6 Factors to Consider when Appointing a Executor
Updated: Feb 4, 2022
Many people think of age as being the primary factor in selecting a Executor. But it is not the only one. Here are six factors to consider when selecting a person to act as your Executor:
1. Marriage: If you are legally married or in a common law relationship where you have had children together or are in a common law relationship where you and your partner have co-mingled assets, your first choice for Executor is typically your spouse or common law partner. This choice is predicated on the fact that your spouse or partner is not mentally incapacitated by reason of injury, illness or disease.
2. Capacity: The person appointed must be of sound mind and have the mental capacity to understand actions and carry out their duties in handling your estate upon your death.
3. Age: The person(s) appointed must be of legal age (must be 18 years of age or older). Age of the Executor can be a factor if you have trusts established in your Will. For instance, if you have established trusts for your minor children to be managed by your Executor until your children reach the age of majority, you may consider appointing a person who is relatively younger, who has a life expectancy greater than the potential duration of the trusts established in your Will. For instance, you may not wish to appoint your 78 year old father as your Executor if you have two young children and you specify a trust established for those children until they reach the age of 30 years.
4. Residency: Many provinces and territories in Canada have wills and succession legislation which specify that any Executor(s) appointed in a Will who do not reside in the Testator’s (the person making the Will) jurisdiction must post a performance bond with the courts. This leads us to the question of what the heck is a "performance bond"? Well, a performance bond is like insurance, it is a sum of money that is pledged to the court as a promise by the Executor that he/she will not flee the deceased’s jurisdiction with the estate assets and dupe the beneficiaries out of their inheritance. The performance bond is typically two (2) times the value of the deceased’s entire estate and must be posted from the Executors own assets (not the estate assets).
There are ways to get around the requirement of posting a performance bond. Please see the blog entitled: Foreign Executors: Getting Around the Requirement for Posting a Performance Bond.
Residency also becomes an issue when trusts are established in a Will. The law specifies that the trust becomes resident wherever the trustee resides. Most Wills establish that the Executor is the trustee of any trust created in/by your Will. So if your Executor is a resident in another tax jurisdiction (for instance, another country), the trust then becomes subject to the tax law regime of the jurisdiction where the Executor resides. Can I hear a "cha-ching" from the cross border accountants reading this?
5. Ability: This is a major factor in deciding who should act as your Executor. You must consider whether the person you wish to appoint has the necessary abilities and willingness to handle your estate. You want to appoint someone who can handle the complexities of your estate and is able to deal with your matters both legal and personal despite any grief they may feel at or after your death.
6. Trustworthiness: This is perhaps the most important factor when selecting a Executor. You must be confident that the person you appoint to act as your Executor is trustworthy. In estate law, it is the Executor who manages the finances of the deceased upon death. The Executor has virtually unfettered and almost unchecked power in dealing with and dispersing funds. The power of a Executor is policed only by the beneficiaries named in the Will. The problem with that is that the beneficiaries are only informed of the gifts to them under the Will by the Executor. Your Personal Representative must be trustworthy enough to inform the beneficiaries of their entitlements under the Will and manage the assets of the estate in the best interests of those beneficiaries. The court system only intervenes after legal negotiations have failed and litigation has commenced, which itself will eat up the assets of the estate with legal fees. Thus, there is a potential for a Personal Representative to dupe the beneficiaries out of their inheritance. Now can I hear a "cha-ching" from the estate litigation lawyers reading this?
For further information, please see the blog article entitled: The Jobs of the Executor
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