In our most recent LGK Wealth Management podcast on wills, we talked about how a will names an individual to be responsible for the management, administration, and ultimate distribution of your estate. That person is called your executor.
According to a recent study done by BMO Financial Group, 40% of those surveyed appointed their spouse as executor, while 85% appointed a family member. That same study also found, that if appointed executor, 65% of Canadians would not, or are not sure whether they would hire a professional to assist them. They also found that 41% of those who have experienced being an executor have encountered administrative, emotional, and legal issues.
With those statistics in mind, what exactly are the responsibilities of your executor and who should you name to be responsible for this important task?
The responsibilities of the executor can be quite detailed and complex. Duties will include, but are not limited to:
- Locating and reviewing the will
- Gaining an understanding of the deceased’s financial situation
- Potentially assisting with funeral arrangements
- Ensuring that there’s adequate insurance in place to protect assets
- Cancelling subscriptions and re-directing mail
- Notifying banks, investments firms etc., where the deceased had dealings.
- Making claims for life insurance and company and government pension plans
- Valuing, managing, and collecting income from investments;
- Valuing real estate, and other assets.
- Obtaining probate
- Closing accounts, selling real estate, and preparing tax returns.
- Distributing the estate according to the will’s instructions
Considering these responsibilities, who should you name as your executor?
In many ways, your executor needs to be part accountant, part lawyer, and potentially part family counsellor. Since it’s impossible to be all these things, their most important attribute might be their ability to use “common sense” and know when and where to ask for professional help. In addition, consider the following:
- Do they understand what it means to be an executor?
- How old is the individual you’re considering to be your executor? If they’re the same age as you are, and you’re getting elderly, you should be prepared to make changes to your will to find someone who is younger.
- If you’re appointing children as executor(s), consider their ability to do the job, and if naming one child over other children will cause family strife.
- Communicate your intentions to your executor and family well in advance because his or her identity should not come as a surprise on the day that you pass away.
- Keep your will up to date and keep your executor informed when you make changes.
- If you’re not sure of who to appoint as your executor, get advice from a family practice lawyer who specializes in estate planning. You may find that it makes sense to appoint a professional corporate trustee.
As with all other wealth management strategies, open and early communication is the simplest and truest path towards success. Having a well informed and knowledgeable executor, who understands you, your wishes, and their obligations, should provide you with a great deal of comfort that your wishes will be acted upon with minimal disruption to the lives of those you care about.
Gary M. Koss
Mutual Fund Advisor
Manulife Securities Investment Services Inc.