Choosing the right executor for your estate

According to the Canadian Bar Association, “The executor gathers up the estate assets, pays the deceased’s debts, and divides what remains of the deceased’s estate among the beneficiaries.”

An executor is the person who you name in your Will who will have the legal responsibility to settle your estate after your death. Settling an estate takes around 18 months, and maybe more . . . potentially years if you have business assets, adversarial family members, a highly valuable estate, a very low value estate, strange problems arise, or if the executor does not have the time, health, interest or ability to efficiently settle your estate.

The Ideal Executor

The ideal executor can make a big difference in estate settlement. Here are some characteristics of the ideal executor:

  • Lives in the same area as you. It can be hard (but not impossible) to deal with assets and issues from a distance
  • Has experience managing money and dealing with financial institutions
  • Can deal with your relatives and beneficiaries objectively
  • Is comfortable dealing with lawyers and accountants
  • Has the time to spend settling your estate which is a part-time job for 1½ to 2 years
  • Has the patience to deal with government agencies (especially tax departments)
  • Is organized and willing to do lots of paperwork
  • Is not afraid to ask for professional help when needed
  • Has experience settling estates or is willing to read, research and learn.

In your Will, you should appoint a primary executor and an alternate executor. It is important to appoint an alternate executor because your primary executor may die before you, or may be ill or become ill when it is time to settle your estate.

Married people will often name each other as their executor. Generally, this is a good idea if each Will says that everything goes to the surviving spouse. This might not be a good idea if the spouse is elderly or unhealthy or financially inexperienced. This also might not be a good idea if the spouse is the second spouse and family members from the first marriage are adversarial.

Naming more than one executor

Is naming more than one person as executor (co-executors) a good idea? Sometimes. It could help share the burden if the co-executors work well together. It would not be a good idea if any of them do not live locally – at the very least, it would be hard for them to get together to meet with accountants and lawyers and to sign documents. More than two co-executors is never a good idea because group decision-making is rarely easy.

Using a trust company

Think about naming a trust company as your executor (or a co-executor). Trust companies could have all the ideal characteristics of a good executor. Yes, they cost money, but the money is paid out of your estate. You can enter into an agreement with a trust company regarding their fees. Their fees are usually a percentage of your estate on a sliding scale (the larger the estate, the smaller the percentage fee) and usually start around 5% on the first $1 million in your estate. Trust companies, like any executor, will also demand repayment of expenses incurred on the estate’s behalf (for example, legal fees, accounting fees and realtor fees).

Anyone who settles your estate (e.g. spouse, child, sibling or friend) is entitled to be paid, and that payment can be more or less than what a trust company might charge. You can state how much your executor should be paid in your Will, but be aware that your executor can seek the approval of a court to be paid more.

The information in this articles was taken from Jim’s book Smart Tips for Estate Planning. For more information on this book, visit Jim’s website www.JimYih.com. Jim is also the creator of My Estate Organizer, a tool to help people organize, diarize and share their estate information with the people they love. It is a tool designed to help beneficiaries and executors.

Other relevant articles

Smart Tips for Estate Planning

Duties of an Executor – an executors checklist

Being the executor of an estate

Communication is essential in Estate Planning – pt 1

Communication is essential in Estate Planning – pt 2

Canadian Finance Blog – Review of Smart Tips for Estate Planning

Financial Resolutions – Get a Will

Wealth transfers – avoiding costly mistakes

Common Fears of Estate Planning

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace.For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

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