Your executor is the person who has the legal authority to wrap up your estate.
Your executor will have a fiscal responsibility to act on your behalf and to carry out the wishes that you’ve outlined in your will. However, what are the risks and responsibilities associated with the role of being your executor?
It is important to be reminded of the tasks involved in being an executor, because it isn’t an easy job. Not only will there be time and financial responsibilities placed upon your executor, but there will be the added emotional challenges that your children will be dealing with while wrapping up your life.
The person you choose as executor to your estate will be responsible for taking care of your funeral and burial wishes, closing your bank accounts, selling your property and personal belongings and liquidating your investments.
Once they have gathered these assets into a central estate account they will be responsible for liaising with any beneficiaries – which may their siblings – and distributing those funds to them. They will also be responsible for filing your terminal tax return.
To help make their jobs easier, I have always recommended creating an Estate Directory to help your executor. Because they will need to know about all the assets, even digital ones it is a great idea to make sure you build some form of estate directory to help them along.
The time it takes to wrap up an estate depends on how complex it is. Typically, it takes one to three years to get it to the point where you can actually distribute funds to beneficiaries.
As executors to your estate, your children may also get paid for their work. Exactly how much depends which province you reside in, the size of the estate and how much work you’ve done versus outsourcing it to professionals. Generally, in Ontario, five percent of the estate’s total value is accepted.
Manu people do not realize how much work it is until they are already in the role. It can amount to hundred of hours and it can become quite overwhelming.
There is a legal risk associated with being an executor. If they mismanage your estate, your beneficiaries can sue your executor. If your executor isn’t diligent about filing tax returns, the CRA can come back to the executor.
If you’ve listed one of your children as your estate executor, they are entitled to decline. If there is no backup executors in your will, it will default to the court to appoint an executor. You can also appoint a trust company to act as a professional executor, which could reduce the likelihood of any legal or tax errors.
The bottom line is that being an estate executor is a grueling job, especially when your child will very likely be grieving your loss. Do your best to make the ready by sharing your wishes with them and don’t be surprised if they decline once they learn what is involved.
KB.Join My Newsletter
THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.