Choosing an executor is no trivial matter

I have to say, I agree totally with the title of this article. Too many people make this very important decision without considering just how that decision will impact family members left behind. This article from Ellen Roseman at  www.thestar.com talks about how to make the choice of executor, and why it's so important to put some real thought into it. Click here to read the article.

Near the end of the article, Ms. Roseman discusses trust companies, who are professional executors. I work at a trust company, and to be honest before I came to work here I really didn't realize how well corporate executorship works for families who need independent executors or simply an experienced helping hand. I invite anyone with questions about how trust companies work to drop me a line.

Know exactly what you're getting into before you agree to act as executor

How I enjoy finding easy-to-read articles that are filled with common sense that I can share with my readers! I'm attaching an article by Gail Vaz-Oxlade that appears in www.moneysense.ca. In the article, Ms. Vaz-Oxlade suggests that you give serious thought to whether or not you accept an executor appointment in someone's will. Click here to read the article.

I totally agree that it's something you need to think carefully about before going ahead. If you start work as an executor on an estate, you have the job for life unless the court releases you. If you make mistakes, you can be held personally liable.

To those of you who are in over your heads and simply can't seem to deal with the estate properly because of time constraints, battling beneficiaries or legal issues, get help. See a lawyer or trust company and ask them to give you some guidance or even take over parts of the work. Did you know that you can walk into almost any major bank and ask them to put you in touch with their in-house trust company?

Financial advisor gets 5 years for elder financial abuse

I'm attaching a link to a news story from Florida about William Abruzzino, who was apparently an attorney (American word for lawyer), financial advisor and insurance agent. He was in charge of the finances of Marlene Scippa, an elderly woman who was suffering from Alzheimer's disease. He stole more than $200,000 of her money and a judge sentenced him to five years in prison for doing so. Click here to read a much more detailed version of the story.

The impact on Mrs. Scippa, not surprisingly, is huge. Her ability to pay for the long-term care she needs is now threatened through no fault of her own.

I notice that the story quotes at least two of Mrs. Scippa's family members, those being her brother and her niece. I don't have all the facts, but it occurs to me to wonder why neither of them was acting as Mrs. Scippa's trustee instead of the jack-of-all-trades financial advisor. It appears from the story that Abruzzino became the trustee upon Mrs. Scippa's husband's death, meaning he would have been named as the trustee in the husband's will.

No doubt Mr. and Mrs. Scippa had their reasons for appointing their financial advisor as their trustee rather than family members. The reason might well have been pressure from Abruzzino. Mr. Scippa's estate was $1,000,000 and perhaps they thought this was too much for a family member to handle. Whatever the reason, a well-intentioned choice made in good faith went completely wrong.

I encourage anyone who feels they might not want to appoint family members as exexutors or trustees to look into using a trust company. The kind of fraud perpetrated by Abruzzino doesn't happen in trust companies. As they are owned and run by banks, trust companies are highly regulated by law and banking policies, and there is never any one person with access to sums of money. And it costs less than you think.

On a final note, the rules must be different in Florida than they are in Canada as Canadian lawyers are not allowed to give investing advice to clients. Of course that assumes Abruzzino knew and followed any rules.

How to leave a substantial estate in safe hands

Who have you appointed as your executor in your will? Did you consider appointing someone other than your spouse or children? There is a new article in the Globe and Mail that talks about alternate choices, including a trust company.

Having worked for a trust company for the last four years, I've answered many, many questions about how a trust company works. The first thing people ask me is how much it costs to have a trust company as an executor. Almost everyone is surprised to learn that a trust company charges the same fee that any executor - such as your kids or friends - can charge. The difference is, we have expertise!

If you've ever wondered whether a trust company is a good choice for you (or perhaps your parents), click here to read the Globe and Mail article for some good information and ideas.

What does an executor do with an old house full of papers?

This is another reader question that I think will interest many of you. I have been asked this question at seminars as well, so I know some of you wonder about the logistics of an executor's job. Here's the question:

My elderly father lives alone in his house [in another city]. The house is dated (1960s) and is cluttered with furniture from my Grandmother plus paper and files from dabbling in the stock market. He has engaged a financial institution to act as Executor of his estate. How does an institutional Executor typically handle a cluttered house where the paper may be valuable? If it falls to me, will I be compensated? At what rate?

