One of the hardest decisions to make in succession planning involves choosing who to appoint as an Executor or Trustee for your estate. Many wealthy Canadians often make the mistake of appointing a family member or members as executors of their will. While this may seem like a good decision at the time many experts say otherwise.
Being an executor requires time and the ability to carry out different tasks that family members may not be able to handle and which can hurt the estate or trust.
To help you make the right choice, we have compiled a guide that highlights what qualities to look for when choosing an executor and some top tips to boot!
What Is An Executor Or Trustee? What Do They Do?
An executor is a person appointed to manage a deceased person’s estate and distribute their assets as specified by their will. An executor’s main responsibility involves the accurate distribution of estate assets to the beneficiaries named in the will. They have fiduciary and legal obligations to the estate and their actions must solely be in the best interest of the estate.
An executor’s tasks would involve:
- Managing the probate court process
- Managing all estate assets of the deceased
- Communicating with beneficiaries and creditors of the estate
- Upholding the terms of the will and defending its legality against any potential lawsuits
- Paying off any outstanding estate bills and creditors of the estate
A trustee, on the other hand, is a person appointed to administer a deceased person’s Trust for the benefit of the beneficiaries of that trust. What is a Trust? A trust is a legal entity that acts as a fiduciary relationship whereby a ‘Trustor’ appoints another party (the trustee), rights to hold assets and property for the benefit of beneficiaries.
These legally binding arrangements can help ensure beneficiaries receive assets over time, after a certain age or after achieving certain milestones. The trustee in this case holds a fiduciary duty to the beneficiaries and must act in their best interest at all times. They also have other responsibilities including:
- Find and keep track of all trust assets
- Maintain accounting records of all assets, liabilities, and creditors of the trust
- File annual tax returns on behalf of the trust
- Ensure the timely distribution of trust assets to beneficiaries
- Protect trust assets against lawsuits and disputes
What Qualities To Look For In An Executor Or Trustee For Your Estate?
Whether it is fulfilling the wishes of your will or the terms of your trust agreement, having a person you can trust and rely on can give you much-needed peace of mind knowing that even after you are gone your loved ones will be looked after and your legacy will live on.
However, to ensure that you choose the right person for the job, here are some of the top qualities that you would ideally want your executor or trustee to have.
- Someone savvy about finances, investments, taxes, and legal topics
- Is trustworthy, reliable, and committed to managing your personal affairs according to your terms
- Lives close to you (in the same city or region)
- Is younger than you and in good health
- Is good at handling disputes and dealing with the emotions of relatives and beneficiaries
- Has the time, willingness, and ability to fulfil all the duties of the role
For most Canadian families it would be rare to find a family member or relative that has all of these qualities. As such, many experts recommend wealthy individuals always consider naming an estate professional, such as a lawyer or a trust management company, as their executor or trustee.
Top Tips For Choosing Your Executor
Now that you have an idea of what an executor does and what qualities they should possess, it is time to look at some of the best tips for choosing an executor.
1. Hiring A Professional Can Often Be The Best Choice
Unless you have a family member who is an attorney, financial advisor, or wealth management expert it is always a safer bet to hire an estate professional to be your executor. This is especially true for individuals that have complex estate assets and/or blended/non-traditional families that don’t always get along.
2. Naming Two Executors Is Better Than One
In this scenario, you can theoretically get the best of both worlds. By naming both a family member and a lawyer or trust company as co-executors you can ensure a smoother transition of estate and trust assets.
Also, if one of your appointed executors were to pass away or relinquish their role the other can continue to manage the affairs of the estate and ensure the continued transition of wealth. You can also outline the role of each executor and how they are to make decisions on matters of investments, donations, or asset distributions.
Wealth Preservation & Asset Protection With Eastport Financial
Eastport Financial Inc. specializes in protecting your wealth through life and beyond. Our team works diligently to provide clients with a holistic blend of legal, accounting, and insurance expertise that helps them deal with all facets of asset protection including estate planning, tax planning and wealth management.
To learn more about who we are and how we can help, call us at +1 902 474 5433.