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 the person who will be responsible for carrying out the instructions in your will. In short, who is to be your executor? Below is a list of five factors which 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: 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 investment advisors, transferring real estate, administering trusts, and ultimately distributing the assets of the deceased in accordance with the 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) DESIRE – Your executor’s desire, or at the very least willingness, to act in his or her appointed role goes hand in hand with ability. The individual who you want to appoint as your executor may be the ablest person you know, but there is no way to force an unwilling individual to act as your executor. When an individual is appointed as an executor, he or she has the choice of immediately “renouncing” or giving up the appointment, effectively undoing some of the planning that you’ve done in your will. You should have a frank discussion with whoever you’re considering appointing as your executor, to ensure that he or she is willing to take on the responsibility.
3) 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 his or her 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 when and how much of the trust can be distributed to beneficiaries. Given the discretion with which executors are empowered in these circumstances, you want to be able to trust that your executor will use his or her discretion in a manner that mirrors your wishes, having an eye to the underlying purpose and goal of the trust in question.
4) 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 he or 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 far away. 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 impacts for non-residents, particularly those in the U.S., if they are acting as an executor and trustee of a testamentary trust.
5) AGE – While it may be tempting to choose an aging parent or a close friend who you’ve known for decades to administer your estate, consider whether that person has the longevity which may be needed for your estate plan. Imagine, for example, that you’ve set up a trust for a child or grandchild. By the time the distributions of the trust have been completed, your executor could be significantly older than he or she is now. If you appoint this individual regardless, you should at least strongly consider appointing an alternative or substitute executor, in case your first choice becomes unable or unwilling to act.
Although the abovementioned 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 with your lawyer about other case-specific factors to consider, to ensure that you have picked the right executor.