And my answer:

I've heard that corporate executors (i.e. trust companies) don't actually go to a deceased person's home to deal with their effects, and am happy to tell you that information is completely wrong. When a trust company is acting for a person who passes away, a specific trust officer is assigned to that family. The trust officer himself or herself will go out to the house as many times as needed to determine what is in the house and what needs to be kept or discarded.

Trust officers don't take paperwork lightly. They will examine it to make sure that they have accounted for all assets such as bank accounts, investments, titles etc. They will also look for papers that mention liabilities such as mortgages, loans, bills, lines of credit etc. The executor must prepare a full, accurate inventory of the deceased's assets and liabilities, and that can only be done if paperwork is looked at carefully.

Other items may turn up during this process, such as another will, stock certificates, or Canada Savings Bonds. The trust officer will also try to locate credit cards, identification cards, previous tax returns and birth certificates.

Any valuable assets such as cash in the house or jewelry will be documented and taken by the trust officer to put into the trust company's vault. Also taken are documents with sensitive information such as the deceased's social insurance number and bank account numbers. The trust officers keep a full, complete log of everything they remove from the house, garage, shed and vehicle.

At this time, the trust officer also takes a good look around to see what else needs attention. For example, is there a pet in the home? If it is winter time, is the heat on and the heating bill paid? Is the house insured? Are there any broken windows that need repair? You simply never know what you might find.

Before dealing with the "clutter", the trust officer will read the will and discuss with the Manager of Trust what steps should be taken. The will may contain instructions to give certain items to certain people. Gifts like that are not necessarily gifts of monetary value, so the trust officer has to be careful not to assume that anything in the house is worthless.

Once the trust officer has a clear idea of what is in the house and has removed essential paperwork, valuables and specifically gifted items, he or she will make arrangements for the house to be disposed of. Depending on what's in the will, the house must either be transferred to a beneficiary or sold. Most of the time the house is to be sold.

Before that can happen, the house has to be cleared out and cleaned. If a house is full of antiques or good items of furniture, there may be an estate sale or garage sale, with the money going into the estate. In most homes though, there is not a sale of this kind because the items have little monetary value. Items that are in good shape might be given to a charity.

Normally a cleaning company is hired for the actual cleaning work. Sometimes a family member wants to do that rather than have a company come in, and that can often work out just fine. If you took on that role, you would be compensated for your work at the rate that you and the trust officer agreed on before you started the work. It's a bigger job than most people realize.

You mention that the house is very dated, which is certainly common among homes where seniors have lived for many years. You don't mention whether it's in good repair. If the house can't be sold in its current condition, there may have to be repairs or even renovations done before it goes on the market. Sometimes updating the kitchen and replacing worn carpeting, plumbing or windows can increase the price of a home by many thousands of dollars. Those decisions will be made by the trust officer as he or she tries to realize the best possible price for the house.

The trust officers work closely with family members who are named as beneficiaries of the will. Beneficiaries are kept up to date on what steps have been taken. Where family members should be involved in a decision, they are brought in. For example, many wills say that personal items are to be divided among the children "as they agree". The trust officer will arrange a day for the children to come to the house and choose the items they want.

The trust company does everything that an individual executor would do, except that the trust officers have experience at it and rarely make mistakes.  I notice that your Dad is in the same city as I am. If you are visiting him one day, feel free to come by our office to meet our trust officers for a chat. I believe you'll feel reassured that a trust company really is made up of caring individuals who are ready and able to look after your Dad's needs.

Do you know what you're getting into when you agree to be an executor?

Paul McLaughlin of Turning Point Law in Sherwood Park, AB, was recently interviewed by the Edmonton Journal about being an executor of an estate or power of attorney.  Paul is a lawyer and teaches a course called "So You've Been Appointed an Executor". He's also one of the nicest people I've ever met. Click here to read the article, particularly if someone has asked you to act as their executor.

As a related comment, please remember that if you are acting as an executor and are completely overwhelmed (because of time, geography, demanding beneficiaries or simply because you are devastated by the loss of your loved one) you can call a trust company to step in and help you immediately. Click here to find out more about that.

