CHOOSING AN EXECUTOR
Choosing an executor is one of the decisions you must make in planning your Will. It is an important decision because it is up to the executor to make sure the distribution of assets set out in your Will is handled in a fair and proper manner.
An executor is responsible for hiring a lawyer to obtain legal advice, probating the Will, filing tax returns, settling debts, managing and / or selling your assets, and distributing your assets to your beneficiaries. The executor is also responsible for arranging your funeral, should you desire one. An executor requires organizational skills and a degree of diplomacy; disputes can arise over property that has little monetary value but great sentimental value. In addition, an executor must have the time to devote to the job.
You may wish to read about Changes to Trustee Investment Powers.
All too often the appointment of an executor is made without much thought as to how appropriate the person is under the circumstances. Some people see it as an honour to be bestowed on someone.
Parents often appoint all their adult children to do the job, thinking they must be fair, but if, for example, four children are named who all live in different parts of the country, a logistical nightmare is set up. All of the executors have to agree on all matters and have to sign major documents, such as house listing agreements and sale documents. Such appointments can lead to increased costs and delays, not to mention increased conflict among family members.
Another problem can arise if minor children are named beneficiaries: executors must be young enough to deal with them until the time they take full control of the assets left to them under the Will. This could be 20 years or more.
Executors are also subject to personal liability. They could become personally liable for income tax if they do not file the proper income tax returns. They can also incur liability if the executor fails to obtain proper insurance. For example, if a house is not inhabited, most residential household insurance policies say that the insurance lapses after a 30-day vacancy unless a special rider is obtained. If the house burns down, the executor could be sued by the beneficiaries for failure to obtain insurance.
Making the Choice
It is important to talk to a potential executor (or executors) to make sure he or she wants to take on the job and has the necessary expertise and level of commitment to carry it out. If you have a large investment portfolio, your executor or trustee will be handling that as well. If you do not seek consent, it is more likely that your named executor will refuse to act in that role upon your death, which is their right.
If you have special circumstances, such as you operate a business, or you own an art collection, you might wish to have at least one executor with some expertise in this area.
Consider a Professional
In situations where family members are located outside the province, where conflicts of interest could arise among beneficiaries, or where there could be potential complexities, it is important to consider appointing a trust company or other professional, such as a lawyer, as executor. One benefit is that if a professional makes a mistake, in most cases there is at least some insurance to make up the loss. For example, if in contravention to your Will, your cousin, whom you named executor, loses all the estate funds due to a bad stock tip and then takes off to Costa Rica, beneficiaries have little or no recourse to recover the funds.
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