Insights for
Financial Success

The ins and outs of choosing an executor and the importance of writing a will.

The best time to write a will is when you don’t need it. 

Unfortunately, though, writing a will is something many people put off. And we get it: thinking about death can be uncomfortable, family relationships can be complicated to navigate, and tasks with no clear “deadline” are easy to procrastinate on.

However, the cost of not having a will vastly outweighs the reasons for putting it off. You might think that you could quickly hire someone to help out if you were to suddenly need a will (if you were to fall terminally ill, for example), but the decisions required to write one take time and consideration, and not all lawyers are willing or able to turn things around on a tight deadline. 

As a business owner, it’s especially important to have a will in place. Here’s why:

• You can choose your beneficiaries
• You get to decide who receives specific assets
• You are able to designate your preferred executor(s)

Although people put a lot of thought into the first two points, they often neglect the third, which can lead to complications further down the line—so let’s get into it. 

what is an executor, and what do they do?

An executor is the person responsible for estate administration—and other responsibilities which we’ll get into later—after someone has passed away, often designated in the will. 

It is important to note that there is no obligation to accept this appointment. In some cases, it’s better not to. 

If a will exists but no executor is named, or if the named executor is unable (or unwilling) to serve, a court-appointed administrator will handle the estate.

Multiple executors can be named, but this can get complicated…

Executors are assumed to act unanimously, which means that if there is any sort of disagreement, things can grind to a halt. Some provinces have provisions for breaking a deadlock when executors can’t agree, but others don’t. This means that you really need to think about naming people who would work well together if you are considering designating more than one executor. 

the executor’s role and responsibilities

Being an executor is no easy task, as it can involve things like funeral arrangements, managing assets, paying debts and taxes and distributing the estate. Many people who have acted as one have reported it being time-consuming, stressful, and difficult.

While this may not seem like a great sales pitch for accepting the designation of executor, it’s worth mentioning because the executor can become personally liable (to a certain extent) if a mistake is made and taxes are improperly filed or assets are mismanaged. 

If you decide to act, but then change your mind, it’s too late—you’ve given up your right to forfeit. That’s why this isn’t a decision to take lightly. 

Here is a (non-exhaustive) list of responsibilities the executor is expected to carry out:

• Locate and review the will and administer and distribute the estate in accordance with its contents
• Act in good faith for the best interests of the beneficiaries
• Delegate various administrative roles to appropriate professionals
• If the deceased was running a business, act to preserve the interest of the estate in the business
• Preserve capital
• Avoid placing themselves in a position of conflict of interest
• Prepare the inventory of assets
• Secure the property and arrange for insurance as required
• Realization of assets
• Prepare income tax returns
• Apply for the tax clearance certificate
• Distribute property to beneficiaries and obtain releases
• Prepare accounts 

As you can see, it’s a pretty long list (and that’s not even all of it). 

That’s why we recommend executors enlist professional help from experts to complete certain tasks, including: 

• A lawyer to obtain the grant of probate, advise the executor, handle the sale or transfer of certain assets, maintain estate accounts, and assist with passing of accounts
• A tax advisor (lawyer or accountant) to advise on the tax aspects of estate administration, do post-mortem tax planning, and advise regarding the clearance certificate
• An accountant to assist with financial statements and tax returns for any corporations held by the deceased, prepare tax returns for the deceased and the estate, and any alter ego or joint partner trust
• An appraiser to provide valuations for real estate and other assets
• An agent for the executor (usually a trust company) to carry out some of the administrative duties

Generally, an executor is held to a high standard of care but will not be liable for honest mistakes. That being said, the importance of obtaining professional advice cannot be overemphasized (and after seeing the list above, you will probably agree).

Executors might think they are saving money by avoiding the cost of professional advisors, but they run a very high risk of making a costly mistake. In addition to personal liability, the executor may risk their own inheritance if they are a beneficiary.

how to choose the right executor(s)

We already touched on the importance of picking people who can co-operate if you’re designating multiple executors, but you’ll also want to look out for someone who:

1. Is trustworthy, conscientious, and intelligent
2. Has the time and inclination to act, and has agreed to act
3. Is willing to hire professionals and experts to assist them
4. Understands and will respect the instructions set out in the will
5. Has the confidence and respect of the beneficiaries
6. Is young enough to carry out all duties under the will and any trust of which the executor is a trustee
7. Is detail-oriented enough to attend to all the “red tape”, but sees the big picture and can put the many tasks of administering the estate into perspective
8. Ideally is a resident in the same province for convenience, or at least a resident of Canada for income tax reasons and to avoid the requirement of security

who can be appointed:

• Children: do not make the common mistake of naming all children as executors in an attempt to be fair or avoid hurt feelings. Conflicts over past events can often arise once both parents have passed away, and there may no longer be any motivation to keep the peace. Having one executor shoulder more responsibility than the others can also create resentment between siblings.
• Non-family members: you can appoint outside executors to act as impartial parties in the administration of the estate. In this case, we recommend designating a lawyer who specializes in estate planning.
• Corporate Executor: you may also appoint a trust company to act as a “corporate” executor. Trust companies offer professional estate administration and have the expertise to navigate all the legal, tax, and administrative details.

what happens if I don’t have a will?

If someone dies without a will, they are said to die “intestate,” and the estate is divided and distributed according to a formula set out by provincial law.

This means that they give up the right to decide who receives their assets (and who doesn’t) after their death, which can cause conflict—the last thing that anyone who is grieving needs.

There are two common misconceptions about intestacy that we’d like to dispel, as they can sometimes lead people to put off writing a will.

Misconception #1: If I don’t have a will, my spouse will inherit everything

This is often incorrect and dependent on many factors; there is no guarantee that your spouse will automatically inherit everything.

Misconception #2: My common-law spouse or partner will be entitled if I don’t have a will

Not every province recognizes common-law partnerships in the same way as marriage when it comes to intestacy. For example, in Ontario, a separated spouse will inherit, while a common-law spouse will receive nothing on intestacy—this is true even if the separated spouse is in a new relationship. 

need help picking an executor? we’re here to support you

If you’ve made it this far, you’ve probably realized that appointing an executor is no walk in the park. We can help you pick the right person for the role, guiding you through which questions to ask and pointing out any potential red flags you may have missed. 

Book a free call with us at your convenience to go over how to set up an executor.