Choice of executor
The executor is the person chosen by the testator to administer their estate in accordance with the will.
The executor also has authority to handle funeral and burial arrangements.
The Courts generally defer to the testator’s choice of executor, but, are not obliged to.
In Ontario, when an estate is probated the Courts appoint an estate trustee, who is the person with ultimate authority to administer the estate. The executor is the presumptive estate trustee, and has the first right to apply for appointment, but the Courts retain discretion to pass over the executor if they are unable or unsuitable.
Choose carefully: being an executor is a job not a favour
Being an executor is a demanding job that requires skill, integrity and judgment. It is not easy, or quick, or just a favour.
Choosing an executor is not about choosing who is nicest or closest to you.
At the best of times being an executor requires a lot of paperwork and handling forms and money. The executors need to collect assets (eg. clean out your house and arrange to have it sold), invest funds prudently, hire and instruct professionals like lawyers and accountants, open and close bank accounts, and complete and file probate forms and tax returns. The executor needs to send and receive considerable correspondence, get advice, make decisions, and keep detailed accounting records throughout. The executors need to be detail-oriented, prudent, but decisive, and able to carry on the task for months and perhaps several years. Make sure that you choose someone who has the right skills and aptitude.
Where does the executor live?
Your executor does not have to be a resident of Ontario, but it makes life easier if they are. Subject to occasional practical issues dealing with assets like houses and personal possessions, there is no impediment to appointing an executor resident in Canada outside Ontario.
Beware of executors outside Canada
Difficulty arises when the executors do not live in Canada.
- If the executor does not live in the Commonwealth, probate will be more difficult. The executor will be required to either post a bond, or secure a court order dispensing with a bond. Bonds are difficult and expensive to obtain. Court orders to dispense are not readily granted. The Court may even refuse your chosen executors, and instead appoint someone in accordance with the default provisions of the Succession Law Reform Act. This problem can sometimes be minimized if there is an executor’s resident in Canada in addition to the non-resident executor.
- If the majority of the executors (or the sole executors if there is only one) live outside Canada, then CRA may argue that the trusts established by the will are non-resident in Canada and impose significant Canadian income taxes on the estate that would not be imposed on a normal Canadian estate.
- If an executor lives in the United States, the IRS may impose US taxes as a result.
Being an executor is a demanding job. Executors are commonly compensated (in rough terms 5% of the value of the estate).
Avoid conflicts of interest
It is very important not to choose an executor who will automatically be in a conflict of interest. This is guaranteed to create distrust and often creates acrimony and disputes. These disputes can destroy families!
For instance, if one of your children lives in your home with you, and the others do not, generally it is a bad idea to choose the live-in child as the sole executors of your estate because they will have a large conflict of interest related to dealing with the house.
Wills can last a long time. Someone who was a perfectly suitable executor at one time, may no longer be able or willing to act many years later. You should name at least one alternate executor.
Consider using a professional
Unless you have a relative or friend who happens to enjoy filing legal forms and doing taxes and accounting, we strongly recommend that you consider appointing an independent professional who is not a beneficiary of the estate to be the executors. Often, this will get the job done ‘better, faster’ and without the risk of poisoning family relationships. In addition, many professionals, especially trust companies, will have made arrangements to have someone ready, willing and able to fill the role when the time comes.
Trust Companies are the only corporations that can assume trust obligations. Trust Companies have ‘infinite life’. All other executors must be a specific named individual and have finite lives. When naming a professional (lawyer, accountant etc.) as an executor you should consider the fact that they may no longer be practicing and may not be willing or able to fill the role when the time comes. Again, it is recommended to name alternate executors.