What is an executor?
Part of creating a thorough will means choosing an executor of that will, or the person who will carry out the will. This person administers the estate and ensures all your beneficiaries are notified of their assets – amongst some other duties, all outlined below.
A will should never be created without an executor. Without an executor, a will isn’t really considered to be complete and it certainly isn’t thoroughly planned. Part of ensuring your wishes are carried out means choosing a person who’s able to execute those exact wishes.
So, what does an executor do?
An executor of the will completes specific duties. Besides taking control of land and other assets, an executor often must:
- Arrange the funeral
- Probate the will
- Obtain death certificate
- Communicate to beneficiaries their estate interests
- Decide how to distribute and manage the estate
- Identify assets and liabilities
- Repay any and all outstanding debts
How do I choose an executor?
Choosing this individual – the one who will be responsible for estate assets at an emotional time – means looking for an individual with particular qualities.
1) If you own a business, the executor should be familiar with your business.
At the very least, they should be well-acquainted with the industry you work in. This also applies to any property you own, whether commercial or not.
If they aren’t familiar with business’ like your own, they should have competent management skills. This will allow them to take over your estate with ease and proficiency – without creating unnecessary complications.
2) An executor should be organized. Likely, this means they keep detailed or thorough records.
When taking over an estate, these organization skills are vital to preventing confusion. It also prevents mistakes, which can be costly to fight or defend against.
3) An executor who shares your values is crucial.
Shared values increase the likelihood any discrepancies or vagueness is carried out to reflect your wishes. Likewise, executors of larger estates are often scrutinized in this sensitive time. An honest and trustworthy executor can also reassure family members and friends that your wishes are carried through.
4) A level head means better judgment.
Executors who have strong moral compasses (bonus points if they match yours) and a good grasp on common sense make this process easier as well.
5) Your family (and beneficiaries) should be familiar with this individual.
It’s even better if they respect this person as your executor needs to carry out wishes on your behalf.
Imagine how difficult it is to take direction from someone you don’t respect. The emotional distress of the situation heightens this difficulty, making it likely that a person who isn’t respected or trusted by beneficiaries will meet an increasing amount of friction.
6) Proximity is important.
Executors take over all of your assets. To be the most helpful executor possible, they should live nearby those assets. Logistically speaking, proximity makes it easier to protect and manage the property and assets.
7) Tax-wise, we recommend choosing an executor who lives in the same country and – ideally – province as the bulk of your assets.
We’ll start federally on this one: estates are trusts. Trusts are taxed unfavourably if they become non-Canadian trusts. As long as your executor – the controller of your estate – resides in Canada as a Canadian resident, your estate won’t meet unfavourable taxation.
Some provinces, on the other hand, have less favourable tax regimes. If your estate is handed to someone in the same province, they won’t meet any unforeseen unfavourable taxation either.
That being said, these tax discrepancies are smaller than the ones applied to non-Canadian trusts. If an executor meets all the other requirements, we’d still recommend choosing that person.
But, What If…?
You’ll hear more ‘what if’ scenarios during will and estate planning than anywhere else. One of the most common ‘what ifs’ focus on beneficiaries who are minors.
Choosing an executor when your will may include a minor requires more thought. Where the will contains testamentary trusts, consider the amount of time the trust operates. It’s advisable to measure this against the age of your executor. You should also make this clear to the executor: a will with a long-term trust is a more intense commitment than one without.
When dealing with trusts like these, many people prefer to use a professional trustee. This can include a trust company or any trust division of a Canadian chartered bank. The benefit here is the longevity of professional management – after all, they’re unlikely to die or become disabled while the trust is ongoing.
Ultimately, you need to find a plan that fits your will and estate needs. That often looks different from one individual to the next and may even change over the course of your life.
The Short Story?
Choosing an executor is an important decision. When approaching will and estate planning, the ideal course of action is to meet a lawyer with a plan and allow us to guide you from there. We can make the appropriate professional recommendations that fit your needs.