One of the duties of the executor is to pay any debts and liabilities of the estate, which includes paying taxes. As executor, you have a duty to pay all legitimate debts of the estate before making a distribution to beneficiaries.
According to section 142(2) of the British Columbia Wills Estates and Succession Act (“WESA”) the executor must account to the creditors as well as beneficiaries. The beneficiaries will receive the residue after these debts and taxes have been paid. According to section 159(2) of the Income Tax Act, an executor must also obtain a clearance certificate from the Minister before making a distribution.
If the assets are not sufficient to pay all the debts and the gifts under the Will, the assets must be liquidated to pay the debts in an order specified by WESA. As a note, benefit plans that have designated beneficiaries pay benefits directly to those beneficiaries, and creditors of the estate have no access to payments made from benefit plans: WESA, s. 95.
An executor is not liable for the debts of the estate, but if the executor distributes assets before the debts are paid, then he or she could be held accountable for the amount they distributed. Also, according to WESA, s. 53(3), if the Will leaves a gift to a creditor, that gift is not necessarily a payment by the Will-maker on the debt, unless the Will clearly says that it is. In other words, a creditor might take a gift and still pursue a debt.