The attached photo of Paul (left) and son Andrew McLaughlin is from the Edmonton Journal.

Decision-making by trust companies

Ever wonder how decisions are made when the executor is a trust company? In this article, Elaine Blades gives you a peek into how things are done. Click here to read it.

Will your executor be able to handle family pressures?

When you chose the executor of your will, did you specifically consider your candidate's ability to withstand family pressures and politics? If you're like most people, you didn't. In my view, this is a factor that more people need to think about.

Many people choose their child or their children as their executors without giving it any thought at all. That's probably ok if you only have one child. If you have more than one child, or if you have a blended family, you need to put more thought into it. When I push my clients to talk out their reasons for choosing a particular child, the most I ever get is that the child "gets along with" the others.

That's important, yes, but there's more to it than that.

Ask yourself some of these questions about the child that you've chosen as your executor, in each case imagining that you've passed away and your child is in charge:

• If a sibling telephoned or showed up in tears or in a rage about a perceived problem with the estate, how would your executor handle the situation?
• If a sibling is not in agreement with the others on an estate issue, causing arguments, and it appears that the problem is the sibling's spouse, would your child be able to deal with that spouse?
• If a sibling accused your child of deliberately or negligently taking estate assets, how would your child react?
• If all of the siblings ganged up on your child, demanding that the estate be done differently in some way, would your child be able to calm the group and stay in control?
• If one of the siblings took your child aside and asked for special treatment from the estate, such as a larger share, forgiveness of a debt or an advance on their inheritance, could your child stay strong and say no?
• If the estate lawyer called your child and said "we have a problem with the estate", would your child be clear-headed and confident enough to make important decisions?

When choosing your executor(s) you must consider not only what works for you now, but whether your choice is going to be a good one after you've passed away. You must consider how your executor is going to handle the job. One of the dangers is that the estate will bog down in delays and arguments. Another danger is that your executor will get so fed up, he or she will stop acting as your executor, leaving you with someone you didn't choose.

If your family is populated with strong personalities, or for any reason you worry that there will be too much pressure on your executor, consider using a trust company as a neutral executor.

Is a corporate executorship the right choice?

If you've ever wondered whether a corporate executor is a good choice for you, or if you simply want to know more about it, this article from The Blunt Bean Counter (great name!) will interest you. The article won't try to persuade you either to hire a corporate executor or to avoid one, but will give information on both sides of the discussion. Click here to read it.

Do you need a corporate executor?

Even though corporate executors have been around for many, many years they don't come to mind quickly for most people doing their estate planning. Corporate executors are trust companies, which in Canada are mostly owned by the major banks. Trust companies are in the business of handling other people's financial affairs, whether as executors, powers of attorney, agents or trustees.

Some of the people who name trust companies as their executors do so because they don't have any family members living near enough to handle the job. Immigrants to Canada, for example, might have no family members here other than their spouses. And someone has to be executor when both husband and wife have passed away. Others have family in the country, but the individuals are scattered, mostly because they go where they can work.

There are others who have family members close by who choose not to name those family members. This happens when the parents think there might be disputes among the children (and I wish more parents were realistic about the fact that siblings fight). Sometimes one child has an addiction or is a spendthrift and the funds are going to be held in trust and the other children don't want to be in charge of doling out their sibling's money.

They have a point, I believe. Parents should consider what they are imposing on one of their children when they make that child an executor and trustee of an estate. What if a child has a handicap and there are going to be funds held in trust for that person's entire life? The parent is asking the sibling to take responsibility for those funds for that whole time.

And it's much worse when the reason for the trust is an addiction. In that case, the child who wants his inheritance is reduced to asking his sibling to please let him have some money. This leaves the executor child in a position of having to say no, whether or not he's comfortable with that role. The disputes and hard feelings are inevitable and if you put your children in this position you might as well admit that you're ruining any chance of them having a normal sibling relationship.

Right now my office is dealing with a case where one of the deceased's adult children won't move out of the deceased's home. The child has no job, no money, and a serious drug addiction. The other children are mighty glad that they aren't the ones who have to deal with getting him out in a compassionate manner and getting that house ready for sale.

Using a neutral third party - a trust company - keeps the whole scenario professional. The siblings can sit around the Thanksgiving table or a summer picnic without the issue of money between them.

