Personal Finance

For more complex estates, an impartial professional is best.
By Gail Bebee | 17/11/14

Without a will, the laws of the province where you reside will determine what happens to your property and other possessions after you die. Settling on your final wishes and documenting them in a properly drafted will is the only way to avoid this less than ideal fate. One of the most critical steps in the will-making process is choosing an executor.

About the Author
Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at gbebee@gailbebee.com; her website is www.gailbebee.com.

An executor is the person or organization appointed in a will to administer the estate of the deceased and ensure that the terms of the will are fulfilled. In some jurisdictions, the role is termed estate trustee; in Quebec, the term used is liquidator.

The job of executor covers a lot of territory. Among their duties:

  • Handle immediate issues, for example, finding the will and arranging the funeral.
  • Cancel identification such as social insurance, health and credit cards.
  • Notify third parties (employer, bank, post office etc.) and cancel subscriptions and memberships.
  • Obtain money or benefits owed the estate such as CPP/QPP death benefits, life-insurance payouts and money owed the deceased.
  • Take inventory and value all assets, including real estate, and protect them.
  • Settle all estate liabilities, including taxes owing.
  • Probate the will.
  • File all required tax returns.
  • Communicate with beneficiaries.
  • Distribute the assets.

A helpful 12-page Checklist of Executor's Duties, published by Manulife Financial, provides more details on the multitude of tasks involved in executing a will.

The executor is legally obligated to follow the directions in the will and to act solely in the interests of the beneficiaries. If the will does not provide specific instructions, the executor must decide. The numerous decisions to be made will not always be well received by all beneficiaries.

The gold standard for executors is a trust company in the wills and estates business. These firms employ professionals who administer wills and estates for a living. They know all the rules and have well-honed processes in place. A trust company acts as an impartial third party.

The testator (person making the will) and the beneficiaries can be confident that estate execution will be fair, objective and error-free, and unfold within standard timelines. Generally, trust companies want to handle estates with at least $500,000 in total assets.

A lawyer, accountant, financial planner or other professional may be a suitable executor and offer advantages similar to a trust company. Before settling on such a professional, confirm that the person or firm is qualified, has sufficient experience and will likely still be in business when their services are required.

Choosing a family member or friend as executor may offer an extra degree of privacy, but it requires careful consideration.

"A non-professional executor means more mistakes, more issues and more delays," says Lynne Butler, a wills and estate lawyer who blogs at Estate Law Canada. "There is a greater risk of asset theft and losses, and more family disputes will occur."

Despite popular wisdom, a family member or friend acting as executor is not always the cheapest option. He may want to be compensated, as is his legal right, and he will need to hire a trust company or professionals to help.

Not all family members or friends are qualified or suitable to be executors. Legally, an executor must be of legal age and sound mind. Anyone lacking mental capacity or in bankruptcy is disqualified.

An executor should be several years younger than you, so that the odds are good he will be alive and able to serve.

Ideally, an executor should live in the province of will execution to minimize travel time and costs, facilitate administration and avoid the bonding requirements imposed by some provinces.

Desirable personal characteristics include trustworthiness and the ability to deal effectively with people, including lawyers, bureaucrats, family members and beneficiaries. Take a pass on anyone whose personal situation might cause him to mishandle estate funds.

The ability to act objectively is critical, more so if the executor is also a beneficiary.

An executor must understand what the job involves and know when to seek professional help. He will need to have the time available to do the job which, depending on the complexity of the estate, could take up to two years or even longer.

An alternative executor should also be named in case the principal executor is unable to serve. Having co-executors would cover this contingency, but more executors usually mean more delays and disputes. Butler says that the biggest mistake most people make is to name all their children as executors because they do not want to pick one.

It is imperative that the executors named in your will understand what is involved and agree to take on the role. Otherwise, given that an executor has the right to refuse to serve, the administration of your will could end up in the hands of a government appointee.

Executor compensation is addressed in provincial legislation. Some provinces, such as British Columbia, specify a maximum allowable fee based on percentage of estate assets. Others, such as Ontario, require only that the fees be fair and reasonable. Fees range from 1% to 5% of the estate plus out-of-pocket expenses. Some executors charge by the hour. Fees are negotiable.

Trust-company executor fees are set when a will is drawn up and are written into the will. No matter who your executor is, it is advisable to define executor compensation in your will to avoid disputes on this matter during the administration of your estate.

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