How Does One Choose the Right Executor?
Your will sets out how your estate is to be divided upon your death, but it is up to your executor to settle your financial affairs and distribute the remaining assets to your beneficiaries. That is why choosing the right executor is so crucial. Here are some guidelines to help select who will perform this important role.
First, you may want to make sure the person lives in Canada. An estate is considered a trust, so there could be tax implications if it is controlled by a non-resident. Rules vary from province to province, so it is best to get someone close by since they will have to consult with your bank and lawyer when settling the estate.
Even with the simplest estate, your executor will have plenty of paperwork to complete. That includes gathering financial information required to file your final tax return, paying outstanding debts and estate expenses, and perhaps even applying to have the will validated by a court. Your executor should be comfortable with finances and dealing with government agencies. He or she should also not be afraid of asking for professional help when needed.
In many cases, trustworthiness is more important than expertise, as honesty trumps experience in this important role.
You will also want to make sure the person you appoint as executor is willing to devote the time and effort required to handle all these tasks, as the process can last for months, even years. In Ontario, more than one executor can be appointed under your will and you may want to consider obtaining consent before naming someone as an executor in your will.
If you are naming a single executor, however, it is wise to consider appointing an alternate. There is always the risk of your primary executor dying before you, or becoming ill, incapacitated or unwilling to act when it is time to settle your estate.
If you intend to leave the majority of your assets to a single person, such as your spouse, you may want him or her appointed as one of your executors. Adult children or other family members often serve in this role. That usually works well, but problems can arise if one family member feels he or she is performing more of the tasks than the others.
Tensions amongst surviving family members can cause problems within blended families, especially if a child from one marriage is put in charge of distributing your estate while those from another marriage watch suspiciously from the sidelines. Naming an executor from outside the family is definitely the better option in that situation.
There are also estate professionals who can be hired to act as executors. This may be a sensible alternative if your estate is complex, or if minors or disabled children have to be provided for through trusts. Having an outsider administer your estate may also be an effective way to avoid family conflict after you are gone.
Anyone serving as an executor of your estate can apply to the court for what is known as executor’s compensation, a form of remuneration for the work involved in settling an estate.
The age of your executor is also very important. While you may want a friend that you have known since childhood to be entrusted with this role, he or she may not be physically able to do the work that is needed when the time comes.
Just as you should be reviewing and updating your will on a regular basis, your choice of executor should also be revisited periodically. Personal circumstances change over time, and perhaps the person you chose to take on the task decades ago may not be as appropriate now.
Your estate is the last gift you will give to your family. Choosing the right executor ensures that the gift is distributed as you intended.
Thanks for reading … have a great day,