More people in blended families should use trust companies, as the potential for disputes is enormous. Many people in second marriages have an overly optimistic view of how the children and step-children will get along once the parents are gone. I've been accused of being cynical more than once, but I'm basing my comments on what I see daily. We all hope that a common crisis like the death of a parent will cause people to come together and support each other, but in truth, it often has just the opposite effect. It's hard on everyone.

This is not to say that only dysfunctional families need professional executors. Far from it. Many people choose a trust company for an executor because their estates are complex. They don't really want their spouses or children to have to deal with selling the condo in Arizona or winding up the business or transferring the farming operation. They want the estate to run smoothly and the children to have someone to help them.

Some high net worth families worry about leaving large sums of money to their children and choose professional executors to manage the money while the children are younger, say to age 25.

Whenever I'm in a discussion about professional executorships, one of the first questions I'm asked is the cost. The fees differ slightly from company to company, but overall it's cheaper than you think. Check it out by calling your local trust company, or asking your banking officer for a referral to the right person.

What does a trust company charge to administer an estate?

A reader has asked me what a trust company charges. Since I work at a trust company, I am very familiar with our charges. I am not as familiar with the charges of other trust companies, though I expect that through the miracle of marketplace economics, we are probably similar.

There are two basic scenarios in which a trust company is hired to help. One is where the deceased person named the trust company as executor in his will before he died. I'll talk about that first. The second scenario is where the deceased named an executor such as a family member or friend, and it's the executor who comes to us for help.

In both scenarios, the cost of using a trust company is cheaper than you think.

If we have been appointed as an executor under someone's will, when that person dies we will run the estate according to the will. We don't charge a fee to be named, and we don't charge a fee if the customer changes his mind and decides not to name us. The only time we charge a fee is when we actually do the executor work on the estate.

The fee is a percentage of the estate. Our fees max out at 3.5% on the first $500,000 of an estate. The fees then decrease as the estate gets larger (e.g. it's 3.25% on the next $500,000). To give these numbers some context, I can tell you that in Alberta any executor, even a rookie who's never probated a will before, can charge an estate up to 5%. So you're getting good value when you get someone with tons of experience for 3.5%.

The fee comes out of estate assets. The executor doesn't pay it personally.

In the second scenario, a trust company is asked for help by an executor who is trying to run a deceased person's estate. This is sometimes because the executor is overwhelmed by the amount of work, and sometimes because there are troublesome beneficiaries. Regardless of the reason, executors might want some help while still remaining executors. We call this "Estate Assist".  The cost for this service depends on how much help the executor wants. Sometimes the executor only wants help with one or two things and other times he/she wants us to run the whole show. The price is tailored depending on the needs.

I once met a client in a branch who had flown in from Ontario. She was appointed as the executor of an estate in Alberta but only had one week to take care of matters. Obviously a week isn't going to make much of a dent in an estate. She hired us on an Estate Assist basis. She had had no idea this service was available but it was exactly what she needed. She told me that she was so happy she was going to take out a full page ad in the newspaper that says SCOTIA TRUST IS GREAT!!!

Remember that it never costs money to call a business of any kind to ask about prices, and that includes trust companies. If you're not sure who to call, go into any Scotiabank branch in Canada and ask them for a name and number for the local trust company.

Executors from two sides of the family

The choice of executor is an issue that takes many of us quite a while to settle, as it should. The choice of executor is crucial to the efficient and timely administration of an estate. If you think otherwise, perhaps you should read the comments and questions left on this blog and many others about the problems people have dealing with reluctant, secretive, aggressive or greedy executors. It's important that each of us examines all of the possibilities clearly and do the best that we can for our families left behind.

Recently I was asked by a woman who is in her second marriage whether it's a good idea to appoint two executors. They would each represent one "side" of the family. In other words, one would be from her family, likely one of her adult children, and the other would be from her husband's family. This is a very common idea. I've seen it many times over the years and it's generally thought to be a sort of compromise.

I'd like to look a bit closer at this arrangement. In particular, I want to look at why someone might want to set things up this way.

