Derek, what should I consider when choosing an executor?
Regardless of what stage you are at in life, it is important to have a will that is properly designed so that your final wishes are followed according to what you would ultimately want.
In a perfect world, we would all have lots of time to prepare for the inevitable, but since that is not the case, taking some time to plan today is the best advice.
One of the steps of writing a will is to choose an executor, or someone who will be able to manage your final estate on your behalf.
For most of us, we automatically assume a family member will take the responsibility, but it’s important to understand the role and ensure the chosen executor will be able to do the job.
Some of the duties of your executor include locating all of your assets, obtaining probate where needed, paying off your outstanding debts, managing the assets until they are sold, establishing and administrating any testamentary trusts, communicating to the beneficiaries, distributing the assets to your beneficiaries, and ensuring that your tax returns are filed. All of these tasks take time and effort.
Beyond the time it takes to settle an estate, an executor may need experience in various topics such as financial markets, real estate, farm succession, tax, and some legal knowledge. In most cases, the executor may need to rely on the professionals who helped you during your life, or find people who may be able to assist them.
When choosing an executor you will want to ensure that they are prepared to act on your behalf. One key aspect is how they will communicate with beneficiaries. While most of us would believe that our beneficiaries would respect our wishes, often the division of assets can create a scenario where there are hurt feelings, jealousy, confusion, and doubt. The executor must be willing to act on what the will specifies, and remove themselves from any of these issues. In many cases the executor may also be one of the beneficiaries, so this might not always be the possible. I have witnessed many happy families gripped with frustration once the assets start to be divided.
One consideration is to ensure that your executor lives close to where you do, or ideally in the same province. This is particularly useful when you start dealing with real estate and lawyers.
In some cases, it’s more complicated.
If your executor lives out of province, they may need to post a bond for the full value of your estate to ensure that all of your creditors are paid. One possible way around this may be to appoint joint executors so long as one of them live in the same province as you — in either case you will want to receive proper legal advice before making this decision.
One way to simplify what happens after you pass away is to name a trust company as your executor.
These are specialists who deal with estates and will have invaluable experience in managing your final wishes. The benefit of naming a trust company as your executor is that they reduce the likelihood of errors, they ensure the timely administration of your estate, they rely on their team of specialists to ensure your estate is managed efficiently, and they ultimately save your family time and energy.
A trust company should follow your will to the exact letter of the law to ensure that your assets are divided according to your wishes.
This eliminates any concerns about beneficiaries feeling any angst toward your executor and your beneficiaries can rest assured that the proper process is being followed.
With this in mind, a trust company will charge a fee to provide the work they do, although these fees are generally governed by provincial courts or legislation.
You’ll be able to find trust services with most financial institutions. As a senior wealth adviser, part of my team includes a group that specializes in helping clients with managing estates; the expertise they bring to the table is an important part of the total wealth management offering.
Whatever your preference, it’s important that you chose an executor that gives you confidence in knowing that your final wishes will be acted out with honour and accuracy. Whether it’s a friend, a family member, or your financial institution they should have the time, expertise, and ability to serve your best interests.
Senior Wealth Adviser
Scotia Wealth Management
Derek Fuchs is a Senior Wealth Adviser with Scotia Wealth Management in Red Deer and holds the designations of Chartered Investment Manager, Certified Financial Planner, Financial Management Advisor, and is a Fellow of the Canadian Securities Institute.