When speaking to clients about estate planning and their wills, I have found that most people come to meetings having given considerable thought as to how and to whom they would like their assets distributed. This isn’t surprising. After all, a key purpose of preparing a will is to direct who is to get what from your estate. However, what is often not given nearly as much consideration is who is to be responsible for carrying out the instructions that have been set out in your will; meaning, who is the executor? Below is list of three factors I advise my clients to consider when deciding who to appoint as executor of their wills.
1) ABILITY – Being an executor of an estate is not an easy task. It can be a difficult and time consuming process. An executor has many responsibilities and tasks which can include matters such as as: making funeral arrangements, applying for a “Certificate of Appointment of Estate Trustee with a Will“ from the Ontario government (commonly referred to as probate), identifying and satisfying debts of the deceased (including taxes), providing notice to beneficiaries, filing tax returns of the deceased, dealing with legal and investments advisors, transferring real estate, administering trusts, and ultimately distributing the assets of the deceased in accordance with his or her will.
Because being an executor can be such an onerous job, it is important that, before you appoint someone in your will, you ask yourself, “Is this person capable and responsible enough to carry out the duties of an executor?” If you are not confident that the person you want as an executor has the ability to effectively administer your will, you should consider removing them, or alternatively, adding a second executor that can offer assistance with the necessary tasks.
2) TRUST – As mentioned above, your executor is responsible for carrying out the instructions given by you in your will. To do this, your executor typically has control over most if not all of your assets, including investments, bank accounts, real estate and other assets. Given the potential value of the assets being controlled by your executor, you want to be certain that the person you have chosen will faithfully and diligently carry out your instructions. It is worth noting that although executors can be held legally responsible for mismanagement of an estate, it may be of little or no consequence to your beneficiaries if misappropriated funds or assets cannot be recovered.
A second matter to consider is that many wills have trusts built into them for which your executor will act as trustee by virtue of their appointment as executor. A common example of this would be a trust set up for children or other minor beneficiaries. In many instances these trusts have discretionary components to them. This means that at times it is up to your executor to decide at what time and how much of the trust can be distributed to beneficiaries. Given the discretion executors are empowered with in these circumstances, you want to be able to trust that your executor will use his/her discretion in a manner that mirrors what your wishes would be, having an eye to the underlying purpose and goal of the trust in question.
3) PROXIMITY – As a general rule, it is typically preferable to appoint an executor that lives in reasonably close proximity to you. There are several reasons for this. First, as a practical matter, it is difficult for an executor to handle day to day activities of the estate if her/she is far away. For example, removing articles from a house and getting it ready for sale would be a much more onerous activity for someone who lives across the country. If administering the estate becomes too much of a inconvenience for your executor, there is risk that her will renounce his executor role. Secondly, if an executor resides outside of Ontario, there is the possibility that the government will require that the executor post a bond, as protection for beneficiaries. This is, at the least, a nuisance for the executor. Lastly, in some circumstances, there can be potential negative tax consequences for non-residents, particularly those in the U.S., if they are acting as an executor and trustee of a testamentary trust. This may cause hardship for your executor or possibly force your executor to decline to act on behalf of your estate.
Although the above mentioned list is by no means exhaustive, it is good starting point for you if you are working on your estate plan. I also suggest speaking to your lawyer about other case specific factors to consider so as to ensure you have picked the right executor.