A client’s close friend asked him to be her executor. Honoured, he agreed. But now he’s come to you, admitting he doesn’t know what to do. All too often, executors accept the job without understanding the scope of the work, the complexity of the estate or the dynamic of the testator’s family—all of which can make the job more difficult.
What you don’t know can hurt you
Joni Metherell, a partner at Pushor Mitchell in Kelowna, B.C., says, “You might not think to ask question[s] because it seems like an invasion of that person’s privacy.”
But, “An executor ought to have a basic understanding of what assets they’re going to be asked to administer,” she says. Such knowledge should include what those assets are, and where they’re held. In addition, would-be executors should know whether the estate includes real property to be sold, rented and/or managed, and whether there are assets outside the jurisdiction of residence.
“Have a general idea of how much work is going to be involved before agreeing,” she says.
A would-be executor should think twice about accepting if the testator’s finances are highly disorganized, he’s currently involved in a lawsuit, or he has a history of bankruptcy or unpaid taxes. And family is another factor many executors underestimate.
“A highly acrimonious family dynamic would be cause for concern,” Metherell says. “The executor could become a target for a lot of pent-up anger and frustration.” And even if such antipathy is groundless, the conflict can be time-consuming and draining. If the potential executor doesn’t know the dynamic, “ask the [testator] if he or she anticipates problems.”
Executors aren’t always fairly compensated. Clarifying remuneration expectations up front can help avoid conflict among beneficiaries.
A business-like approach
E. Jane Murray, a partner at Burke-Robertson LLP in Ottawa, suggests prospective executors ask questions that a corporate trustee would, such as, “How much are you going to pay me? What do you own? Who holds it, and how complicated is this going to be?”
Personal effects can also create problems. “The other large point [beneficiaries] fight over is sentimental items: paintings, furniture, jewelry,” Murray says. “If I were going to be an executor, I would want the testator to deal with that before they died.” Testators can ask heirs to sign a list of who gets what and add it to the will. Or, they can describe in their wills how to resolve disagreements: by the flip of a coin, drawing lots or some other method.
She adds, “What’s really unfair to the executor is to say, ‘Use your discretion and distribute [assets] equally.’ Because there is no equal when you’re talking about sentimental value.”
Murray says executors may want to decline the job in such cases. “If there are a large number of beneficiaries who do not get along well and a lot of valuable personal property, such as jewelry and art, it could be a serious enough issue.”
Questions to ask
What (and where) are the assets?
Distributing assets is a core function of any executor. But the difficulty of the job depends largely on what kinds of assets are involved, and where they’re domiciled.
Where will the assets go?
An estate with few heirs (immediate family only, or a single charity) is much easier to administer than one that needs to be distributed to multiple beneficiaries across the country.
What’s the family dynamic?
Family acrimony can make an executor’s work harder. In extreme cases, it can also expose the executor to legal challenges. Better to know about potential discord before signing up.
Originally published in Advisor's Edge
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