The estate doesn't have enough money to pay all the gifts in the will. Am I responsible for making up the difference?

No. As executor, you're not personally responsible for covering the shortfall. When an estate doesn't have enough to pay all the gifts, those gifts get reduced according to a specific order set out in BC law. This process is called abatement.

Abatement can happen in estates of any size — even modest ones where a will-maker's wishes exceed what they were able to leave behind. 

Which gifts to reduce, and by how much

As executor, it’s your job to settle the estate. First, you pay all the estate's debts. This includes things like outstanding bills, funeral costs and taxes. Only after the debts are paid do you look at distributing what's left to beneficiaries. If there isn't enough money to give everyone their full gift, the law says which gifts get reduced first. Generally speaking, the order is:

• Residual gifts get reduced first. The residue is what's left over after specific gifts are given out. For example, "I leave the rest of my estate to my children."

• General gifts get reduced next. These are gifts of money. For example, "I give $10,000 to my friend."

• Specific gifts get reduced last. These name a particular item. For example, "I give my car to my nephew" or "I give my house to my daughter."

If multiple gifts are in the same category, they all get reduced by the same proportion. This keeps things fair among people in the same group. 

Crunching the numbers

Say your grandfather had $100,000 in the bank. He owed $20,000 in debts. His will gave $60,000 to a charity and $50,000 to a friend. The residue is to go to his children.

After paying the $20,000 debt, there's $80,000 left. But the two gifts total $110,000. Since both gifts are general gifts (just money amounts), they get reduced proportionally.

The charity would get about $43,600 (their share of the $80,000). The friend would get about $36,400. Your grandpa’s children would get nothing because the residue gets reduced first, and there's nothing left after paying the general gifts.

If your grandpa died leaving $150,000, the general beneficiaries would get the full amount of their gift. The residual beneficiaries would have $20,000 to split between them.

Next steps

Telling beneficiaries they won't receive what the will promised can be a hard conversation. Being transparent, calm and prepared with the numbers can help. Be honest with them. Explain that the estate doesn't have enough to pay everyone in full. Show them how you're distributing what's available according to the law.

This can get complicated depending on the exact wording of the will and the types of gifts involved. You may want to talk to a lawyer to make sure you're handling the distribution correctly. Learn more about your duties as an executor and distributing an estate.