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Thursday, April 29, 2010

Have I made the right choice to be my executor?

I've noticed that when I speak to groups of seniors, the questions centre quite a bit around choice of executors. Frankly, people seem very concerned about the choices they've already made in their Wills. They are asking me for reassurance that they've done the right thing. Often they've made a choice of executor that makes absolutely no sense at all. Why do people make these mistakes in choosing their executors? Here are some of the usual reasons:

1. They are worried that if they have several children and don't name ALL of them as executors, the ones left out will be ticked off. I can't tell you how many Wills I've seen where all three children are named as executors and either one won't do anything at all, leaving the estate in limbo, or the three of them quarrel constantly.

2. They think naming someone as their executor is an honour. It isn't. It's a lot of thankless work most of the time.

3. They want to save money by naming someone that they think will not charge their estate an executor's fee. They assume the children won't charge a fee "because they are family", leaving the question of compensation to be battled out between the executor and beneficiaries.

4. They also want to save money on getting the Will itself made and as a result never speak with an experienced estate planning lawyer who would have alerted them to the dangers of their plan and suggested some alternatives.

5. They make an emotional decision rather than a business decision when choosing an executor.

Choosing your executor is one of the most important decisions you will make for your family as it is the starting point for the administration of your entire estate. You absolutely must think it through and not grasp onto any obvious solutions without considering whether it's really workable, practical and reasonable. Why on earth would a parent expect three children who barely get along as it is to be able to work closely together for at least a year and make tough decisions together about finances and family?

Are you asking too much of your executor, given the executor's age, abilities, geographic location, time demands and position in the family? Are you being fair to them?

Try to think through what your executor will have to do, and then determine who should be taking care of those tasks. For example, will your executor have to sell your house? Distribute the goods in your house? Deal with a vacation home in Arizona or a timeshare in Mexico? Track down someone who hasn't been seen in years? Settle disputes between siblings? Place values on assets they are not familiar with? Handle a trust for grandchildren that might last as long as 20 years?

Once you start thinking of your estate this way, it's actually easier to imagine who might be the right executor for you. Try to keep the emotion out of it and make a businesslike decision.

Remember that if you are not sure that any of your current options are ideal, you can always look into whether a trust company would be a good choice for you.

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