This article appears in the November 2022 issue of Advisor’s Edge magazine — our second last print issue. If you’re a print-only subscriber, learn more about our digital transition and how to continue to receive all the best news and features on Advisor.ca.
An executor has a fiduciary duty to administer an estate in the best interests of the beneficiaries. But what happens if an executor is no longer able to carry out their duties, or no longer wants to?
“You can’t just give up. You can’t just say: ‘I’m not going to do this anymore,’” said Stuart Dollar, director of the insurance tax solutions group at Sun Life Financial in Waterloo, Ont. “You have to look for someone who can.”
Someone named as an executor is not obligated to accept the role. However, once that person formally accepts the position, or even assumes it by beginning to administer the estate, they must continue. An executor who fails to fulfil their duties may be held liable by the beneficiaries for any loss in value to the estate.
Circumstances may arise, however, where an executor is no longer able to perform the role. These include health or incapacity, a job change or a move to another province or country, said Matthew Urback, partner with Shibley Righton LLP in Toronto.
Some complex or contentious estates may take years to administer, Urback said. “Someone at year zero [in an estate administration] is at a different point in their career or life than they are in year five.”
If an executor wants to resign, it’s necessary to first look to the will, which might name an alternate executor or provide someone — perhaps a beneficiary — with the power to appoint a replacement.
If the will is silent on the issue, then provincial trustee acts set out the rules for replacing an executor who has died, become incapable, become unfit to continue or wants to resign.
If the executor hasn’t yet applied for probate, they may step down by providing a formal renunciation document (signed by a witness) to the alternate executor — or another person who has agreed to step in as a replacement — with an estate accounting to that point, Dollar said. “You have to discharge [your duty to the beneficiaries] by making sure you leave the estate in the sort of shape that the alternate executor can pick up seamlessly from where you left off.”
If probate has already been granted, the executor may also have to apply to court and provide an explanation for why they’re asking to retire. The court may expect the executor to have made efforts to identify a replacement.
“The court’s main consideration is the welfare of the beneficiaries, guided by the words in the will,” Urback said.
If the court approves an executor’s application to resign, it doesn’t — subject to the terms of the will — have to appoint a replacement when more than one executor is administering the estate. The remaining executor or executors have the authority to continue on their own.
Where a replacement executor is required, a family member of the deceased, who may or may not also be a beneficiary, will often agree to step in. Beyond the family, a friend of the deceased, a lawyer or an accountant could take the role. A trust company usually only agrees to serve as executor when the estate is of significant size.
If after all reasonable efforts are made there’s still no one willing or capable to take on the role, the province’s office of the public guardian and trustee will step in as the trustee of last resort. As all executors have a right to compensation, it will seek payment for doing so.
Finding a suitable person to serve as executor is “usually the better, more expeditious course of action,” Dollar said.
When an executor dies
When an executor dies and there are co-executors to administer the estate, naming a replacement may not be necessary (subject to the terms of the will). If a sole executor dies, their personal representative may be able to appoint a replacement or administer the estate themselves, depending on the provincial trustee act.