O’Sullivan Wealth Management Investment Update - Settling an estate

Sep 09, 2019 | Kevin O'Sullivan


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I view the task of helping my clients manage their wealth as also ensuring the wealth stays largely intact when passing from one generation to the next...a professional executor can help with a seamless transition of assets to the next generation...

I bumped into an old friend recently. She told me that her parents had passed away several years ago, and she had been appointed the executrix of the estate.

 

She went on to tell me that she had sold off the family home as part of the estate. That was a few years ago, and she thought it was all behind her. Then, just recently, she had been contacted by a lawyer telling her the current owners discovered an oil tank had been buried on the property, and they were suing for damages that the contamination had caused.

 

It had been stressful enough to deal with her parents’ passing, then the estate, and now a lawsuit.

 

In choosing an executor to act in settling an estate, we may not fully consider the implications of the task. On the other hand, we often consider it an honour to represent a family member, or close friend, as executor. The reality is that it is a complex, time consuming job, that can put a strain on the person appointed as executor, as well as placing significant stress on family connections, and have far-reaching implications.

 

Dealing with the passing of a loved one is difficult. But if you are acting as the executor of the deceased person, you have a brief period before the business of settling their affairs sets in. In settling the estate, the executor needs to pull together all the information on bank accounts, property, cars, any outstanding loans, etc. They also have to be aware of filing deadlines for tax purposes. If there is property in other provinces, in the US, or other countries they need to be in touch with legal advisors in those jurisdictions to understand tax filing issues, or estate tax obligations. One can be sure that whatever thread they begin to tug will unravel a ball of string.

 

This all takes place while the appointed executor has their own life to lead. Acting as executor quickly becomes a full time job, and one that must be learned on the run. It also involves making decisions that may be well-meaning, seeming like a good idea at the time, but lead to unfortunate consequences. My contact at RBC Trust services says she usually ends up saving executors from themselves.

 

An executor must also communicate with other family members, or beneficiaries of the estate. If circumstances are fortunate there won’t be questions over the executor’s actions, or the process.

 

In a previous article I briefly mentioned the value of professional executor services. Most of the banks offer these services through their trust departments. These folks settle large and small estates, and are very knowledgeable and efficient when it comes to wading through the complexities of process.

There are several benefits of choosing a professional executor. The most obvious is the relief of having an expert take on the task during a very emotional period. A professional executor will still be engaged with the key contact(s), but will manage most of the details allowing the family and loved ones to grieve their loss. A professional executor is also removed from family dynamics, which might help in reducing the stress, or conflict, within the family during this difficult period.

 

I view the task of helping my clients manage their wealth as also ensuring the wealth stays largely intact when passing from one generation to the next. I believe having a professional executor is an important component to ensuring a seamless transition of assets to the next generation, and equally important is the notion of preserving the integrity of the family unit. Having an independent professional can be a big help with this transition.

 

Of course, a professional executor comes at a cost which varies depending on the services selected and the size of the estate. On my website under the tab for Family Wealth is an overview of RBC Trust’s services – again, these services are provided by any of the major banks. There is a breakdown of the cost of services, as well as a useful checklist for executors to follow. If anything, the checklist serves to illustrate the importance of having a professional on the task. It’s worthwhile reaching out to me, or someone in this area, to get a better sense of the actual cost of a particular estate.

 

(On a side note, I will also point out the value of having life insurance. Life insurance bypasses probate, and is paid directly to the beneficiaries on the death of the insured. It’s quick, clean, and difficult to dispute.)

 

Choosing a professional executor would likely have prevented the lawsuit that confronted my friend. The trust company would have conducted a survey of the property to detect any buried tanks, with disclosure provided to the buyers.

 

I am a strong advocate of using a professional executor, regardless of the institution you choose. Settling an estate is a complex job, and having the help of a professional executor can be a significant help, and relieve a lot of strain at a very difficult time.