Will you be my executor?

March 25, 2017 • Luxury Assets

Someday a relative, close friend or business associate may ask if you’ll be their executor (or, depending on your province, estate trustee or liquidator). It’s a great honour — the person believes you are capable and trustworthy and feels the two of you are close. But it’s not a decision to take lightly.

An executor has a lot of responsibilities that may require an enormous amount of time and effort. You need to be aware of everything an executor does before you provide an answer.

 

Executor’s tasks

As executor, your role is to distribute the person’s assets according to his or her will. But reaching that stage involves a great many tasks, including any or all of the following:

  • Working with a lawyer to obtain probate of the will.
  • Identifying all assets and determining their value.
  • Notifying creditors and paying any outstanding debts.
  • Liquidating certain assets.
  • Filing any life insurance claims.
  • Filing a final income tax return and annual returns for the estate.
  • Updating beneficiaries on your progress. And those are only some of the key tasks.

 

Can you spare the time?

Beyond the actual effort involved, you’ll want to consider the time commitment. The more complex the estate, the more time it takes to settle.

If you’re dealing mainly with a principal residence and conventional investments, it’s pretty straightforward. But it’s more complex if you’re dealing with, let’s say, rental income property, a family trust, and vacation property. The degree of complexity can spell the difference between settling an estate in a matter of months and taking a year, two years, or more.

The location of the property and the beneficiaries may also pose a challenge. You may need to spend time and money travelling in order to carry out certain duties in person.

 

A question of fees

As executor, you’re entitled to financial compensation, typically 5% of the value of the estate. Friends or relatives, however, will often waive the fee out of kindness or in light of the bequest they’ll receive.

You also have the option of engaging a professional to assist you. While the professional fees will come out of the estate, it can be well worth it in terms of time savings and accuracy.

 

Your answer

The work of an executor can be arduous and take time, but it can also be gratifying. If you decide to accept the role, you may want to arrange a meeting down the road to go over the will, obtain a list of contacts (lawyer, accountant, beneficiaries), and ascertain the location of key documents (banking records, life insurance policies, income tax returns, and so on).

If you decide to say you cannot accept the role, it’s beneficial if you communicate your reasons. Your explanation may help the person in choosing someone else.

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