Choosing an executor is a challenging, yet necessary decision you must make when preparing your Will. Your executor will be responsible for making important decisions, on your behalf when you are no longer living.
In this article, we will cover the basics you need to know before choosing an executor so you can feel confident in your decision.
What Is An Executor?
Ideally a spouse, relative or close friend, your Executor will help execute the wishes outlined in your will, distribute funds to your beneficiaries, and can act on behalf of your business and financial interests when you die.
The executor (female ‘executrix’) is the person or people appointed by the testator to administer (or ‘execute’ that’s where the word comes from) their will, to ensure their final wishes are fulfilled. In Ontario, this position is called an ‘Estate Trustee’ and in Quebec, they’re called the ‘Liquidator’.
When And Why Do I Need To Name An Executor?
It’s important to name an executor because they will be the person in charge of taking care of your estate. If you do not choose one before you die, the courts will be in charge of appointing an administrator to execute your wishes, and this person may not be someone you would have wanted to act in this role.
Responsibilities of your executor include paying off estate debts, recovering money owed, paying your final tax return, and distributing assets and gifts to your beneficiaries. Your executor is also responsible for handling your funeral and burial wishes, including the organization of your funeral or cremation.
When you prepare your will, you appoint the executor to follow the direction laid out in your will. They may collect debts, pay bills, sell property and/or businesses, file your final tax return and distribute assets in accordance with the direction in your will. There’s a lot to do and it’s an important job.
They also have to communicate with the heirs on a regular basis to keep them happy with the progress of the estate settlement, as well as advertising for creditors (best done through NoticeConnect to save on costs), deal with creditors, courts, lawyers and the Canada Revenue Agency. It can be time-consuming and stressful so it’s important to choose the right person or people. Be sure to name a contingent or backup executor in case the first one you name is unable to fulfill the role for any reason.
How Does This Differ From An Estate Trustee? Are They The Same Role?
An Executor and an Estate Trustee are two different roles, but the same person can fulfill them. The difference is that executors take care of the entire estate, while a trustee would only handle the trust (assets that are being held for beneficiaries), and work with beneficiaries named in that trust.
Effectively speaking, executors are estate trustees, since estates are trusts and the executor manages the estate and has fiduciary responsibilities just like a trustee. In Ontario, executors are actually called estate trustees.
Can I Choose More Than One Executor?
You may want to appoint multiple executors - for example maybe you have two people you want to share the position, or you’d like to appoint a professional executor in tandem with a family member. It’s important to ensure your executors get along and are clear on your wishes, as appointing two people can lead to disagreements. With the Willful platform, you can currently only choose one executor, but we are working on the ability to appoint a co-executor, and the ability to appoint a professional executor. A professional executor can be a trust company, an individual, or a financial institution - they specialize in closing up estates, and you may want to appoint them if you don’t have a family member who you feel would handle this job well. Your executor can also hire someone to help after you pass away to guide them through that process.
However, we do highly recommend choosing a backup executor. Your initial choice may be unable or unwilling to perform in this role, so it’s important to have someone else who can step into this role if needed. There is a spot to add a backup on the Willful platform in the Executor and Trustee section.
How Do I Choose An Executor?
Here are some important things to consider when selecting an executor for your will.
Choose someone who is comfortable with the responsibility Being an executor can be a stressful role, especially under the circumstances. They must be an organized and level headed person, able to make critical decisions during a potentially stressful time.
Choose someone who will be available Is your executor available to take on this role? Choosing someone who is available both physically in terms of location, and mentally is essential. A person who loves to travel or lives off the grid may not be the best person to pick.
Choose someone you trust Although the plan you outline in your Will is legally-binding, it’s still important to choose someone that you believe will execute your wishes and represent you well after you’re gone.
Choose someone who is likely to be alive Morbid we know, but choosing someone who is expected to be alive and in good health after you’re no longer around will avoid any headaches for your family down the road.
Review your executor regularly Like the rest of your will, you should review and update your choice for executor as life happens. Monumental moments such as the birth or adoption of a child, moving to a new home, or divorce may trigger you to make changes to your will and to review your chosen executor.
What Qualities Should I Look For In An Executor?
Honesty – Although the Will provides direction, a dishonest person can still find considerable latitude with the truth and may misinterpret your intention in ways they find most convenient or beneficial.
Ethical – An ethical person will do the right thing even when they can get away with doing the wrong thing. They have a moral compass that guides them when there are no other rules or guidelines.
Organized – Being an executor involves a lot of paperwork, documentation, dates and follow-up. A disorganized executor is most likely to get into trouble with creditors, heirs or other third parties who may choose to litigate.
Available – Being an executor is like having a part time job for one to three years and even longer in some cases. They must have time available. When thinking about who to appoint, consider where they spend their time now. Will they have to give up coaching soccer or teaching piano?
Financially Literate – Estates have become a lot more complicated in recent years and while the successful executor can outsource some of their duties, such as the estate tax returns, they should know a little about assets, debts and the basics of taxation.
Impartial – Executors are tasked to ‘act with an even hand’, meaning they treat people equally and fairly. This doesn’t mean contravening the Will, but rather that in following the Will they use good judgment and all the heirs feel they were treated fairly.
Diligent – When executing a Will, as in anything, things don’t always go smoothly and follow-up and persistence are necessary. Your executor needs to be diligent in holding people accountable for the things they need to do.
Good Communication – The surest way into a courtroom is failing to communicate effectively and timely with all parties affected by the estate. Left unchecked and uninformed, emotions can get out of hand very quickly.
Cool-Headed – When everyone else is losing their minds, the executor needs to keep theirs! The cool-headed executor can calm people down, share the facts, and get to the bottom of the matter promptly and effectively.
Strong-Willed – Sometimes, people try to get away with things they shouldn’t, such as making up debts owed, or forgetting assets that were borrowed and never returned. A strong-willed executor will hold all parties to account.
Is There Any Personal Risk When Acting As An Executor?
Acting as an executor carries considerable personal risk. In fact, there are up to 18 areas with supporting case law where executors can be sued personally. In Ontario, executors can be fined up to three percent of the entire estate and if they’re found to have benefitted from making a mistake, (such as if they’re also an heir), they can be put in jail for up to two years.
One way to mitigate that risk is to obtain executor liability insurance, though most people don’t know it exists, leave it too long to apply and get turned down, or find that arguments over who should pay the premium is the first family fight. The best way to protect executors is to get a guaranteed issue, paid up policy at Executor Protector.
Inform Your Executor
Lastly, it’s important to remember to sit down with your chosen executor to make sure they are willing to take on the role, go over the essential responsibilities and to inform them where they can find the most recent copy of your will and other information they may need to settle your affairs. You should also register your will on Canada Will Registry to ensure your executor knows where it is - so if they forget, or you forget to tell them, your executor can perform a search to find out exactly where it’s located. Willful provides free will registration with each plan purchase.
Are There Any Resources For Executors?
Fortunately there are now a lot more resources available to help make the executor’s job easier. We’ve already identified a number of them throughout this article.
Be sure when talking to your executor to direct them to this site to get answers to these important questions and to make sure they have their own Wills in place.
You can also direct them to Executor Depot which provides free, online, do-it-yourself estate preparation and settlement services.
If they’re still having problems they can also talk with a Certified Executor Advisor (CEA) in their area, by searching the national directory.