When someone you love names you as the executor of their estate, it can feel like an act of trust. Of course, you want to say yes. But before you do, it’s worth understanding what you’re getting into, estate planning experts say. These days, the role of executor has become more demanding than ever – physically, emotionally and even financially – and it deserves careful consideration before you agree.
What once might have been perceived a “temporary” administrative job can quickly become a long-term fiduciary commitment and a heightened personal risk for anyone accepting the role.
The executor is responsible for making sure every aspect of an estate is handled properly, says Kirk O’Brien, Director, Wealth & Tax Planning with BMO Private Wealth. Not only is it a high-pressure situation, considering the heightened emotions and family dynamics, but missteps can carry real consequences.
Here’s what you need to know to navigate the role of executor with confidence – the time, the tasks, the risks and the moments when handing things off to a professional may be one of the smartest decisions you can make.
The administrative checklist
From a practical perspective, the executor’s to-do list can be extensive. There are tax returns to file for both the deceased and the estate, potential liabilities to address and investments to manage and distribute. You may need to decide whether to hold or sell real estate in a down market, and whether to pass investments directly to beneficiaries or sell and convert them to cash.
Every asset, whether it’s real estate, a private business or another asset held outside of Canada, brings its own administrative, tax and legal requirements – often across multiple jurisdictions – and many of these continue long after the initial estate settlement.
Then there are the less obvious assets. Digital assets (like passwords, cryptocurrency, loyalty points and online accounts) and valuables like firearms add more layers of responsibility. These things need to be located and accounted for, says O’Brien. You also need to know whether you have to take out insurance to protect certain assets or, get appraisals.
Cross-border assets bring their own set of obligations. Take U.S. stocks, for example. If the deceased held more than $60,000 in U.S. equities personally, including in registered plans, the executor is required to file a U.S. estate tax return.
Understand the time commitment
Apart from understanding the tax and legal requirements, anyone taking on the role of executor should also consider how the time commitment may weigh on their own life and livelihoods. Even if you get help, there are some parts of the role you can’t delegate away, especially the emotional aspects, explains O’Brien. “It has a cost,” he says. “If you’re a professional or business owner, the time commitment can come at the expense of income.”
Due to the growing complexity of estates and the increasingly demanding tax requirements, it is prudent to plan for a longer timeline than many people initially expect. Executors often have to navigate multiple tax authorities simultaneously, manage cross-border issues arising from differing interpretations of tax and legal concepts, and wait for foreign clearances before distributions can safely be made, says Tony Yu, Vice-President & Regional Director, Trust, Western Canada at BMO Private Wealth.
“It is not uncommon for estates of this nature to take several years to fully settle, requiring sustained attention to detail and prudency long after the initial flurry of estate administrative work has been completed,” says Yu.
The time commitment can be even longer if there are private companies or private investments in the estate. “Executors must review shareholder or partnership agreements, understand restrictions on transfers, coordinate formal valuations and, in some cases, make operational decisions that will expose the executors to higher personal liability,” he says. “Unlike public investments, these assets are often illiquid, making it difficult to fund tax liabilities on time.”
The time commitment required of an executor can be extended for years or even decades if that same individual has also been named as a trustee.
This can involve ongoing investment oversight, annual trust tax filings, making discretionary decisions and communicating with beneficiaries. Yu explains that a professional trust company can help manage these ongoing trust obligations, ensuring that discretionary decisions are made appropriately while balancing the short- and long-term impacts on both the trust and its beneficiaries.
Personal risks of being an executor
Mistakes in administering an estate can introduce risks for both executors and beneficiaries. “Valuations are frequently scrutinized by tax authorities, and disagreements among beneficiaries can arise when distributions are delayed or outcomes differ from expectations,” says Yu.
But the consequences of a misstep do not stay with the estate – they could mean the executor has to cover any losses out of their own pocket. If assets are distributed before all tax obligations are settled or if records are incomplete, the executor, not the estate, may be personally responsible for tax liabilities, explains Yu.
Tax reassessments, legal challenges and allegations of breaching fiduciary responsibility can arise after estate distributions are made. Keeping detailed records and seeking professional guidance are not just best practices, but essential risk management considerations.
The human side of the job
The executor’s role is often more personal than any checklist suggests – a reality that catches many off guard.
“People look at the list and they go, ‘I can do that. I’ll get somebody to help me do that,’” says O’Brien. “It’s a lot different when you walk into mom’s or dad’s house and there are boxes of paper, and you don’t know what’s in those boxes. Are there tax returns? Are there stock certificates from 20 years ago?”
Grief has a way of intensifying the emotional strain. In O’Brien’s experience, some of the most charged decisions have nothing to do with money. “The family cottage, the family home – people are emotionally invested in these heirlooms,” he says. “I remember spending three hours in a living room with family members over household and personal effects.”
Those emotions can have significant consequences, both personal and legal. Canadians are becoming increasingly willing to challenge estates in court.
When to bring in the professionals
One of the most important things an executor can do is recognize that they do not have to manage everything alone, according to O’Brien.
Lawyers, accountants and trust companies play a meaningful role in estate administration. A company can be engaged as an agent, taking on administrative and technical work while the executor retains overall responsibility. A professional co-executor can be appointed, with each party handling what they do best – the trust company managing the legal, tax and financial work, while the family member stays involved in the personal and relational side.
That kind of arrangement can ease the burden. Professional executors do this work every day, with the resources, expertise and experience to handle the most demanding estates.
For those who have already been named executor, they should think carefully before taking any significant action.
If the scope of it gives you serious pause, speak with a lawyer about your options, including the possibility of renouncing before you begin.
Just because someone asks you to be an executor doesn’t mean you have to take the role. “If you’re asked to be an executor, I don’t think you just say yes,” says O’Brien. “You have to do your due diligence and ask if you can review the draft Will and list of assets and liabilities to see what the actual responsibility and work you might be accepting.”
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