Well, we sure we’re prepared for this cold, frigid April, were we? Whether you weren’t emotionally prepared or physically prepared for the snowstorms that came our way this “spring” it felt jarring all the same. Preparation when it comes to your families estates can work similarly. It’s a big responsibility to become an executor for someone in your family, one that you need to prepare for emotionally, and with physical paperwork and action.
This month David Reeve is in Hespeler Village Magazine helping you decide whether you should consider being an executor for your family member.
To Be or Not to Be…an Executor
I remember sitting down with my father on a sunny day in June. My father explained to me that if something were to happen him, he would like me to “handle things for him.” He said I would be an executor of his estate. I was honoured. After all, my father th0ught highly enough of about me to trust me to handle his assets and disperse them properly.
Today, I’m not so sure I would want to be an executor.
An executor or trustee has a fiduciary duty; which means he or she must always act in good faith and with loyalty; he/she must act in the best interest of the beneficiaries and carry out the instructions of the settlor or testor.
Sounds simple enough, but it also has the potential to be the most stressful experience of your life. Quarrelling family members, entitled beneficiaries, assets outside of Ontario or maybe business assets all make for a potentially large headache. Add to that the potential for jail time and who would want the job?
Yup, I said jail time. Effective January 1, 2015, new probate filing rules took effect in Ontario. Executors who apply for a Certificate of Appointment of Estate Trustee (with or without a will) are required to file an Estate Information Return with the Ministry of Finance within 90 calendar days after the Certificate of Appointment of Estate Trustee is issued by the government. Failure to do so can result in fines and/or imprisonment.
A person who is appointed as an executor might be flattered that the testator held them in such high esteem, but this “honour” comes with a lot of work and personal sacrifice, as well as a fiduciary duty that requires the executor to:
- Always act in the best interests of the beneficiaries
- Avoid conflicts of interest
- Act with reasonable level of care
- Strive to maintain the integrity of the testator’s intent
- Act with an even hand when there are multiple beneficiaries, and
- Make distribution decisions by fully considering the needs of the beneficiaries and the objectives of the trust.
Still feeling honoured? If you still want to be an executor, get professional help. An executor has the right to ask for professional advice and I strongly encourage this. While it is true than an executor is not liable for the debts and liabilities of the deceased upon their death, the executor does incur personal liability for debts incurred during the administration of the estate. In addition, the trustee can also be found personally liable for estate debts if the executor distributes assets of the estate to beneficiaries and fails to make adequate provision for payment of all estate debts. The liability can last for up to four years from the final filing.
Get professional advice. A good lawyer is always an excellent option, but you can often start with a financial advisor who has their CEA designation. Either way, choose your team wisely.
David Reeve is President and Owner of Davlyn Financial, a local financial planning firm in Hespeler. He is also a CEA, and can be reached at 519-651-1246 or info @davlynfinancial.com.