Planning for executor success

The job of executor is one that few people aspire to, and with which few non-professionals have experience, says Wayne Townsend, a principal with Lawton Partners Financial Planning Services.

If you choose poorly when naming an executor for your estate, problems can arise—disagreements, misunderstandings, avoidance—that delay your estate’s administration.

And what happens if the named executor doesn’t know about the nomination or refuses to take up the task?

In most cases, advisors say, the person will fulfill his or her duty.

Yet if a surprised executor backs out, and the will names no alternate, beneficiaries face a dilemma: the estate will remain frozen—bills won’t be paid and investment decisions will be deferred—until the family can agree on appointing a new executor (i.e., a lawyer, accountant or trust company).

What can you do to prevent problems with executors?

1) Name an outsider as executor

Many estate planners watch siblings declare war on one another once they get down to the grim business of dividing the spoils. Prevent problems by naming someone outside the family as executor.

2) Name an odd number of executors

“Add another, independent executor to cast a tie-breaking vote if needed,” suggests Townsend.

But if you know your three children don’t get along, don’t name them as joint executors.

David Wm. Brown, an estate and insurance specialist, points out your will can specify that a certain member of the family must be part of a majority in order to break a tie—useful if you’re concerned about one executor being excluded by the others.

3) Speak with potential executors beforehand

Inform proposed executors upfront and ensure they’re willing to take on the responsibility. Initially, experts say, some people consider the request a duty or an honour.

But Marie Richardson, a financial planner and investment advisor in Kingston, Ont., notes that some “step back once they find out what’s involved,” especially if there’s family conflict.

What if an executor declines?

Typically, well-drafted wills name alternates, but executors do pull out. Sometimes, says Vancouver estate lawyer Gordon MacRae, the executor’s circumstances shift, and the executor wants out because of poor health, living abroad or financial troubles. In such cases, the estate may select a named alternate or hire professional executors with trust companies or law firms.

Under B.C. law, MacRae adds, an executor can renounce the duty, but only before divvying up the estate—paying debts or selling assets and acting as the executor.

Once you start, he says, “it is not possible to renounce.” In such cases, the beneficiaries or lawyers for the estate must go to probate court and seek an order to replace the executor.

Is your communication clear?

The best means of anticipating and ultimately defusing disputes involving executors is clear and upfront communication. “Sharing information can really de-escalate things,” says Richardson.

And, as both Townsend and Brown observe, downstream conflicts tend to arise when you fail to do the prep work and hammer out a proper estate plan—including choosing an executor team capable of doing the work.

“The executor is really just the voice of that document [the will], which reflects the wishes of the deceased,” observes Brown.

“You always have that document to fall back on.”