Selecting your Personal Representative (executor)
“Executor” is used informally to describe the person who carries out or fulfills the wishes of the Will-maker as outlined in the Will. The feminine form of the word “Executor” is “Executrix”. The term “Executrix” is nearly obsolete, but it is still found in Wills that were drafted prior to 2012. In 2012, Alberta lawmakers combined the various pieces of Wills and Estates legislation into two comprehensive acts: The Wills and Succession Act and the Estate Administration Act. Each new Act replaces the terms “Executor” and “Executrix” with the term “Personal Representative.” The Personal Representative fulfills the same duties, has the same responsibilities and is the same person as the individual formerly described as an “Executor” or “Executrix”.
does it matter who you choose?
Executor or personal representative considerations may not be top of mind for most people when they are drafting their wills and estate plans. It is understandable when many are not aware of what is expected of a personal representative, and even fewer have the practical experience acting in the role. Whether you are selecting a personal representative or have been named a personal representative, if you are not aware of what is required, you may be at risk of costly errors, unfulfilled intentions and avoidable liabilities. It is always recommended to get qualified legal advice for your situation.
Before selecting a personal representative, it is vital to understand what one does. At a very high level, a personal representative is responsible for administering the entire estate of an individual. In general terms, duties include, but are not limited to:
Before selecting a personal representative, it is vital to understand what one does. At a very high level, a personal representative is responsible for administering the entire estate of an individual. In general terms, duties include, but are not limited to:
- Arranging the funeral.
- Obtaining all the required documents, waivers, court approval for administering the estate, including probating the will through the courts when required.
- Dealing with all the assets (tangible/digital/financial/and more), insurance, property, household and investments of the individual.
- Dealing with all the liabilities and contingent liabilities of the individual and/or estate.
- Dealing with all the income, costs and expenses related to administering the estate of the individual.
- Keeping detailed records and accounting.
- Hiring and overseeing necessary professionals and service providers. This might include appraisals, tax preparation, real estate, financial/tax/legal advice and more.
- Dealing with all the tax, legal and regulatory filings and requirements related to the income, assets, interests of the individual and/or their estate as well as the authority to administer the estate.
- Dealing with all the parties involved. This could include notification of death to providing documentation, terminating services/contracts, responding to and settling claims and fulfilling the terms and required strategies of the will.
- Dealing with the beneficiaries of the estate for communication requirements, reporting requirements and distribution of the estate.
With these responsibilities, there is potential for things to go wrong, and a personal representative can be held personally liable.
Some common personal representative errors include:
Some common personal representative errors include:
- Keeping poor records.
- Acting without the authority of a will or the authority of the court.
- Improperly liquidating or distributing assets (especially prior to obtaining CRA clearance).
- Acting with a conflict of interest.
- Failing to advertise for/inform required parties such as creditors, CRA, beneficiaries, and others.
- Co-mingling estate asset/liabilities.
- Improperly protecting, managing, maintaining or transacting estate property.
- Failing to file required tax, legal or other documents.
- Failing to meet certain deadlines for required financial, legal, regulatory or tax matters.
- Failing to account to beneficiaries and obtain the required legal releases.
Selecting a personal representative
There are far more important considerations when selecting a personal representative:
- Is the personal representative in the same jurisdiction as the estate? There are added complexities with an out-of-province personal representative.
- Age is a factor. Is the personal representative likely to outlive the testator (the individual who makes the will)? Named personal representatives can be too old or too young for the role.
- Does the personal representative understand and have the ability to fulfill their fiduciary duty in a trustworthy manner? Proficiency and attributes of a personal representative affect how they do the job.
- Is the personal representative experienced and knowledgeable with all the financial matters applicable to administering the estate? Is the personal representative prepared for the correct order of administration and distribution of the estate?
- Does the personal representative have the required time to administer the estate?
- Is the personal representative not only a good communicator but also a good record-keeper, good with details and able to manage multiple relationships with interested parties, including all the beneficiaries?
- Is the personal representative well-prepared by the testator to fulfill the intentions of the testator and administer the estate accordingly, in all its complexities, and has payment for services been discussed?
- Is the personal representative comfortable with and prepared for the personal liability involved?
professional personal representatives
Alternatively, there are professional (corporate) personal representatives with the knowledge and experience to administer an estate of all levels of complexity. These services are typically provided by trust companies, some accountants or lawyers. A reputable professional personal representative can administer even large and complex estates, providing professional and thoughtful administration of estates and testamentary trusts. In the event a family member or close friend is a preferred personal representative due to their understanding of the testator’s intentions and sensitivity to family dynamics, a knowledgeable and experienced professional can be hired to provide personal representative support, ensuring that the personal representative is not alone in managing the many responsibilities of the role.
EXECUTOR EXPENSES
The personal representative(s) are allowed to be reimbursed for any out-of-pocket expenses incurred, such as travel expenses, as long as they are considered reasonable. Receipts for these expenses are not normally required, but it is good practice for the personal representative to keep receipts in the event of a dispute. Note: Any fees received by an personal representative, other than reimbursement of expenses, are treated as income and therefore subject to income tax. GST does not have to be added to the compensation unless the personal representative's work is carried out as part of the personal representative's commercial activity.
personal representative Fees
It is important to recognize that fees may or may not apply depending on each situation, the legislation involved and the person(s) or entities contracted. Personal representatives are allowed to charge the estate reasonable personal representative fees for the time spent fulfilling their duties. Be sure to clarify expectations with your personal representative by outlining fees in your will and discuss your expectations with them in person when writing your will.
More information
Resources from the 2022 Servus Credit Union Wealth Management Series:
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