Your client has finally committed to making out her will. She’s thought through her wishes, including the selection of an executor. She’s picked someone she trusts completely and considers competent to settle her affairs. Having crossed this hurdle, she announces she’s done with the process.
It falls to you to explain that’s not the case. Once your client decides who will handle her estate, the next step is to pose key questions to the prospective executor, says Lori Duffy, a partner with Toronto law firm WeirFoulds LLP. These are tough questions to ask a friend, but it’s important an executor accepts the job with a full understanding of what it entails.
Here are the five questions your clients should ask a potential executor:
1. Do you like my children?
“This is important because, if there are going to be trusts for any of the children and the children don’t get along, what you’re asking the person is, ‘Are you going to be able to fairly mediate and resolve these issues without it going to court?’” says Duffy.
Court proceedings waste estate assets so an executor must work to ensure disagreements are resolved in other ways. And, Duffy says, a prospective executor should flip the question and ask him or herself, “Do I actually want to deal with this person’s children?” An honest answer is crucial. It can be a hard job.
2. Can you handle my other beneficiaries?
This is a polite way of asking, “Are you young enough to deal with my estate?” To get the answer, your client must look at the prospective executor in the context of her estate plan. “If you’re leaving gifts for grandchildren, for example, and those grandchildren are now ages one and two and [won’t] get the gifts before they’re 30, then what age is this executor?” Duffy asks. “If [the executor is] the same age as you, they’re going to be 90.”
While Duffy doesn’t often recommend professional executors, in circumstances where an estate establishes long-running trusts, she says it can be the best choice.
3. Do you understand my assets?
A client’s trusted best friend might not be qualified to sort her assets—especially if your client owns a business that needs to be wound down as part of the estate settlement. “I have one client who owns a successful specialty manufacturing business and he picked, as his executor, a best friend who is a physics professor,” says Duffy. “The physics prof is brilliant, but can he read a balance sheet, or a profit and loss statement? Has he hired and fired people? Could he wind up this business? There’s no way.”
In such cases, Duffy recommends the client select a business partner, someone in a similar business or possibly even a competitor (since that person would handle matters competently, and wouldn’t be allowed to buy the business since trustees can’t purchase estate assets).
4. Do you have time to devote to the task?
Naming a younger executor who is either starting a family or her own business may not be the best choice, since administering an estate can be time consuming. “If they don’t have the time or are at the wrong stage of life, that’s when mistakes get made and it gets costly,” says Duffy.
Backup is also important. There have been cases when someone making a will and the executor of the will die at the same time. “I always put in at least one alternate, and I do the same for powers of attorney,” she says.
5. Will you get along with the person I’m naming as guardian?
In a perfect world, a client can task the same person with raising the children and managing the estate’s finances. But sometimes the person managing the finances doesn’t have a clue about raising kids—and vice versa.
“I had a case where the guardian was raising the children the way they thought the parents would have raised them, which was private schools and camps, and the guy with the money was saying, ‘That’s frivolous; I’m not giving the money for that,’” says Duffy. “As the children grow up, your client may want to revisit who their guardian will be. A person who was great when the children were young may not be so great with teenagers. Your family and your assets are going to be changing.”
Philip Porado is a veteran Toronto-based journalist who specializes in financial and business topics. Prior to immigrating to Canada in 2004, he covered brokerage compliance, real estate, housing policy, architecture and technology for several U.S. publications.