There are many traits that may help make someone a good choice to administer your estate: trustworthy, diligent and detail-oriented, for instance. But what about their age? Treva Newton, a Tax and Estate Planner with TD Wealth, talks to Kim Parlee about occasions when an executor may be too old (or too young) for the task.
- So you are drafting your will, and your lawyer asks you if you've thought about who would be your executor. There are so many traits that would make a good choice for a person who would administer your estate, but have you thought about age? Yes, the perfect executor could be too old or too young. Treva Newton is a Tax Estate Planner at TD Wealth, to tell us what age has to do with choosing an executor. So what does age have to do with it?
- So first of all, you have to be age of majority, and that does vary by province. You can't be 15 years old and act as somebody's executor. Secondly, you can't be maybe too old. Age not so much for there-- but competency level, and making sure that they're still going to be around.
- OK, so let's talk a bit more about what "too old" means. I mean, does this happen? I mean, you might choose someone, I guess, who's close to you, like a friend or a sibling, and they age at the same rate of you, and that might not work.
- Right. So depending on who your executor is, could be different ages throughout your lifetime. Maybe when you're 20, you could appoint your parents as executor. And that makes perfect sense at that point in time.
- But as you get older, maybe it's your siblings you appoint, because they're about the same age. And maybe, as you get even older, maybe it's your children who you appoint. So you really do need to look at your will every three to five years and review it, just to see if who you've chosen still makes sense.
- Let's take the scenario of someone who didn't follow the advice you just talked about, and let's say that they chose an executor who couldn't do the job. Maybe they died. Maybe they're incompetent. What happens then?
- Right. And so, that does happen. So you could end up choosing somebody who maybe doesn't have capacity when it comes time to act. So then, somebody else is going to have to go to court to become administrator of your estate. And that can take time, and it's going to delay the administration of the estate, and it actually makes it harder on the person to get the information.
So when I was a trust officer, I used to administer a lot of estates. And one of them came to us through an agency. So an executor had been appointed, but they didn't quite have the capacity to do the administration of the estate, but they didn't really realize that. And so, two years went by with them doing absolutely nothing to the administration of the estate.
Then finally it did get to us, and we took over the administration of it. However, there was a lot more taxes that had to be paid, because no filings had been done, and some of the tax planning that you'd want to be done, couldn't be done. So it ended up costing the estate a lot of money.
- I'm sure, also, from the legalities of it. I mean, if you've appointed someone executor, it would be complicated, in terms of you have to prove they're not doing what they're supposed to be doing.
- Yes, it can be. The beneficiaries were just waiting for things to happen, and the only way you can really change it is going through court, and they weren't quite ready to do that.
- What's the sweet spot? What should the age be?
- So it does, like I say, depend over time, right? So you need to review the will every three to five years. Choose somebody who makes sense at that time to be your executor. If you don't have somebody that makes sense, trust companies are always a really good option. You can name a trust company to be the executor of your estate, and they're always going to be there for it. And you're not going to put the burden on your family members for it.
- Anything else you should think about, in terms of where the executor lives?
- Right, so the other parts for being the executor-- not just age-- are where do they live? The jurisdiction they live in. Do they live really far away? Because it can take up to 18 months-- that's not unusual-- to administer an estate. So you're going to want to have somebody who has time to do it. And if you appoint a busy professional. They may not have time to do everything that needs done, especially if they live in a different jurisdiction.
You're also going to appoint somebody who has some knowledge behind it. Maybe it's some financial background, some sort of things like that, so they can make sure everything is done.
- Can you appoint more than one executor?
- You can, and that's actually a really good point. So you should have your first executor, who would be your first choice, and then an alternate executor after that. And maybe even one more alternate, just to make sure that you do have somebody there who can be your executor in the end.
- Treva, thanks very much.
- You're welcome.