If you asked someone why this might be a good idea for them, you would likely hear answers that have to do with making sure that everyone has a say, everyone is represented, and everyone has a way of making sure that things are fair. Nobody wants to feel that they are at the mercy of someone in the "other" family. Picking one person from one side without equal representation would make the other side unhappy.

Ok, that's the surface. But what's beneath all of this?

At the very core of the problem is the fact that the two sides don't trust each other. The people making the wills are expecting trouble between the two factions. They already know the two sides aren't going to get along. So how does it make sense to try to force people who don't trust each other to work together? This seems particularly problematic when the work that has to be done arises at a time when emotions are running high due to the loss of a loved one, and when old resentments surface.

It seems unfair to the two individuals who are chosen to captain their testamentary teams, and who will be exposed to immense pressure from their sides of the family. It also doesn't seem to be a particularly good idea for the estate, since joint executor decisions need to be made jointly, and that's going to be hard for the executors to do.

A better solution for a family in this situation is to find one neutral party to be the executor. Forget trying to bring two opposing camps together. The couple making the wills might choose one of their siblings, a close family friend or a trust company.

Can my spouse be my executor?

I'm often asked whether having your spouse act as the executor of your Will as well as being the beneficiary of your Will is a conflict. Just the fact that someone is your spouse is not a conflict. In fact, it's very common that husbands and wives appoint each other as their executors.

It works because the finances of the husband and wife are already intertwined, such as when they take out life insurance policies that name each other, or open RRSPs and designate each other as beneficiaries. In most cases, they leave their estates to each other. In addition, it is usually safe to say that they have similar plans when it comes to looking after their children once both of them are gone.

This is not to say that it can't get complicated. For example, where there is a trust set up for a spouse, it might not be ideal for that spouse to be the trustee in charge of deciding whether they want to pay money to themselves. A trust for a spouse might be set up if, for example, a man and woman get married, and it's a second marriage for one of them. Let's say it's the husband who is marrying for the second time. He sets up his Will so that his second spouse can live comfortably for the rest of her life, but when she passes away, the remainder of the estate goes to the man's children from the first marriage.

Maybe it wouldn't make sense for the second wife to be in charge of her own trust. Even if she were completely honest, there is always the appearance of conflict of interest that might cause the children of the first marriage to speculate about how much she is taking for herself and how much she is leaving for them.

Even this doesn't mean that the spouse can't be the executor. A man like the one in our example can say that his spouse is to be his executor, but if there is a trust set up for his spouse, it is to be managed by another trustee. We do this a lot in the trust company where I work. We either act alone as the trustee, or we handle it together with the wife. This doesn't mean that the man doesn't trust his wife. It just means that he is aware of the optics of the situation and wants to avoid problems with the children if possible.

When it comes to choosing an executor, I often advise clients to decide first what they want to have happen with their estates. Once they know what the job is going to involve, they can think about who is best suited to do it. The spouse may or may not be the best choice.

As with all legal issues, the question is not whether you can do something; it is whether you should do it.

How many executors should I have?

The executor named in your Will is the person who is going to take charge of all aspects of your legal and financial affairs after you have passed away. Your executor is going to have a lot of authority, so the choice of executor is crucial.

Some people like the idea of having more than one executor, which is an option. Sometimes this is because there is a lot of work to be done. For example, the owner of a large business might want to have someone familiar with his business to act together with someone from his family. The goal there is to share the workload and pool the skills and knowledge of the two executors.

Sometimes people want more than one executor because they hope the executors will keep an eye on each other and keep each other honest.

If there is more than one executor named, the co-executors must act jointly. Neither of them is the "lead" executor or "main" executor. Each has equal legal authority. If you are considering naming more than one person to act as your executor, give some thought to how well the two (or more) of them will get along. How difficult will it be for them to reach important decisions together?

From time to time I hear from clients who want to appoint all of their children together to be their executors. As a general rule, I'm not in favour of that because I don't think it's realistic. For one thing, if four or five people have to review and sign every document, everything is going to take longer. For another thing, the chances that four or five siblings will agree on the myriad of decisions that have to be made on an estate are next to nothing. People have different values, different expectations, different decision-making styles, and of course each of them has a spouse with an opinion as well. In my experience, this is asking too much of people, particularly at a time when emotions are close to the surface and everyone is dealing with the loss of a loved one.

