Choosing An Executor
Choosing an executor is one of the decisions you must make in planning
your will. It is an important decision as it is up to the executor
to make sure the distribution of assets set out in your will is handled
in a fair and proper manner. An executor is responsible for hiring
a lawyer to obtain legal advice, probating the will, filing tax returns,
settling debts, managing and/or selling your assets and distributing
them to your beneficiaries. The executor is also responsible for
arranging your funeral. Being an executor is a job, which requires
organizational skills and a degree of diplomacy. Disputes can arise
over property that has little monetary value but great sentimental
value.
Implications
All too often the appointment of an executor is made without much
thought as to how appropriate the person would be under the circumstances.
It may be seen as an honour to be bestowed upon somebody. Parents
often appoint all their adult children to do the job. If, for example,
four children are named who happen to be in different parts of the
country a logistical nightmare is set up. Each of the executors would
have to agree on all matters and would have to sign major documents
such as house listing agreements and sale documents. Such appointments
may lead to increased costs and delays, not to mention increased
conflict among family members. If children are involved, executors
must be young enough to deal with the minor beneficiaries until such
time as they take full control of the assets under the will. This
could be twenty or more years.
Personal Liability
Being an executor may impose personal liability on the executor.
An executor may become personally liable for income tax if the executor
does not file the proper income tax returns. An executor can also
incur liability if the executor fails to obtain proper insurance.
For example, if a house is not inhabited most normal residential
household insurance policies say that the insurance lapses after
a thirty-day vacancy unless a special rider is obtained. If the house
burns down the executor is likely going to be sued by the beneficiaries
for failure to obtain insurance.
Making The Choice
It is important to talk to a potential executor to make sure they
want to take on the job and that they have the necessary expertise
and commitment level to carry it out. If you do not seek their consent
it is more likely that they may refuse to act as an executor upon
your death, which is their right.
If you have special circumstances such as you are a business operator
or you own an art collection you may wish to have at least one executor
with some expertise in these areas.
Consider A Professional
Increasingly, in situations where family members are located outside
the province, where conflicts of interest could arise among beneficiaries
or where there could be potential complexities, it is important to
consider appointing a trust company or other professional, such as
a lawyer, as the executor. An added benefit is that in most cases
if a professional makes a mistake there is at least some insurance
to hopefully make up the loss. For example, if in contravention to
the will your cousin, the executor, loses all the estate funds due
to a bad stock tip and then takes off to Costa Rica, beneficiaries
will have little or no recourse to recover the funds.
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