Choosing the Right Executor for Your Estate

A recent CIBC poll conducted by Harris/Decima finds that 84 per cent of Canadians with a will have named a family member or friend as the executor of their estate, even though the majority may not have the time, knowledge or expertise to effectively carry out the responsibilities.

"If you appoint a family member or friend without the appropriate experience or knowledge, it could cost your estate thousands of dollars, as well as months or even years of angst for your loved ones," says Jamie Golombek. He notes the poll found that 78 per cent of Canadians had no prior experience administering an estate. "An executor should have the time, skill and knowledge to effectively undertake the numerous duties."

Mr. Golombek advises that there are 3 common mistakes in planning a will that can be avoided if you just take the time to educate yourself.

1. Don't underestimate the time involved in administering an estate -it may take longer than you think

The poll found that 38 per cent of Canadians thought estate administration could be completed in less than 6 months, while nearly two-thirds thought it would take a year or less.

"The reality is that even if everything goes well, the estate administration process typically takes between 12 and 18 months; however, complications, tax errors and litigation can delay estate administration for months or even years," he adds. "When naming an executor, consider if the individual has the time and ability to dedicate to the task for a period of up to two years or possibly longer.

2. Don't choose the wrong executor — an executor can inadvertently cost your estate money

The duties of an executor include making funeral arrangements, determining the value of all estate assets and liabilities, filing individual and estate tax returns, collecting any insurance proceeds, and accounting for the estate financial activities. Your executor will need to have the time as well as the skills and expertise to deal with many parties, including lawyers, accountants, financial institutions, insurance companies, government agencies and beneficiaries, some of whom may be located in other cities, provinces, or countries.

"For many estates, a corporate executor, named either as the sole executor or a co-executor, is an excellent option," adds Mr. Golombek. “Not only does it relieve your family and friends of a difficult burden and time-consuming task, it can actually save you thousands of dollars." He cites an example of how tax expertise can impact an estate. "CIBC Trust routinely encounters estate situations of elderly individuals who were unaware they qualified for the disability tax credit. An executor can amend personal tax returns on a post-mortem basis to claim this credit and save the estate thousands of dollars in tax." He emphasizes, "The disability tax credit varies by province, but in Ontario, for example, this can equal approximately $1,500 annually."

3. Don't prepare your will then forget about it — regularly review your will and your choice of executor

It is recommended that you review your will regularly — at a minimum, every 5 years. The CIBC poll indicated that 37 per cent of respondents had not updated their will in more than 5 years. Changes that should trigger a review of your will include such things as a marriage, a divorce, the birth of a child or relocating to another province or country. When reviewing your will, also consider if you have made the best choice in who you named as the executor of your estate.

Further, for a smooth estate transition process, keep good records and ensure your executor knows where to find your will and other important information. All too often, estate administration is delayed because a will, or other crucial documents, cannot be located.

If you are already serving as an executor, it might be helpful to know that should the task become too complex or time-consuming to manage, you can hire a corporate executor as Agent for Executor to assist you with your estate administration duties. A family member or friend combined with a corporate co-executor may provide the best solution — providing the peace of mind and comfort of someone you know and trust, combined with the knowledge and expertise of a corporate executor.

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