Having three executors is relatively rare, but does happen particularly for business owners. In this case, be sure to consider putting in a clause that allows decisions to be made by majority vote rather than unanimity, to avoid deadlocks.

If you are appointing just one person as your executor, as most people do, you must also appoint an alternate executor. The alternate does not work with the executor. The alternate only comes into the picture if the first-named executor is unable or unwilling to take on the job. In older Wills, the alternate could only take over as executor if the first-named executor had died. In more modern Wills, the alternate can also be called upon to take over if the first-named executor has lost mental capacity or simply refuses to act as executor.

Often husbands and wives name each other as their executor but aren't sure who to appoint to act when both of them have passed away. A solution that is becoming more popular is naming a trust company to do the bulk of the work, together with one of the children.

Do not choose anyone to be your executor simply because you want to do them an honour. Being an executor is hard work. Generally executors don't enjoy it. Try to choose an executor based on who is best suited to do the work you need them to do. Consider geographical distance. Consider personalities and personal skills. And of course, you must consider trustworthiness.

Should my parents be my executors?

The answer to the question of whether your parents should be your executors will partly depend on your age and your parents' ages. If you're 25 and your parents are about 50, then appointing them as your executors could work for the immediate future. The problem is though, that if you don't look at your Will again for many years, then you might suddenly realize that the choice you made back then is no longer as suitable.

As a general rule, you should not have an executor who is much older than you are. An entire generation older is problematic.

With an executor who is getting up there in years, you run a couple of risks. In the natural course of events, you should expect someone much older than you to pass away before you do. If your executor is a generation older than you, he or she could pass away while administering your estate. If this happens, then your executor's executor becomes yours. This might not even be someone you know.

The other risk is that the executor might lose mental capacity while administering your estate. This could lead to losses and delays while someone else sorts things out.

Most parents will not refuse to be an executor when one of their children asks them, because they feel the child needs them to fill this important role. But in my view, the children should consider the heavy load carried by an executor and think about whether it's really fair to ask that of a parent who is getting on in years.

Clients have told me that they've appointed their parents because they really didn't have anyone else in their lives at the time that they trusted to deal with their assets. If this is the case, consider using a trust company.

Can I appoint my lawyer as my executor?

In Canada, you can appoint either an individual or a trust company as your executor. If the individual you choose is a lawyer, that's the same as appointing any other person. It means, however, that you can't appoint the law firm that the lawyer works for, just the lawyer himself or herself.

By the way, I should clear up one common misconception here. If your lawyer acts as your executor, your lawyer cannot charge your estate for executor work at the same rate he or she would charge for legal work. If your lawyer may charge $350 to work on your lawsuit or contract, but he or she cannot charge that for executor work. This is because you appointed an individual executor who just happens to be a lawyer. The lawyer will be limited to charging what any other executor could charge (in Alberta, that's 1% to 5% of the estate).

If your executor is a lawyer and he or she does legal work for the estate, such as applying for probate, then that work can be charged at full lawyer's rates, because your executor would have to pay a lawyer for that anyway.

In my years of private practice, before coming to my current job of in-house lawyer, I was asked many, many times to act as executor for clients. I almost always turned it down. In speaking with other lawyers about this, I understand that most lawyers will turn it down most of the time. Where your lawyer is a family member or close friend, that's different. However, I think that even if you do want to appoint your lawyer, you may not be able to get your lawyer to agree to it.

Most people will ask their lawyer to be their executor because they don't have anyone in the family or a close friend that they feel is appropriate. This often happens when people have immigrated from another country and don't have relatives in Canada. It also happens when people don't have children, or their children live far away, or perhaps don't get along. It can also happen when the clients want to set up lengthy or complicated trusts that they don't feel would be best managed by an inexperienced person.

Before you name your lawyer as your executor, think about this. If you name your lawyer as your executor, and your lawyer dies before your estate or your trusts are wound up, who is then in charge of your estate? The executor named in your lawyer's Will becomes your executor. Do you even know who that is? Your lawyer's husband/wife? One of the lawyer's children? Remember that you are appointing the individual person who happens to be a lawyer; you're not appointing the law firm.

