Excerpts from the Book – Preserving Wealth – written by Jack Lumsden, MBA, CFP®
A common question I received as an advisor is whom should we name as executor in our Wills?
The true answer is that it depends on your situation. It usually ends up based on how complicated your estate may be, the projected value and who in your immediate family may be able to do the job.
The following excerpt from the Book – Preserving Wealth, provides a starting point for this discussion.
“Wow, maybe I’ve been too tough on the government. But who would you suggest I name as executor? I don’t have a wife anymore, and my kids are just in their early twenties and not particularly knowledgeable about finances. I guess Mom knows a lot about money, but she’s getting older, and she probably wouldn’t want the job.”
Uncle Wayne replied that there are several ways to go, but that the most common choices for executor include:
- spouse
- children, if capable
- friend or business associates
- trust company.
“What are the pros and cons of each?” Sally wondered.
“If you’re married and your estate is fairly straightforward, then naming your spouse is usually the easiest and cheapest route, provided he or she is up to the job.”
“If one of your children are old enough, and capable, then that could also be a good choice, but you have to be aware that it could create problems. Sometimes children who act as executors become very controlling regarding money that’s been left by one parent to the other, especially when it eventually will go to the kids. Also, family rivalries can crop up when one child has control over an asset that is owned by the entire family, such as a cottage.
“As an alternative, you can name a friend or business associate as your executor, as long as there’s no conflict of interest over any of the estate assets.
“Trust companies are always an option too. They’re certainly very knowledgeable where it comes to their duties and responsibility as an executor. They’ll have all the contacts and processes in place to handle the estate, and they’re completely independent, which some people will want. An added feature is that since they’re an institution, you don’t have to worry about your executor passing away before you do. However, they will almost certainly charge the maximum fees allowed by law for their work in settling the estate.”
“Are executor’s fees high enough to really matter?” Mark asked.
“It depends on the size of the estate,” replied Uncle Wayne. “They can be up to 5% of the assets passing through the will, and then there may also be ongoing costs if the inheritance is not distributed to the beneficiaries right away. In a later session, we’ll review more about this, but assets that have a named beneficiary, such as life insurance, RRSPs/RRIFs, and TFSAs, do not pass through the will, and the same goes for joint assets.”
“Okay,” Alice said. “Going back to Mark’s situation … how about a compromise? Would it make sense for him to name his kids as co-executors along with one of his own friends or business colleagues who know more about financial matters?”
“I like it,” Mark said. “As much as I hate to admit it, you’re getting pretty good at this stuff.”
For more information you can refer to Preserving Wealth: The Next Generation – The definitive guide to protecting, investing, and transferring wealth by Jack Lumsden, MBA, CFP®
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Jack Lumsden, MBA CFP® Financial Advisor, Assante Financial Management Ltd.
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The information provided is for illustrative purposes only. Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing. Insurance products are services provided through Assante Estate and Insurance Services Inc
