Choosing an executor for your estate seems simple enough. A trusted son or daughter, your spouse or maybe a close personal friend are all likely candidates. But, are you doing them an honour or saddling them with a burden? Individuals give a lot of thought to making out their Will. They should do the same when choosing an executor.
The executor named in your Will is your proxy. He, or she, or they assume all the financial and administrative duties of winding up your estate and see to it that what you want to happen with your assets is properly carried out.
It’s natural to want a family member or a close personal friend to be your executor, but it may not be practical for the following reasons: people emotionally close to you will be grieving; while a friend or family member may have your complete trust, their ability to manage your estate may be compromised by lack of business or financial experience; someone your same age may not outlive you; or the nomination of one child over another may create hard feelings.
Duties and Responsibilities of an Executor.
Consider some of the financial and legal responsibilities of an executor.
• Register your Will with the provincial court.
• Prepare a complete inventory of your financial assets and liabilities and assume responsibility for them.
• Deal with various government agencies, banks, credit card companies, insurance companies, pension administrators and so on to finalize and close accounts.
• Meet with your creditors and review their claims on the estate.
• File all final tax returns (there can be several) and pay any capital gains tax owing on the deemed disposition of your estate’s assets.
• Assume control of your investment portfolios, property and business interests not covered by a separate Will or legal agreement and arrange for their sale or legal transfer to beneficiaries.
Clearly, reading the Will and distributing assets to your heirs and beneficiaries is only the last of a series of fiduciary duties. The majority of tasks expected of an executor are administrative. For that reason, an executor out of his or her depth can seriously affect the speed of settling your estate and possibly the value of your estate assets if they are not managed or disposed of properly.
There are several things you can do to ensure you get the best executor possible.
If it’s a family member or personal friend that you want as an executor, first make sure they are prepared to take on the responsibility and are comfortable making such a commitment.
If they live out of town, or if their business or profession won’t allow them the time to devote to your affairs, then it may be wise to have a second choice. Another option is to consider appointing more than one executor.
Your lawyer or accountant or a business partner can bring the necessary business and administrative skills to augment those of a friend or family member. Keep in mind you’ll need to establish how to resolve disagreements affecting the estate.
Another possibility is to arrange with a Trust company or law firm that specializes in estate administration to be designated as your executor. In complex estate matters this may be the best course of action. Compensation for their services is usually based on a percentage of the value of the estate.
Finally, don’t leave your executor with a lot of detective work to perform. Your Will, insurance policies, public and private share certificates, investment records, mortgages, legal and business agreements should be stored in a safe place with its location and a duplicate set of keys made accessible to the executor(s). And make a list of your key business and financial advisors, their names, telephone numbers and areas of responsibility. They can be key resources for your executor as he settles your affairs.
If you need help in estate planning, some financial institutions can arrange an Estate Planning Advisor to work with you. You can’t be your own executor, but you can see to it that trusted and qualified people who are familiar with your financial affairs can be working together to ensure your beneficiaries and heirs are provided for exactly as you wish.
Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). The views of the author do not necessarily reflect those of RJL. This article is for information only. Securities are offered through Raymond James Ltd., member CIPF. Financial planning and insurance are offered through Raymond James Financial Planning Ltd., which is not a member CIPF. For more information feel free to call Jim at 250-594-1100.