The same idea applies when you appoint your accountant, your financial planner or your doctor, all of whom I hear proposed as possible executors from time to time.

If you don't have an appropriate family member, or you need specialized skills for your estate that you are not sure are available in your family, consider a trust company. Most people immediately think that using a trust company is terribly expensive, but in reality it's cheaper than you think. It's certainly worth a phone call to a trust company, or a conversation with your banker, to find out what it would cost you. And always remember to look at the value of what you're getting and not just the price of what you're getting.

What happens if my executor lives outside the province?

This is a very common question, given how families these days are spread out all over the country and perhaps even beyond. If you've appointed someone outside the province as your executor, you need to be aware of the rules about that. Although I am quoting Alberta legislation in this post, other provinces also have similar rules.

If the executor you've named in your Will lives outside of Alberta, the Surrogate Rules of Court which govern estate and probate matters say that before your executor may take control of your estate, he or she must post a bond. The bond is to be for the full amount of your estate. The point of the bond is to provide some assurance that the creditors and beneficiaries of the estate will be paid before the executor leaves the province.

So, if this is your situation, what can you do? There are solutions available.

A popular idea is to appoint co-executors, with one being your out-of-province executor and the other living in Alberta. This refers to two (or more) executors who must work jointly to administer your estate. As long as one of the executors lives in Alberta, you will not have to post a bond.

Another good idea is to appoint a trust company, which is resident in almost every province and territory in Canada. The trust company can act alone as your executor, or can be a co-executor with someone else.

If you've been putting off getting your Will made because you're stuck on the question of who to appoint as your executor, a better idea is to sit down with an estate-planning lawyer and ask for ideas. You just might hear something that works for you.

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.

Picking the Wrong Executor Can Ruin Your Estate

The following article was written by Norman M. Boone, CFP. Even though it has American content, it is still very applicable to us here in Canada, so I'm posting it here. Note: executor compensation in Alberta varies between 1% and 4% of an estate.

"Picking the Wrong Executor Can Ruin Your Estate
Norman M. Boone, CFP
Mosaic Financial Partners, Inc.

You need a will is basic estate-planning advice. Without a will, at your death your assets will be distributed according to state law, which may not reflect your wishes.One of a will’s important functions is to name your executor (known in some states as a “personal representative”), who will be responsible for administering your estate and carrying out the provisions of your will. Choosing the right executor can help ensure the prompt, accurate distribution of your possessions with a minimum of family friction. You’ll leave behind warm thoughts instead of hurt feelings. Picking the right executor is vital even if your estate is not large.

Example: Jane Smith might have little more than a house and a small bank account. At Jane’s death, though, her grown children are likely to fight over household possessions. Unless the executor is able to resolve disputes amicably, the heirs will end up resenting each other and may even incur legal fees to settle the issue of who gets what.

WHAT AN EXECUTOR DOES

• The executor’s tasks include...
  Paying all expenses of the estate, including debts, taxes, and funeral and burial costs from the estate.
• Distributing all bequests after expenses have been paid. This could include charitable donations and personal inheritances, as directed by your will.To these ends, the executor must handle a great deal of paperwork, including tax returns. He/she will have to file appropriate forms with the court overseeing probate (the process of carrying out the terms of your will).
  

DEPENDABLE, DETAIL-ORIENTED

As you can see from this job description, choosing an executor deserves careful consideration. What to look for: You’ll want an executor who will be able to deal with all estate beneficiaries in a way that will avoid disputes. What can go wrong...

• The executor may have to deal with discontented beneficiaries, especially if the division of assets in the estate isn’t equal.
• Relatives may fight over who gets possessions, from carving sets to love seats. In an extreme case I encountered, a decedent’s son took some items from his mother’s house. His brother was so upset that he called the FBI and reported that a thief had crossed state lines with stolen property.Your executor might have to put together agreements to resolve these disputes.You’ll also want someone who will work diligently and efficiently. If everything is done on time, unnecessary court delays may be avoided.

Bottom line: Ideally, your chosen executor will possess attention to detail. He will be well-served by having an ability to handle numbers, personal finance issues and complex situations. In addition to looking for someone familiar with financial matters, seek someone who knows your family well. Above all, you want someone you trust to make every reasonable effort to ensure that your wishes are followed.

