Executor Is Not a Job To Die For
David Christianson, CFP, R.F.P., TEP
As promised in December, we are going to review some of the responsibilities involved with being an executor and some of the preparations you should be making now.
First, though, a little Tax Free Savings Account news for Manitobans. The provincial government is introducing an amendment to the Retirement Plan Beneficiaries Act, to allow people in Manitoba to name a beneficiary on their new TFSA accounts.
Although this won’t take effect until the legislature receives Royal Assent, they have wisely written it so that a designation made now will be valid as soon as the legislation is passed (as long as the account holder does not pass away before then). Kudos to the government for acting so quickly.
By the way, do you need more information or advice on TFSAs in this column? How about the temporary RRIF withdrawal rules that will be included in the federal budget this month?
If you want me to write about those or any other topics, just drop me an email.
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If someone named you as their executor, you would likely feel honoured, and for good reason. That person is nominating you as his or her personal representative, to make decisions and use your judgment when they have departed this mortal coil.
However, it is likely not a job to get excited about. It involves a lot of responsibility, will be very time consuming, and can even result in personal liability (although most modern wills absolve executors for actions taken in good faith and with proper care).
Sometimes this is a job best left to professionals, like trust companies. However, most people like to name an individual they know and trust.
Proper preparation on both sides can make the job much easier.
Be sure your executor knows they have the job and have had a chance to ask the questions they need to ask. Prepare a complete inventory of all assets – like bank and investment accounts, life insurance policies, real estate, group and pension benefits, safety deposit box, out-of-country accounts or properties, everything - and their locations. This is also a great organizational tool for you, and one you will find extremely valuable as you get older.
Our company and most other financial institutions have family inventory forms that can help with this task.
Make sure the location of your original will is known to your executor, and let that person know if you move it. Ideally, go over the will with the executor, to clarify any ambiguities.
If your will leaves some things up to the executor’s discretion, then prepare a letter or have a talk with that person to explain your thinking and feelings about those issues. This is especially true when setting up testamentary trusts that will last a number of years.
If you are named as executor for someone, ask to get this information ahead of time. It will pay off later, and also give you a better chance to properly grieve when the time comes.
Here is a PARTIAL list of executor duties:
- Arrange funeral and burial
- Obtain death certificate and copies
- Locate and review original will
- Locate and inventory all assets and liabilities
- Meet with lawyer
- Advertise for creditors of the estate
- Submit application for probate
- Pay probate fees
- Locate and notify all beneficiaries, including charities, of their interest
- Explain your role to the beneficiaries
- Notify spouse of entitlement under family law and suggest independent legal advice
- Assess the rights of dependants
- Apply for all benefits and rights under government, life insurance, group, pension and other programs
- Cancel all credit cards, SIN, memberships, etc., and notify financial institutions of the passing
All of that is before you start managing the assets and the estate, calculating taxes, paying liabilities and, eventually, calculating and making distributions to beneficiaries.
A proper Executor Checklist runs many pages. When naming (or accepting appointment as) an executor, prepare yourself for your task.
In the meantime, stay warm!
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David Christianson is a fee-only financial planner and investment counsel with Wellington West Total Wealth Management Inc.