When a person dies, it is their Executor who manages the estate, seeing to the distribution of estate assets and fulfillment of estate obligations. Your Executor is appointed in your will.
Your Executor has three main jobs: identify and collect the assets of your estate, pay your taxes and other debts from those assets, and distribute whatever remains to your beneficiaries.
You can have one Executor or multiple co-Executors. You can appoint an individual or a trust company. You should appoint alternates if your first (or second) choice is not available.
Whoever you choose, it is important to discuss your choice with them, because they are not obligated to accept the appointment, even if it appears in your Will. Although it is impossible to ensure with complete certainty that they will still take the job when the time comes, you should at least know that they are open to it before naming them.
Many people choose their spouses or adult children to act as their Executors, especially when they are familiar with the estate assets and are the beneficiaries. However, even if you are married and/or have adult children, you should consider whether they have the skills to manage an estate – a job that can include working with lawyers, banks, Canada Revenue Agency, real estate agents, and impatient beneficiaries. If trusts for minors are set up in the Will, the job may involve years of responsibility for managing other people’s assets. It is also important to honestly assess whether your children are likely to work cooperatively or if there will be conflict and strife. Choosing one child can create problems, since the others may be offended at not being chosen. This offence is misguided – being an Executor is a job with responsibilities and not a gift that is bestowed – but nevertheless can be a cloud over sibling relationships for years. Finally, in a blended family, it is important to consider questions of trust, and specifically whether the beneficiaries will trust the Executor or are likely to challenge them at every turn.
A trusted friend, other relative such as a sibling, or advisor such as an accountant may be good choices.
If your estate is complex, if you want an Executor with expertise in administering estates and trusts, if you have investments in private corporations or are often involved in significant commercial litigation, if your estate includes trusts that are expected to last beyond than a person’s lifetime, or if there is simply no one in your life suitable to act as an Executor, you can appoint a trust company to act. Each of the major banks has an affiliated trust company and your account manager can usually connect you to someone at the trust company to discuss their services.
You can also appoint both a trust company and an individual to act as co-Executors; neutral third parties may be able to defuse family tensions.
Most trust companies will want to review your Will before agreeing to act, as well as review your assets to ensure your estate will meet their minimum thresholds. They will also ask that you sign a fee agreement.
An Executor who is not a trust company is also entitled to Executor’s fees. Unless you put a set amount or formula in your Will, it will be variable – depending on many factors including (among other things) the size and complexity of the estate – and what the Executor thinks is fair may be challenged by the beneficiaries or reduced by a judge.
As in all matters of estate planning, you should review your Executor appointments every five years to ensure they are still appropriate.
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