Many people ask us for advice about whom to name as the executor of their will. This is an important task, and you won't be around to supervise the person's work.
Sometimes, naming your power of attorney can be just as tricky. Remember the person named as your attorney has the legal right to look after all of your affairs while you're alive. Those powers cease the moment you die, and then the person named as executor takes over.
I am using the term 'executor', though the proper term is 'executrix' if the person carrying out the tasks is a woman. As well, I'm saying 'person', when either attorney or executor can be a licensed trust company.
The executor's job includes making an inventory of all financial assets, arranging with a lawyer to file for probate, paying probate fees, advertising for creditors of the estate, cancelling credit cards, memberships and government programs, managing the estate during the transition process, arranging for the preparation and filing of income tax returns and other required filings, and ultimately contacting the beneficiaries and distributing assets when prudent.
That's a partial list. On my blog at www.davidchristianson.com/?p2984 is more detail as well as several other articles on estate planning considerations. If you are updating your estate plan, give it a visit.
The executor may also be responsible for locating, listing and distributing personal assets - everything from furniture to collectibles and old love letters. Almost every estate also has some special situations to deal with, and all of this is assigned to the executor.
For most people who are married to a legally competent spouse (no jokes here, please), the spouse may be the obvious choice as the primary executor. However, remember that person might not be available or able to fulfil the role when needed, so it's always good to have a backup executor named.
When considering naming an executor (and contingent executor), think about some of the following items:
-- 1. Age and health: You want someone who will outlast you and ideally be in their prime when the time comes.
-- 2. Expertise and experience: This doesn't mean they have been an executor before, but you definitely want someone with enough judgment and general smarts to ask for help when they need it. For a complicated estate, a professional or a trust company might be best.
-- 3. Willing participant: It's important to ask the person about willingness to act. If they are to be compensated, talk about that now. Remember, a gift from your will is tax-free to the receiver, but an executor fee must be claimed as income. (And don't be cheap; it's a huge job.)
-- 4. Location: Ideally, the person is in your province, and almost certainly should be in Canada.
-- 5. Number of executors: You can name two or three people to act jointly as co-executors. This can lighten the load, and some people work better in a team, or when they feel someone is looking over their shoulder.
-- 6. Family or not?: In a perfect world, family is usually the right choice. Not all of our worlds are perfect. If your estate wishes may be difficult to carry out because some family members will strongly object, an outsider may be best.
This same partial list applies to selecting a power of attorney. Pick carefully, and review your choice from time to time to make sure it's still the right one.
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We talk a lot about taxes in this column, but seldom get political. That's on purpose. Today I have to break policy, as I can't stand by watching government cuts decimate programs that are vital to the future of the Canada we want to live in.
Specifically, the Experimental Lakes Area (Savela.org) is a unique world-class research facility learning how to prevent the degradation of our freshwater lakes - arguably Canada's most precious resource. It's irreplaceable.
Separate from this, the archives and history collection and cataloging systems across Canada are being decimated. Those who forget their history are destined to repeat it.
I hope you will write to your MP and the minister of finance to beg the government to be more discriminating in its cuts. How can we brand Canada as a knowledge economy when we are exporting our scientists to other countries, instead of selling the knowledge they produce?
David Christianson is a fee-for-service financial planner with Wellington West Total Wealth Management Inc., a Portfolio Manager (Restricted).