The person who administers your will has a tough but important role. Here are five things to look for when searching for the right person to do the job.
Creating a will means making big decisions that will impact your family for years after you’re gone. While divvying up assets, assigning care for dependants and tax planning will take up most of your will-creating conversation, you’ll also have to choose an executor – also called a liquidator in Quebec – who can carry out all your wishes. Naturally, finding the right person is critical to any good estate plan.
An executor’s obligations can include everything from arranging your funeral, to making sure your dependants or pets are looked after, to filing tax returns and administering assets as set out in your will. It’s also a significant time commitment, so anyone you choose should have some free hours to dedicate to the job. “It takes at least a few months, and could even take two or three years – especially if there’s litigation,” says Christine Van Cauwenberghe, vice-president, tax and estate planning, at IG Wealth Management.
So, how can you select the right individual? Here’s Van Cauwenberghe’s checklist of the top five traits of effective executors.
- Trustworthy. “This person will be making all the decisions you’re not around to make, so make sure you can trust them. They should act solely on your behalf and not gain any personal benefit from their decisions.”
- Responsible. “Being an executor requires a lot of record keeping and correspondence; things like informing financial institutions and utilities of the deceased’s death, keeping track of where all assets are and what they’re worth. Part of being responsible is also knowing when to reach out to professionals, such as lawyers, accountants, financial planners and corporate trustees, for help. Some people think they’re required to do everything themselves, but that’s not prudent. They could be held liable if they do things incorrectly.”
- Willing to work. “You might name your daughter as executor because she’s an accountant and has the right skill set, but what if she’s too busy or just doesn’t want to do it? Nobody likes unexpected surprises, so be sure to speak to your chosen executor in advance to make sure they agree. Consider introducing your executor to your lawyer, financial planner and accountant, so he or she will be more comfortable approaching them later for help, if necessary.”
- Canadian resident. “Non-residents of Canada will likely not be accepted by the court as executors and, even if they are, it creates an extra layer of complexity with additional tax-filing requirements. Similarly, avoid selecting U.S. citizens, who also may need to file extra tax returns even if they live in Canada.”
- Impartial. “Look out for conflicts of interest. For example, you might be trying to decide between appointing a new spouse or children from a first marriage, but with blended families neither is a good choice because the parties have conflicting interests. Similarly, some business owners want to name their partner as executor, but since the executor would likely end up negotiating with the partner’s spouse over the sale of the business’s shares, being an executor would put the partner in an impossible position.”
Clients with complicated estates or those who don’t want to burden surviving family with extra responsibilities could also consider corporate trustee services, notes Van Cauwenberghe. A corporate trustee is a professional who can oversee the administration of an estate. In terms of what to look for in one, find out the company’s fee structure, the services they provide and what experience they have overseeing estates. “Hiring a corporate trustee may cost the estate some money, but the fees are small compared to the potential losses in the long run if mistakes are made,” she says.
Dwayne Rettinger, Investors Group Financial Services Inc.
This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Dwayne Rettinger is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant. Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Great-West Life Assurance Company.
