Your Estate Executor Questions, Answered.
You have worked hard, saved, invested, and planned along the way, but will your documents, important contacts, and financials be easy to find for your estate executor?
As an executor, do you want a single, secure online desitination to reference in order to settle the estate of a loved one?
Organizing your estate now will make the process of estate settlement and the role of your executor easier; saving your family time, money, and stress.
What Is Estate Organization?
With an aging population and the enormous transfer of wealth before us comes a new category of planning called “Estate Organization”.
Estate organization is a more proactive, dynamic process than traditional estate planning, where an advisor asks if you have a Will and sells you some life insurance.
Continued in FAQ Below
Estate organization consists of 8 key elements:
1. Carefully Contemplated Estate Documents
- Consisting of a valid Will, Enduring Power(s) of Attorney, Personal Directive, if desired, and Trusts, if needed for minors or other dependents.
- Creating these documents requires careful thought about who to appoint as your executors, agents under powers of attorney, guardians, and trustees.
- It also requires making decisions about who will receive your assets, after you’re gone, and when.
- We recommend using an experienced estate lawyer who has “seen it all” and knows what questions to ask to draft workable documents that will stand the test of time.
To Do #1: Identify an experienced estate lawyer and make an appointment to draft your estate documents. You don’t need all the answers before going to see them.
2. End of Life Wishes
- Creating a document that describes how you want your life to be remembered, and in what format (funeral or other end of life celebration), will make things much easier for your grieving family.
To Do #2: Pour yourself a cup of coffee, think about what you’d like, tell your family and write it down. If you wish, contact a reputable funeral home to pre-pay the arrangements, making it even easier.
3. Organize Your Affairs
- Having a complete inventory of who and what’s involved in your estate and where everyone and everything can be found is a total game changer for your family.
- Whether you use QuickEstate™ Estate Orgaizer or create your own lists, being organized before tragedy strikes saves an enormous amount of grief, time and money.
- Being organized will also help generate better financial results and reduce professional fees as you build your estate.
To Do #3: Get organized and stay organized with QuickEstate™
4. Beneficiary Designations
- Every few years, or as life changes, review the beneficiary designations on registered plans (RRSPs, RRIFs, TFSAs, etc.) and life insurance policies to ensure that, on your death, the funds go to the right person (or to your estate).
- Forgetting to remove the name of an ex-spouse as beneficiary is a classic planning error that can create enormous issues after you’re gone.
To Do #4: Call the financial institutions holding your registered plans and life insurance to confirm your beneficiary designations.
5. Insurance Needs
- Determine the adequacy of life insurance to support your survivors and minimize tax on death. Disability, critical illness, long-term care, key man and other types of insurance may also be useful.
- Shop around for a reputable provider who is not going to talk you into more insurance than what you really need.
To Do #5: Review your personal and corporate insurance needs with an experienced advisor and include your accountant in the discussions as needed.
6. Tax Planning
- If you’ve worked hard and saved hard, talk to your accountant about strategies to leave more money in the hands of your family and worthy charities, rather than in government coffers.
To Do #6: Ask your accountant to create an “estate fire drill” plan, showing who gets what, in dollars and cents terms, including the government, with planning advice.
7. Family Succession
- If a lot of money is going to change hands on your death, or if your circumstances are complicated by a second family or successful operating businesses, an experienced family wealth coach who can work with your other advisors will help create a workable plan around family dynamics.
To Do #7: Identify a family wealth coach to help navigate family succession issues.
8. Prepare your Executor for the Job Ahead
- Most people don’t know that while a valid Will is the blueprint for distribution of assets, it’s the tip of the iceberg when it comes to settling your estate. The lion’s share of the work occurs after the reading of your Will. If your affairs are disorganized at death, settling your estate will be a time consuming and expensive nightmare for those you leave behind.
To Do #8: Your executor is doing you a huge favor! Do them one back by making them an informed decision maker ahead of time. QuickEstate™ gives them clarity, confidence and control over a process that will take at least 2 years.
