Have you been asked to be an executor? The role involves settling a person’s estate after they pass. It can be very challenging if not overwhelming. Greg Bonnell speaks with Georgia Swan, Tax and Estate Planner, TD Wealth, about what’s involved and what to consider before you say “yes.”
Print Transcript
[AUDIO LOGO]
In this particular case, we're talking about a situation where somebody has been named as an executor in a will. So the first thing you have to do is find the original will. Then you need to basically get really good legal advice to help you interpret what the will is instructing you to do and whether the will needs to be probated. Contemporaneous to all of that, the first step is figure out what it was the person owned at the time of their death. So what were their assets, and then what were their liabilities? So what did they owe at the time of their death? Now, that might entail having to, maybe, value some of these assets, which can take some time. And then, of course, you also have to find the beneficiaries. So make sure they are located and you know where they are. Those are the first steps. They all kind of happen at the same time. And as the executor, you really need to hit the ground running on those things.
OK, so you have some duties there. Someone asks you to be their executor. What questions should you be asking them before you say yes?
So aside from educating yourself of those things I've already talked about, you need to ask this person about their particular estate. So do they have special assets that you're going to have to deal with? Do they own a business? What's the succession plan for that? Are they into cryptocurrency now or some of the new types of assets that maybe you're not used to? Do they have collections? And then in your role as the executor, you also actually being asked to be the trustee over time of any vulnerable beneficiaries. So are you actually buying into maybe a 10- or 20-year job that you're going to have to deal with? These are the types of things. And you don't want that asset and liability determination to be a treasure hunt. So you need to ask the person to open up their lives to you, so that you know what you're going to be facing when the time comes.
Very interesting. So if someone says yes, can they step away from the role after they've started acting in it?
It's much harder to step away once you've started acting. If you've got concerns when the time actually comes, because you can say yes 10 years before the person dies. And then they pass away, and you're thinking, oh, gee, I'm not at a good place in my life right now. It's much easier to step away then, before you start acting-- basically, that's called renouncing the appointment-- than if you've started acting already, and then you decide, I don't want to do this. That may require a court order. You may come under scrutiny about what you've done so far. So it's important to make that decision at the outset.
OK. You say court orders. That makes me think that if you fail to perform your duties in the role, there could be consequences. Are there consequences?
Yes, there are. You know, this is a job. This is a job. And it is something you have to be devoted to. And executors can have personal liability. So if you make a mistake, if you don't fulfill your duties properly, if you're negligent in some way, you could end up being personally liable for that. If, for example, you distribute the estate, and you don't hold back enough to pay off the debts, you may have to pay them out of your own pocket. So you have to be very careful in this job and really understand what it is you're saying yes to.
Yeah, you're starting to give us a lot of information here. So why someone shouldn't just say, oh, yeah, sure, whatever. It's not a short conversation. What about scenarios where people can't carry out their duties? I mean, what could happen?
Well, anything, really, life. The time comes, and you're at a place in your life where you have other responsibilities. You get ill. You're not living in Canada. That can have serious tax consequences for the estate. So you have to be aware of yourself and understand that you can say no if the time comes.
Let's talk about, perhaps, and I would hope no one would ever do this to anyone, but I guess, since the question's here, maybe it does happen. You're named as someone's executor, and you didn't even know about it.
Oh, that happens a lot. That happens a lot. I would hope that somebody would do somebody the courtesy to say, would you do it for me? But if that happens, and it's a surprise, then that's when you really need to get the proper advice. It's going to be a bit of catch-up. But don't feel that you have to say yes right away. Make sure you get all of that advice in place, you know what you're getting into, and then decide to say yes. And please feel free to say no.
This is a lot. And I hadn't ever really thought of this before. As far as I know, I have not been asked or named anyone's executor. But I think about everything that laid out here, let's talk about the fact that if you are in this role, there are things to consider. But is that onerous a process once it begins? I mean, if you follow the steps, can you sort of get through this thing?
You know, I often say that sometimes being an executor is a horrible, thankless job. And once you've done it once, you never want to do it again. It is a lot of work. Depending on the estate, even simple estates, there's hundreds of decisions that have to be made every day. And so it's not something to do-- it used to be an honor, I think. But now, not so much. It really is a job. And as our lives get more complicated, as our assets get more complicated, it gets to be more work. So sometimes, it pays to maybe get a little help too.
What would that help entail? What would you ask? Like, if you went to someone and said, listen, I want to do right by my friend or my family member, but I need a little guidance here. I mean, what would be the three things someone would want to be told?
