Accounting for Law
Estates & Wills & Trusts, Tax

Choosing an ideal executor requires time, consultation

The role of executor is a complex and time-consuming responsibility that requires a knowledgeable and trustworthy candidate, as well as a willingness to consult professionals when necessary, Calgary trusts and estates lawyer Matt Trotta tells

As Trotta, a lawyer with Shea Nerland Law, explains, the executor’s function is to complete the administration of a deceased person’s estate.

This includes everything from locating the will, marshalling assets, making funeral arrangements, retaining professionals, settling debts and obligations, making all necessary tax filings, keeping beneficiaries informed, distributing assets, and obtaining beneficiary releases. An executor also acts as a trustee for any testamentary trusts arising from a will unless otherwise stated.

The executor is appointed by the individual drafting a will — once the document is activated, the appointment is in place, but Trotta says a person may decline to accept the position, as long as they have not already taken steps to administer the assets of the estate.         

“As such, it is always recommended to consult with executor candidates to make sure they have an interest in accepting an appointment,” he adds.

Trotta also says the choice of executor should not be made in haste and should always be subject to periodic review and analysis.

“While an executor may be ideal at this point in time, it should also be considered whether this person can carry out the position through from start to finish,” he adds.

An ideal executor, Trotta says, is someone local, reliable, mature, and trustworthy, with some financial or legal background to assist in understanding the multitude of tasks that will arise throughout the course of administering an estate.

In a blended family situation, he says, it is often prudent to appoint an executor who is not interested in the assets of the estate, or someone who may be biased against certain beneficiaries. And in many complex cases, it may be worthwhile to consider the appointment of a professional executor, such as a lawyer or trust company, says Trotta.

Realistically, a wise executor will make use of experts in accounting, law, finance and planning who can point the individual in the right direction, although, he says, "the ultimate decision making authority rests with an executor alone.”

An experienced estate planning lawyer can assist in this process by asking tailored questions to obtain a good understanding of one’s personal estate plans, goals and concerns, and take the time to learn your background, ask probing questions, confirm that you have legal capacity, and are free of any undue influence or coercion.

In terms of possible pitfalls, the executor role is also a highly demanding and time-consuming responsibility that can easily overwhelm an unprepared person and expose them to personal financial risk during what is often a difficult and emotional period for many individuals, says Trotta.

“Many people believe that estates with relatively few assets are simple to administer and that they can get away with little or no estate planning. However there are very few simple estates, as most people will have some level of complexity, whether it is based on assets, citizenship, family, planning, or even something as avoidable as a poorly drafted will from a store-bought will kit or an unqualified lawyer,” he says.

Executors can run into trouble when they do not follow or understand the terms of the will or when they misunderstand their tax-related responsibilities.

“An uninformed executor can easily miss important tax filing deadlines, and distribute assets before satisfying any outstanding obligations with the CRA or other creditors,” says Trotta.

Unqualified executors may also neglect to keep proper financial records, may dispose of property, securities or other assets without obtaining valuations, or fail to act fairly towards all beneficiaries, he adds.

Another critical error that can have a significant impact on an estate can arise when an executor does not seek advice from relevant professionals, such as accountants or lawyers, says Trotta.

“For example, there are certain tax filing opportunities that exist on the year of death. If an executor prepares and files the terminal tax return without investigating if these opportunities exist for the estate, the estate may end up paying more taxes then it needs to.

Ultimately, by hiring professionals who are knowledgeable about these benefits, “the executor is not only saving the estate money but also fulfilling their responsibilities to act in the best interests of the estate and its beneficiaries,” says Trotta.

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