Note from Coleman Wealth: We work with a network of Canada’s wealth planning experts, and are fortunate to have connected with Executor Duties on Demand. This company simplifies the estate administration process and makes sure all of your duties are covered. Their team is comprised of chartered accountants, tax specialists and trust lawyers, who will ensure you have the right information and that you are correctly fulfilling your executor responsibilities.
Many people agree to be the estate trustee (a.k.a. executor or executrix) of a family member’s estate without realizing how large a responsibility they have taken on. In addition to the risk of personal liability and the possibility of legal action for inappropriate handling of the estate, there are over 400 time-consuming tasks that need to be performed to complete your responsibilities (depending on the size of the estate and the nature of the assets and liabilities).
Let’s look at the one of the biggest questions that we get from clients:
What is the risk that I am taking on in accepting the role of being an Executor?
An Executor/Executrix has been given the fiduciary responsibility of managing someone else’s affairs, after that person has passed away. They are expected to handle all of the assets and liabilities with due care and in a responsible manner. They need to determine firstly, what their responsibilities are, and then execute them in such a manner as to not cause any unnecessary monetary losses to the beneficiaries of the estate. If it is determined that certain losses to the estate such as late filing penalties, or the sale of assets well below the fair market value of the asset, could have been prevented, the executor could be accused of fraud or negligence. In addition to having to repay any compensation that they may have taken as an executor, he/she could have to use their personal funds to compensate for their actions. Also, if the executor distributes the estate prematurely, they could have to personally compensate the creditors or other beneficiaries for this misjudgment. The executor’s fiduciary responsibility is to remain honest, avoid any conflict of interest, communicate fully with the beneficiaries, and administer the assets and liabilities as timely and as accurately as possible – in a way that any careful, intelligent person would look after their own affairs. If the estate is insolvent (i.e. its debts are greater than the assets available to settle them), the executor should seek legal counsel immediately. If handled properly, the executor is not responsible to personally cover the liabilities of a bankrupt estate.
It is important to note that lack of expertise is not considered a viable excuse for the mishandling of an estate. Executors are expected to seek the help of lawyers, accountants, investors and other professionals to ensure that they are administering the estate properly – and in all cases, complete and accurate documentation is a must.
Being an executor is both an honor and a huge responsibility. If you have been asked to be an executor, you have been personally chosen as the best person available to administer the affairs of a person once they are gone. Be smart, be honest and be responsible, and seek assistance if you need it, and you will safely execute your duties with minimal risk and exposure.
This discussion is for general information only and is not intended to provide legal or any other advice. Executor Duties on Demand Inc. accepts no responsibility for any losses related to reliance on information contained herein.