So absolutely. You can go to a lawyer or a trust company that can basically help you walk through the process, will basically say, OK, step one, we need to locate the will. We got the will. Great. Step two, let's ascertain what the assets are and what their value is. So they will walk you through it. Now, the responsibility, the buck always stops with you, but having that person who kind of does the day-to-day work can be a huge help in this process. So look to a lawyer, look to a trust company to get that executor assistance. That can be very helpful. [AUDIO LOGO]
[MUSIC PLAYING]
In this particular case, we're talking about a situation where somebody has been named as an executor in a will. So the first thing you have to do is find the original will. Then you need to basically get really good legal advice to help you interpret what the will is instructing you to do and whether the will needs to be probated. Contemporaneous to all of that, the first step is figure out what it was the person owned at the time of their death. So what were their assets, and then what were their liabilities? So what did they owe at the time of their death? Now, that might entail having to, maybe, value some of these assets, which can take some time. And then, of course, you also have to find the beneficiaries. So make sure they are located and you know where they are. Those are the first steps. They all kind of happen at the same time. And as the executor, you really need to hit the ground running on those things.
OK, so you have some duties there. Someone asks you to be their executor. What questions should you be asking them before you say yes?
So aside from educating yourself of those things I've already talked about, you need to ask this person about their particular estate. So do they have special assets that you're going to have to deal with? Do they own a business? What's the succession plan for that? Are they into cryptocurrency now or some of the new types of assets that maybe you're not used to? Do they have collections? And then in your role as the executor, you also actually being asked to be the trustee over time of any vulnerable beneficiaries. So are you actually buying into maybe a 10- or 20-year job that you're going to have to deal with? These are the types of things. And you don't want that asset and liability determination to be a treasure hunt. So you need to ask the person to open up their lives to you, so that you know what you're going to be facing when the time comes.
Very interesting. So if someone says yes, can they step away from the role after they've started acting in it?
It's much harder to step away once you've started acting. If you've got concerns when the time actually comes, because you can say yes 10 years before the person dies. And then they pass away, and you're thinking, oh, gee, I'm not at a good place in my life right now. It's much easier to step away then, before you start acting-- basically, that's called renouncing the appointment-- than if you've started acting already, and then you decide, I don't want to do this. That may require a court order. You may come under scrutiny about what you've done so far. So it's important to make that decision at the outset.
OK. You say court orders. That makes me think that if you fail to perform your duties in the role, there could be consequences. Are there consequences?
Yes, there are. You know, this is a job. This is a job. And it is something you have to be devoted to. And executors can have personal liability. So if you make a mistake, if you don't fulfill your duties properly, if you're negligent in some way, you could end up being personally liable for that. If, for example, you distribute the estate, and you don't hold back enough to pay off the debts, you may have to pay them out of your own pocket. So you have to be very careful in this job and really understand what it is you're saying yes to.
Yeah, you're starting to give us a lot of information here. So why someone shouldn't just say, oh, yeah, sure, whatever. It's not a short conversation. What about scenarios where people can't carry out their duties? I mean, what could happen?
Well, anything, really, life. The time comes, and you're at a place in your life where you have other responsibilities. You get ill. You're not living in Canada. That can have serious tax consequences for the estate. So you have to be aware of yourself and understand that you can say no if the time comes.
Let's talk about, perhaps, and I would hope no one would ever do this to anyone, but I guess, since the question's here, maybe it does happen. You're named as someone's executor, and you didn't even know about it.
Oh, that happens a lot. That happens a lot. I would hope that somebody would do somebody the courtesy to say, would you do it for me? But if that happens, and it's a surprise, then that's when you really need to get the proper advice. It's going to be a bit of catch-up. But don't feel that you have to say yes right away. Make sure you get all of that advice in place, you know what you're getting into, and then decide to say yes. And please feel free to say no.
This is a lot. And I hadn't ever really thought of this before. As far as I know, I have not been asked or named anyone's executor. But I think about everything that laid out here, let's talk about the fact that if you are in this role, there are things to consider. But is that onerous a process once it begins? I mean, if you follow the steps, can you sort of get through this thing?
You know, I often say that sometimes being an executor is a horrible, thankless job. And once you've done it once, you never want to do it again. It is a lot of work. Depending on the estate, even simple estates, there's hundreds of decisions that have to be made every day. And so it's not something to do-- it used to be an honor, I think. But now, not so much. It really is a job. And as our lives get more complicated, as our assets get more complicated, it gets to be more work. So sometimes, it pays to maybe get a little help too.
What would that help entail? What would you ask? Like, if you went to someone and said, listen, I want to do right by my friend or my family member, but I need a little guidance here. I mean, what would be the three things someone would want to be told?
So absolutely. You can go to a lawyer or a trust company that can basically help you walk through the process, will basically say, OK, step one, we need to locate the will. We got the will. Great. Step two, let's ascertain what the assets are and what their value is. So they will walk you through it. Now, the responsibility, the buck always stops with you, but having that person who kind of does the day-to-day work can be a huge help in this process. So look to a lawyer, look to a trust company to get that executor assistance. That can be very helpful. [AUDIO LOGO]
[MUSIC PLAYING]