Every month we publish a financial planning article in the East Gwillimbury Bulletin magazine. The November article regarding the pitfalls of the executor role is explained below.   

 

Naming your executor - seven common pitfalls and how to avoid them

 

If asked by a family member or friend to serve as their executor, most of us would consider it an honour. However, it can be a complicated, sometimes overwhelming undertaking. 

An executor is often responsible for a long and detailed task list to ensure your last wishes are carried out. To settle even a simple estate, it can take about 18 months. Your executor must complete numerous tasks and duties, including:

• Finding and, if necessary, probating the Will
• Protecting, selling or distributing assets
• Reviewing insurance and pension benefits
• Paying outstanding debts and taxes
• Preparing a final accounting for the beneficiaries of the estate

That's why it's important to carefully consider your choice as executor. Following are seven issues you should be aware of when naming your executor. 

 

1. Not considering your executor's age and health
   • Many people choose someone close to their own age to act as their executor, such as their spouse, a sibling or a close friend. That may be fine when everyone is younger and in good health. However, when the time comes to act, the person you have named may no longer be up to the task due to their age or health. It's also possible that they will predecease you. Make sure you review your choice of executor as time goes on, consider naming someone from the next generation.
2. Overlooking family conflict
   • Let's face it, family can be complicated. That's why it's important to select an executor who is able to manage potential family discord and balance conflicting interests. To help your executor, consider talking with your beneficiaries in advance, so they clearly understand your final wishes and the reasons for your decisions.
3. Selecting someone too busy
   • It can take 1-2 years to settle a basic estate, and longer if you have a more complex estate. If you are establishing trusts in your Will, your executor's responsibilities could stretch into many years or even decades. This can be challenging for your executor if they have a busy life, so think about naming someone who will likely have the time to carry out their duties, or arranging professional assistance to help them. 
4. Choosing someone too far away
   • Your executor will be responsible for many tasks that are much easier to do if they are close to where you live. 
5. Naming an expat executor
   • When a non-resident of Canada acts as the sole executor of a Canadian estate, the estate may be considered a non-resident of Canada. This could result in the loss of tax advantages enjoyed by Canadian-resident estates.
6.  Putting honour before duty
   • You may feel like you have to name someone in particular as you executor - someone who may "expect" the honour. However, your executor will have duties that require a certain level of technical expertise, such as filing tax returns. What's more, your executor could potentially face personal legal liability if they don't properly carry out their duties. As a result, you should carefully consider your executor's level of expertise. 
7. Not getting professional assistance when you need it 
   • Ultimately, you may find it difficult to find someone ideally qualified to act as your executor. Avoid naming someone just because you have to name someone. Give some thought to either hiring a professional to act as your executor, or to support your executor in carrying out their duties. 

If you are interested in learning more about estate planning, check out one of our upcoming estate planning seminars or email us with any questions or to set up a complimentary one-hour consultation.

 

Also, our previous East Gwillimbury Bulletin articles are listed below. Click on the links to download the PDF version of the article.

September Article: Why you need more than just a Will to achieve a lasting legacy

October Article: Creating a comfortable retirement 

 

Connor Ryan, MBA

connor.ryan@rbc.com

905-895-4102