The Role of the Executor: A Large OneChristopher Briggs, RRC®, Wealth Advisor
Have you been named as an executor of someone’s estate? If so, you have been entrusted with a very important role. It is often a large responsibility, so here are some things to keep in mind:
It is time consuming.
Settling an estate generally takes about 18 months on average, but may extend to several years depending on complexity. Duties can include arranging the funeral, finding, itemizing or even managing estate assets, applying for probate (where applicable), notifying financial institutions of the death, filing income tax returns, liquidating or distributing assets as directed by the will…and more. It may involve visits to financial institutions or meetings with accountants, lawyers and even creditors or beneficiaries.
It may involve exercising business judgment or knowledge.
The executor is often called upon to make decisions on behalf of the estate, such as those related to realizing estate assets or preparing estate tax returns. In many cases, professional assistance will be required; however, the executor will be responsible for monitoring and approving the actions of those hired.
There are legal implications.
As an executor, you may be held personally responsible for any losses incurred as you settle the estate. For example, if the estate’s assets were distributed prior to the estate’s taxes being paid to the Canada Revenue Agency, the executor could be held personally liable for the balance of taxes due. You may be required to manage conflict. Even with the most harmonious families, conflicts can emerge. The executor will need to make fair decisions and, in some instances, the parties may not agree with the outcome, even if the executor acts without bias.
Your place of residence may have consequences.
There may be complications to the estate if you, as the executor, and the estate are in different jurisdictions. For example, if you are appointed as executor for the estate of a Canadian resident, but you decide to become a non-resident of Canada, the estate may also become a non-resident, which could result in negative tax consequences.
Consider that not everyone may be well-suited to be an executor. Having a full understanding of what the role entails can be helpful in deciding whether to act in this position. To learn more, or for an introduction to an estate planning specialist, please contact us.