Help your Executor out

In yesterday’s Globe and Mail, Rob Carrick wrote an article titled, “The worst job ever just might be serving as someone’s executor”.  

In it, Carrick interviews David Edey, a Certified Executor Advisor, who endured 7 years, 10 court appearances and $50,000 in lawyer fees to settle his parents’ estate. According to Edey, acting as an Executor only brings: “Trouble.” He argues that “it is a thankless job” that can take about “100 hours or more and 12-18 months to get the estate settled.” Not to mention, Edey suggests, it can involve beneficiaries “who will not think twice to want to sue you.”

If you’ve ever acted as the Executor of an estate, you might agree. But, I also bet that you were quick to visit your lawyer to ensure that your affairs were in good order so that your Executor is spared the countless headaches.

Edey isn’t wrong. Too often, Executors are burdened by estates that are a real pain to settle. He therefore offers some tips for Executors to help alleviate the task. For example, he recommends that Executors hire professional advisers such as accountants, lawyers and financial advisers to assist with preparing and filing tax returns, applications for probate, or managing investments for the estate. He also recommends maintaining constant communication with the beneficiaries to minimize opportunities for tension, conflict or legal action.  

These are all great tips. However, here are 3 additional tips that you can implement in your lifetime to greatly simplify the eventual administration of your estate. 

1. Prepare a Will.  Without a Will, your estate will incur legal costs (likely more than what it takes to draft a Will), your dependants won’t have access to your funds for a long time, and your estate may suffer losses from market fluctuations (whether real estate, stock, etc.) – all while time is spent trying to appoint someone to administer your estate. This happens because an Executor wasn't named ahead of time under a Will. To settle your estate, the court will look to appoint your next of kin to administer your estate, in the order of priority set out under the Estates Act (Ontario). Your spouse will be up first (although, not if they are your common law spouse – they don’t qualify). If your spouse has predeceased, is incapable or otherwise won’t do it, then your children will be up next (and yes, all of them must act together unless someone agrees not to act – you can imagine where this might end up in terms of possible conflicts…). And if your children can’t act, the court will look to your other descendants ranked by degree, then your parents, and then your siblings. Only if none of these can act will the Public Guardian and Trustee be appointed. This appointment is made by way of application to the court. Hence the legal fees, delays in distributing the estate, and possible financial losses while no one has the legal right to protect your assets. And then, the person appointed may not be the one you would have chosen. They may not have the necessary skills that Edey points out are helpful for an Executor to have, namely that they are honest, have a lot of patience, are well organized, pay attention to detail, can get along well with others, and have the time to attend to the task.

2. Organize your affairs.  It is incredibly helpful to your Executors if you can prepare a list of your assets and liabilities, ready for them to use on your death. That way, your Executor doesn’t have to spend too much time digging around in your filing cabinet or kitchen junk drawer for important information. This is how a lawyer’s estate planning questionnaire can be incredibly useful. After you complete it, you can keep it together with your Will.  It’s an excellent starting point for your Executor to be able to locate and collect your assets, have the contact information for key advisers and beneficiaries, and determine your outstanding debts that need to be attended to. It also helps them become aware of any registered plans, for example, that may be paid out directly to beneficiaries outside of your estate but for which your estate is responsible for paying taxes.  In this way, you help your Executor avoid exposure to personal liability from the CRA for unpaid taxes.

3. Periodically update your Will.  It’s a good rule of thumb to read over your Will every 3 to 5 years.  Life changes – people marry, separate or have more children. Children grow older (and hopefully wiser), and some move out of province. Some loved ones may develop a disability for which they receive government support. You may acquire a cottage or a rental property, incorporate your business, or dispose of a large asset and roll the proceeds over to a new investment. All of these life events could require updates to your Will. While a good Will will take future contingencies into account, it’s impossible to know the future and plan for every eventuality. Not to mention that the laws change – not just estate-related laws, but also family, tax or corporate laws – all of which can affect your estate plan and yield unintended consequences on your death, including unhappy (and potentially litigious) beneficiaries.  

With good careful planning, while it may never be a dream job, acting as an Executor won’t be the worst job.