Ask first before appointing an executor

Being an executor is “the toughest job anybody never applied for.” So says Mark O’Farrell, president of the Canadian Institute of Certified Executor Advisers, who recently spoke to financial advisers in Saskatoon about the challenges of settling an estate.

An executor is someone you name in your will to look after all your worldly goods — to gather, protect and distribute those goods to the people you most love in the world. Your executor is one of the most trusted and influential people in your life.

Of the 14.8 million Canadians aged 45 or older, 99 per cent intend to name a friend or family member as their executor, according to a BMO Leger survey. Too often executors learn about their appointment after the death.

Please ask your executor if they would be willing to take the job. Tell your executor where to find your will. Review the contents of your will. Explain to your executor what you really mean to have happen. Tell your executor where to find your passwords and access codes for online investment accounts and social media accounts.

Your executor will need to ask for help from more than a dozen different professional advisers to minimize taxation, illiquidity, inequality, grief, stress, risk and litigation. Besides calling on a lawyer and an accountant, your executor can expect to deal with a funeral director, appraiser, auctioneer, real estate agent, insurance agents and possibly a mental health counsellor for grieving family members.

Blended families

With today’s second marriages and common-law relationships, family dynamics are much different from the days when nuclear families were the norm. After a parent dies, the family could lose the glue that holds them together. Blended family members who only get together for Christmas and Thanksgiving are more prone to sue each other over rivalries concerning inheritances.

Beneficiaries can easily become armchair executors using the Internet to verify the market values when real estate and automobiles are put up for sale. If they are upset, they can readily share their opinions with the world by posting on Twitter or Facebook.

Liability insurance

According to a survey of Canadians who are already acting as executors, 47 per cent are having administrative complications, 31 per cent face emotional issues and 26 per cent are dealing with legal issues.

O’Farrell recommends that any family members acting as executors protect themselves with an ERAssure executor liability insurance policy. He thinks that anyone updating their will should include a clause that allows for premiums to be paid out of the estate.

Demographics

Most people are familiar with the huge age wave of baby boomers born between 1945 and 1962. However, the dramatic upturn in the birthrate actually began 10 years prior in 1935. That means the number of seniors turning 80 is going to accelerate starting this year and continuing for the next 27 years. The Conference Board of Canada calls this a “slow-motion demographic tsunami.”

They’re the 80-something seniors who should update their wills and talk to their executors.

Tax changes

With the 2015 federal budget decreasing the percentage for minimum RRIF withdrawals, we can expect more Canadians will be dying with bigger, more taxable estates.

Now that the tax rate for testamentary trusts has been increased to a flat top-bracket rate, the tax benefits of most testamentary trusts are gone. For deaths in 2016 and later, executors who file estate tax returns for deceased person will have to make a “Graduated Rate Estate” election.

Terry McBride, a member of Advocis, works with Raymond James Ltd. (RJL). The views of the author do not necessarily reflect those of Raymond James Ltd. (RJL). Information is from sources believed reliable but cannot be guaranteed. This is provided for information only. We recommend that clients seek independent advice from a professional advisor on taxrelated matters. Securities offered through Raymond James Ltd., member of the Canadian Investor Protection Fund. Insurance services offered through Raymond James Financial Planning Ltd., not a member of the Canadian Investor Protection Fund.