of your reach.

Sometimes the question arises – can a funeral home sue the executor personally, as well as the estate, for unpaid expenses? The executor’s personal money, is separate from the estate’s money. The most reliable way to ensure you can sue an executor personally, is to ensure the executor signs a contract in advance, stating that they are personally liable (in addition to the estate) to pay the funeral home. Not all executors may be willing to sign such a clause however, so you should clarify this before the funeral.   

That said, if an estate legitimately incurs a debt to a funeral home, and then later the executor distributes all the assets of the estate before paying the funeral home, that executor may become personally liable. Each situation is unique, and it is recommend to consult a lawyer for specific situations.

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

The potential dangers of adding children as joint tenants

Many people like to add the name of a child, or children, to their home. The hope is to avoid probate fees on the death of the parent, and have the asset go directly to the children.

However, before you make this decision, be aware of the following potential danger:

  • First, if you later have a change of heart and do not wish to leave property to that child, it may be impossible to “undo” what you have done
  • Second, if the child who is now on title, attracts a judgement creditor, the judgement creditor may be entitled to go after the child’s share of the home

In short, sometimes circumstances cannot be controlled. Once you add a person to your title, you have given legal rights to that individual. Creditors will be entitled to rely on the legal position you create when you add a joint tenant.

James Steele’s preferred practise area is estate litigation. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

Related News and Articles

Funeral expenses: Why executors should pay them promptly

This article discusses the payment of funeral expenses out of an estate, and why executors should pay them promptly. The first reason is practical. After death, the funeral home is often the first to provide a service to the estate. It disposes of the body in a safe...

read more

Rebutting the Presumption of Resulting Trust – A Refresher

Today’s post comes from Wagner Sidlofsky LLP, a well-known estate law blog. The article talks about the importance of creating a contemporaneous evidentiary record of a parent’s intention when gifting property to their adult children.

read more

Saskatchewan Estate Litigation Update: Bryant Estate v Stuart, 2021 SKCA 54

A recent case from the Saskatchewan Court of Appeal clarifies that a beneficiary who seeks an estate accounting is not required to show possible wrongdoing by the trustee before an accounting can be ordered. Background: The late Franklin Bryant was a beneficiary under...

read more

Who Approves Compensation for the Executors?

Typically, executor compensation will be governed in one of three ways:

  1. By a specific term in the Will, setting out a compensation percentage (these terms rarely exist however);
  2. By the agreement of the beneficiary (this is most common)
  3. If the beneficiary and executor do not agree, by a court order.

The vast majority of estates see beneficiaries consent to the compensation amount requested by the executor. The executor will first provide an accounting which sets out all of the transactions of the estate, so the beneficiaries can make sure they have no concerns. The executors will then often ask for a sum for compensation, and for their out of pocket expenses. Often, the beneficiaries will agree, and sign a consent.   

However, sometimes the beneficiaries feel that the compensation is too high for the work actually done. Or sometimes, there are minor (children) beneficiaries who are unable to provide capacitated consent. In these situations, the executor will need to go to court to seek court approval for their compensation. This approval should be given before the executor actually pays themselves anything.

How will the court fix the appropriate compensation:

There has grown to be a “rule of thumb” that an executor will receive a fee of 5% of the estate, as compensation for their work.

However, in estates which are very large, or, which were not specially complicated, courts routinely reduce compensation to below 5%. After all, 5% of a $2 million estate could be a huge amount of money, which may be too much compensation if the executor only dealt with a straightforward sale of farmland (often assisted by a lawyer).

In terms of the considerations that a court would examine, they include:

  1. The size of the estate;
  2. The care and responsibility required to administer the estate;
  3. The time occupied by the executor;
  4. The skill and ability displayed; and
  5. The success in administering the estate.

In short, before any executor “pays themselves” any fair compensation, be sure to first get written consent to the compensation from the affected beneficiaries. The last thing you want is to pay yourself a fee, and only then find there is a dispute, and perhaps you may even need to pay some of the money back to the estate.

