Choosing your executor

Deciding who will act as your executor is one of the most important decisions you’ll make for your estate plan; yet for many Canadians, the executor was one of the least considered parts of their plan. The vast majority of testators pick a family member or friend, even if this isn’t the wisest choice.

When naming an executor, there are a number of aspects you should consider.

It’s a big task

After you die, your executor (or estate trustee with a will, in Ontario) is responsible for administering your estate and distributing the property in accordance with the terms of your will.

The job starts with reviewing your will, and ends with the closing of your estate accounts. To reach the final step, your executor will discharge a number of duties, of which will vary depending on the size and nature of your assets, and the terms you’ve laid out in your will.

Such duties include:

• obtaining probate, where required;
• obtaining valuations for all estate assets and ascertaining cost base for capital assets;
• preparing an inventory of assets and liabilities;
• ensuring all valid estate debts are paid and receipts obtained;
• ensuring all debts (mortgage, rent etc.) owed to the estate are collected;
• reviewing any relevant contracts, including domestic agreements, shareholder or partnership agreements;
• figuring out whether there will be any claims against estate, and the related applicable limitation periods;
• determining which, if any, assets are to be transferred in specie (in its present form) and which are to be converted to cash;
• preparing interim and final estate accounting;
• preparing interim and final releases from beneficiaries; and
• filing your terminal T1 (year of death return) and any un-filed returns for previous years.

Other concerns

Aside from expertise, you should also consider time commitment, potential for personal liability and potential for family complications.

1. Time and availability

Administering even a relatively simple estate with no ongoing trusts takes considerable time, generally ranging from 18 months to more than two years of occasional work.

Estate administration is often bookended by two key events: obtaining letters of probate and obtaining final clearance from CRA. Each event can take weeks, sometimes months to finalize.

Many duties, such as dealing with your former residence and personal effects, will need to be handled in person. So consider someone local for the job.

2. Legal responsibilities

A breach of trust, error or omission resulting in a loss to the estate may result in personal liability to your executor. The fact that an insurance product is now available to protect executors from such risk clearly underscores the validity of this concern.

3. Family issues

Although it’s natural to place trust in family, conflicts can arise when trying to organize a loved one’s estate. Similarly, you should take the effects of grief into account. The work involved in settling an estate may simply be too much to ask of those closest to you.

4. Choosing the right executor

Carefully consider the obligations the role entails. Choosing someone you trust is only one part of the equation.

Expertise, willingness, availability and, depending on the situation, independence and objectivity are equally valid considerations. Consult with your proposed executors and make sure they’re aware of, and comfortable with the obligations as well.

Elaine Blades is Director, Estate and Trust Products and Services at Scotia Private Client Group.