NAME YOUR SPOUSE?

Among married couples, it is common for the spouses to name each other as executor.

Trap: Often, a survivor is too distraught after a spouse’s death to deal effectively with the details of managing an estate. Or the surviving spouse might lack experience handling financial matters.A surviving spouse might be too easily influenced by one member or one side of the family to the detriment of others who have a legitimate interest in your estate.

Strategy: Consider naming a trusted, levelheaded and fair-minded sibling or grown son or daughter as executor. A family friend is another possibility.

Alternative: Name a bank or trust company as estate executor. There will be costs involved (generally a small percentage of the estate -- fees vary by state), but they might be worth paying if no relative or family friend has the required financial expertise and diplomatic skills.One additional possibility is to name coexecutors. An individual or an institution could be named, along with your spouse, if you think that’s necessary to avoid hurting your spouse’s feelings.

QUESTIONS

Before naming an executor or coexecutor, ask yourself...

• Do I trust him to handle the financial affairs for my beneficiaries according to my wishes?
• Has he ever had financial problems of his own? If so, he may not be a good choice to fairly and accurately administer an estate.
• Would he get along with the beneficiaries, and how would he handle conflicts? An executor should listen to both sides and understand their points of view. If possessions are the issue, for example, the executor should work out some system in which heirs can take turns choosing.
• If I name coexecutors, can they work well together?
• Will your executor or coexecutors seek and accept advice from the estate’s attorney?
  

GET EXECUTOR’S CONSENT

Assuming that you choose an individual to serve as executor, make sure that you get his verbal consent to serve before naming him in your will.

Strategy: Name one or more backup executors in your will. A successor will be necessary if your original selection becomes unable or unwilling to serve.

Following up: Once you have made your choice, go over the necessary financial details with your executor -- your assets, how the titles to your real estate, securities, etc., are held, and where the paperwork, such as statements, deeds and insurance policies, can be found. Your executor should see your will, or at least know what’s in it. If your executor isn’t a family member, he should meet your heirs to get an idea of the personalities involved.Arrange a meeting with your tax preparer, too. Your executor will be responsible for filing income tax and perhaps estate tax returns after your death, so getting together with your tax pro may help speed that process.

Compensation: Executor fees are set by each state. For instance, in New Jersey, they range from 2% to 5%, depending on the size of the estate. In California, fees range from 1% to 4%. Usually family members serve for free (they decline the fee), and sometimes friends do as well. Check that any provisions in your will to compensate an executor conform to state law.

FUNERAL ARRANGEMENTS

Funeral arrangements are the responsibility of family members rather than your executor. Often, though, there is confusion among family members as to who will make the decisions.

Reality: Since the executor eventually will pay from your estate the bills for funeral and related costs, it makes sense to provide him with your funeral and disposition-of-the-body wishes.

Best: Let family members know your wishes in advance. Leave a letter or video explaining them.

Trap: Many people put this information in their wills, which then go into safe-deposit boxes, to which heirs will not have access without proper documentation. This means that family members could learn funeral wishes long after the funeral.

Strategy: If you have prepaid your funeral costs or purchased a cemetery plot, make sure that your executor has all the details. Then he can quickly find the relevant contracts or deeds.

GRACEFUL EXIT

After preparing your executor, prepare your heirs. Reveal your choice of executor to immediate family members and others mentioned in your will. The fewer surprises in your estate plan, the greater the chance that you’ll make a graceful exit and leave a peaceful family.

Bottom Line/Retirement interviewed Norman M. Boone, CFP, president, Mosaic Financial Partners, Inc., 140 Geary St., San Francisco 94108. Recently named by Barron’s as one of the top independent financial advisers in the US, he also has been cited as one of America’s “Top 100 Wealth Advisors” by Worth magazine. "

Conference in Fort Edmonton Park

Every summer I make at least one trip to Fort Edmonton Park to enjoy the sunshine and the history. I'll be there again tomorrow, but for a completely different reason. Right now there is a conference going on for all of the Managers of Customer Service for all of the Scotiabank branches north of Edmonton. I'll be there tomorrow morning to speak to the group about corporate executorship. What a wonderful location for a conference. Welcome to Edmonton everyone! Have a great three days in our beautiful city.