In the 25 years that I have been in the investment advice business, I have been involved in more than a few estate settlements. I have witnessed the work of many executors and more than once had executors say to me they wished they had never taken on the job. You do earn a fee, but is it worth it?

Let’s talk about why in most cases, you do not want to be the executor of someone’s estate.

In short: it’s not worth it

Elaine Blades of Scotia Private Client Group once noted that taking on the executor role is similar to renovating a home. Her point is that like any renovation, it is a tremendous amount of work and something is bound to go wrong—and, she is right. A lot can go wrong and often does.

I thought this was particularly insightful but I would add an extra observation – being an executor is equivalent to renovating a home that is not yours, and when things go wrong, you are held responsible. Furthermore, the final result is subject to public display and review by all of the beneficiaries including the Canada Revenue Agency (CRA).

Let me expand on that last point a bit. A probated will and all matters pertaining to it are posted to the various provincial government websites. For a fee of $10 to $25 anyone can go online and see what money and possessions the deceased had and what you, the executor, did with them.

Personally, I find this government policy somewhat revolting. To me, this is equivalent to paying money at the post office to have the right to read someone’s mail—and unfortunately, there isn’t much we can do about it. There is, however, a solution to this privacy issue, which I will discuss in another post. For now, let’s focus on the risks of being an executor.

Responsibility and risk (and little reward)

The bottom line is this: as an executor, you are personally responsible for all matters related to the estate. This is true despite clauses that are often included in wills that supposedly discharge the executor from any liabilities. It makes me wonder why those clauses are even there!

Here’s an example. As the ultimately responsible person, this includes securing alcohol and firearms in the deceased person’s home. If a teenager breaks into the home and gets drunk, you are liable; if they then shoot someone, you’re even more liable.

The responsibility also includes ensuring that there is proper insurance on the house. There was a case some years ago where the son, who was the executor, missed the fire insurance coverage and the house burnt down. The two sisters were willing to forgive but their husbands wanted to sue, and did.

Being an executor also includes the responsibility of paying taxes. Another case arose when there was an RRSP at a bank—the wife was the beneficiary and the executor was a close friend. The wife showed up at the bank with the will, the bank called the executor, and the executor gave permission for the RRSP to be passed over to the wife. She cashed it before it was transferred to her name. Because it was cashed, it should have been included in the deceased person’s final tax return and the resulting tax should have been paid by the estate. The executor missed this, and he ended up being personally responsible to pay the tax.

Being an executor is like taking on a second job

Those are just a few instances. Expand those examples to include bank and investment accounts, a condo in the US, other properties and businesses—then, throw in a second spouse, and various beneficiaries near and far. Talk about taking on a difficult job.

From sheer frustration, I have seen executors hire a lawyer to do all of the work. This is usually at an hourly rate and is one of the most expensive ways to settle an estate. The lawyer may do the work, but the executor still has the responsibility, and if one of the beneficiaries challenges because they believe the executor diminished the estate through unnecessary fees, the executor may be liable. Executors would have a hard time accepting a fee and passing on the work to a lawyer.

So, what are the alternatives? Let’s look at the renovations analogy again. You’d likely prefer to give the responsibility of a large scale renovation to an experienced and skilled general contractor. You should seriously consider the same criteria when appointing an executor. And, it’s something to bring up if asked to be an executor yourself.

Best practices for choosing an executor for your estate

My recommendation is to use a trust company as the executor. These people are often licensed, well trained and experienced. Of course, you will likely want to interview a few to find the best fit for you.

I was hesitant in the past to recommend trust companies because often they insisted on transferring the assets of the client’s estate into their own mutual funds. This placed the trust officers in a conflict of interest because fees were being earned on these funds and such fees factored into how the trust officer got paid. This meant that dragging out the settlement of the estate resulted in higher fees being generated. This was beneficial to the trust company and the trust officer but detrimental to the beneficiaries.

Thankfully, that practice has ended. You can now specify in your will who will manage your assets during the probate period and you can also negotiate the one-time, flat fee that will be charged. Such arrangements give the trust company an incentive to discharge their duties promptly.

We’re here to answer your questions

Our team is available to answer any questions you may have—just reach out to make the proper arrangements. In terms of executorships, we recommend talking with your current financial advisor about making such arrangements for your estate, and discuss the concept with anyone who has already named you as executor. Trust us—you and your family really don’t need the added work, responsibility or complications.