 James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

How to avoid your Will from becoming challenged after you die

More and more wills are being contested in Saskatchewan each year. And the sad truth is that many challenges are avoidable if the will-maker had done one or both of the below things:

  1. Hired a lawyer to draft their will, and keep good notes of their instructions;
  2. Told the will-maker’s family of the terms of the will, before they died.

On numerous occasions I have seen situations in which a person had sought to avoid the cost of a lawyer-made will. They therefore draft their own will. When the person later passes away, the result is sometimes a confusing will, often made in secrecy and without any independent notes showing the true intention. This situation often spawns litigation, which can then drain tens of thousands of dollars in legal fees from the estate. 

Thus, the first lesson is this: think carefully about perhaps hiring a lawyer to make your will. Moreover, if possible, look for a lawyer who actually specializes in wills and estates, and better knows all of the questions to ask, and situations to avoid.

Second, talk through your goals and assets with your children, and keep notes of such conversation. This is especially true if your new will is making a departure from a prior will. It is far more difficult for a child to later suggest you had dementia, or were pressured into making your will, when the child had the opportunity to talk about your will with you in person.

A will is one of the most important pieces of paper you can ever sign. It can control who is left in charge of your children, your home, and your savings. It is meant to give you peace of mind that when you pass on, your wishes will be followed. It is therefore worth putting in the time to ensure your will is done right.

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Q&A: Hurt in a Car-Accident and someone needs to pay!

Question:

I have been in a car accident and suffered an injury. Can I sue the other driver?

Answer:

Saskatchewan is often referred to as a no-fault insurance jurisdiction. The reality is more nuanced.

In Saskatchewan, you can elect to either have no-fault insurance or ‘tort-election’ insurance. Each comes with different abilities to sue at fault drivers for your pain and suffering

The default coverage is no-fault insurance in Saskatchewan. With this option, you cannot sue the party who hurt you. Instead, SGI compensates you for your injuries, regardless of who caused the accident. Under no-fault coverage, SGI provides you with a broad range of benefits. However, this does not prevent you from suing the other party for some forms of specific economic loss above and beyond what was covered by your no-fault insurance. For example,

Saskatchewan driver’s are entitled to choose tort-election insurance instead of the no-fault coverage default. With this option, you still get basic insurance regardless of whoever caused the accident. However, the standard benefits included are fewer than no-fault coverage. Under this form of insurance, if the other driver is at fault, you are able to sue them for any injuries over and above your benefits, as well as any pain and suffering that may have resulted from the collision.

Tort-election coverage also allows you to also sue for economic loss: think loss of wages because you missed work due to your injuries. If you suffer what the government calls a ‘catastrophic injury,’ along the lines of paralysis or amputation, you will be entitled to additional benefits to compensate for this.

Tort-election insurance is subject to the regular rules of negligence and contributory negligence. This means if you choose to sue the other side under tort-election, there is a chance you may also be found at fault. If this happens, your damages will be reduced accordingly.

For more information about vehicle insurance in Saskatchewan, contact Jennifer D. Pereira, Q.C.

The above is for general information only. Parties should consider seeking legal advice prior to taking action in specific situations.
Copyright 2019 by Robertson Stromberg LLP. All rights reserved.

Q&A: Collecting loans from friends

Question:

I loaned some money to a friend and they won’t pay it back. What timelines should I be aware of, to make sure I don’t lose my chance to sue?

Answer:

If you lent money to a friend, you cannot wait forever to start a lawsuit. If you both agreed they would pay you back in a certain period, once they fail to do so, the clock begins ticking on when you can start a lawsuit.

The reason for this is that in most normal civil lawsuits in Saskatchewan, you have two years in which to commence a lawsuit with the court. After the two years are up, the law can no longer help you get your money back. 

However, always speak to a lawyer about your specific case. There may be exceptions. For instance, in order for the two-year clock to kick in, you have to know that the person has failed to pay you back. So, if for years you had legitimate grounds to believe you had been paid back, the clock may not start ticking until you actually realize you had a claim.

Anwers for general information only. Parties should consider seeking legal advice prior to taking action in specific situations.
Copyright 2019 by Robertson Stromberg LLP. All rights reserved.

Articles & ResearchQ&A