Wednesday, November 09, 2005

Choosing an Executor

You may appoint someone in your will to look after your affairs on your death. The person you appoint is called your “executor.”

Your executor’s duties on your death include:

a. Arranging your funeral and disposal of your remains;
b. Paying your debts;
c. Filing income tax returns and paying any taxes owing up to your date of death, and filing returns and paying taxes after your death if your estate earns income after your death;
d. Applying for a clearance certificate from Canada Customs and Revenue Agency before distributing your estate;
e. Insuring and protecting your assets;
f. Subject to any directions in your will, selling your assets;
g. Investing any funds in your estate until they are distributed;
h. Identifying and locating the beneficiaries;
i. Distributing your estate to the beneficiaries in accordance with your will;
j. Preparing accounts for the beneficiaries.

The executor is expected to carry out his or her duties diligently. In many estates the executor should be able to substantially complete the administration of an estate in a year. This is called the “executor’s year.” However, in some estates it may take longer than a year. Factors that may lengthen the administration include legal disputes over the estate, assets that are difficult to sell, active businesses that need to be sold or liquidated, and disputed claims by creditors

If you create long term trusts in your will, and appoint your executor as a trustee, he or she will have continuing duties as trustee after the executor’s year. In some cases this may be a lifetime obligation. You might create trusts in your will for tax planning purposes, for infant, disabled or spendthrift beneficiaries, or for beneficiaries whom you want to enjoy property in succession.

You should choose someone who is reliable, well organized, trustworthy, and capable of handling money as an executor. Your options may include relatives, friends, and professional trustees such as trust companies. You may appoint two or more executors to act together. For example, in a large complex estate, you might appoint a trust company to act together with a relative. However, before appointing two or more executors to act together, you should be confident that the executors would work well together.

The person you choose as executor may decide not to act as executor, and can renounce his or her appointment. If he or she does decide to act as executor, then the appointment is effective immediately on your death. However, the executor may need to have his or her appointment confirmed by a court grant of letters probate of your will before your executor can deal with your assets.

It is a good idea to name alternate executors, in case your first choice dies before you, or is unable or unwilling to act as your executor.

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