To Do #9: Estate organization is a dynamic process. Review all of the above every 3 – 5 years, or in the face of life changing events such as births, death, divorce, or sale of a business.
A trustee is a person appointed to manage all or part of the deceased’s property for the benefit of others e.g. for the beneficiaries named in a Will. An executor or court appointed Administrator is trustee of the deceased’s estate.
Trustees have “fiduciary responsibility”, meaning that by taking control of the deceased’s property, they must act solely in the interests of that person or their heirs. In a Will that requires the creation of a trust e.g. for minor beneficiaries, the executor may or may not also be named as trustee of the trust. In the example of a trust for minor beneficiaries, it is usually a surviving parent who is named as trustee.
The executor is responsible for doing everything else to settle the estate, but once they have transferred the necessary assets to the trust, it is the responsibility of the named trustee to administer the trust per the terms of the Will.
Legal fees vary, depending on the method of billing the lawyer uses; some bill by the hour and others bill in a lump sum.
The fees of trust companies vary, depending on whether they are appointed sole or co-executor in the Will or if they are hired as agents for the named executor.
If a trust company is told by the deceased, before their Will is executed, that they are to be named as executor or co-executor, then the trust company will insist on having their fees specified in the Will.
If the Will is silent on trust company compensation, their current fee schedule for executor services will apply.
If the trust company is being hired by the named executor to do all or part of the work, then their "agent for executor" fee schedule will apply.
Agent for Executor fees depend on the nature and amount of work to be done. Trust company fees also vary based on the size of the estate. Most banks view estate settlement as a low profit, "loss leader" business. Their goal is to retain the estate assets in their highly profitable wealth management divisions. As a result, many trust companies prefer to deal with estate with assets of at least $3M. Some take on smaller estates, but may price to discourage.
It is quite common to see friction amongst family members when it comes to settling an estate.
Past grievances amongst family members often reach new heights when Mom or Dad passes away and there are assets to divide up.
Under such circumstances, it is essential for the executor to maintain an impartial, evenhanded stance. They cannot allow themselves to get pulled into a contentious situation or be asked to take sides.
If friction within the family is significant, the executor may opt to delegate the estate settlement to a trust company and, in extreme cases, apply to the Court to renounce their role.
Although some level of friction may be inevitable, ensuring that your estate is organized for your executor can significantly reduce tensions at the onset.
There are no guarantees that something cannot go wrong during the estate settlement and that the executor may be held responsible.
The risks associated with the role of an executor are substantially reduced if the executor recognizes their fiduciary responsibility and conducts the estate settlement using the principles of good governance.
If an executor feels incapable of acting, they may choose to resign by “renouncing” their role.
If the executor can tell, in advance, that:
- the estate is going to involve an inordinate amount of work,
- the executor fees listed in the Will cannot possibly compensate them for their time,
- and they have concerns that the beneficiaries will not be willing to vary the fees,
They have two choices: either resign as executor or hire a lawyer to apply to the Court to have their fees increased.
Unless the Will prohibits delegation, there is no reason why the executor cannot enlist the help of family members or hire an administrative assistant.
But at the end of the day it is the executor who is responsible for all aspects of the estate settlement.
If a well meaning family member or an administrative assistant makes an error that costs the estate money, the executor can be held responsible.
Thus it is imperative that the work of other family members or an administrative assistant is reviewed regularly for accuracy and that their work is well documented per good governance practices.
The executor was appointed to the highest position of trust by the deceased who was relying on them to settle the estate in good order.
If some or all of the beneficiaries are insistent that the executor renounce, they must seek their own legal counsel and the matter will be brought before the Court.
This is not something the Court will take lightly.
Respecting the original wishes of the deceased, the Court will be incisive in determining why the beneficiaries do not want the named executor to act and who they expect to step in as a replacement.
If the executor senses that there will be ongoing friction between themselves and the beneficiaries, however, they may wish to voluntarily renounce.
If your affairs are disorganized at death and if your executor has no idea where to start, settling your estate may become a never ending, costly nightmare for your family (with the proceeds going to lawyers and taxes). We can fix that!