Five reasons to choose a corporate executor

Itemizing your assets and debts, choosing beneficiaries and getting your financial house in order can take untold hours of careful thought and calculation.

But despite all the work and consideration people put into creating an estate plan, there’s one element that often doesn’t get the attention it deserves: choosing an executor.

Many people who think managing a Will or trust is a straightforward task often select their oldest child or a close friend to oversee the implementation of their last wishes. But few appreciate that the timely and proper execution of a trust or Will is potentially the most challenging part of the estate administration process.

Did you know there are more than 70 individual tasks—including the probate application process and completing tax returns—required to settle an estate?

This is especially true for high-net-worth individuals (HNWIs), whose estates often contain a complex array of assets, property and investments that can overwhelm an untrained individual executor—i.e., the person who carries out the terms of your Will.

What to evaluate when choosing an executor

Being asked to serve as executor can be considered a great honor and privilege—but it can also feel like a weighty burden for someone unprepared or ill-suited to the task.

For this reason, choosing a professional, such as a corporate executor, can be a smart decision.

Here are five things to consider when deciding whether hiring a professional is right for you and your loved ones.

1. Expertise

Ensuring an estate plan runs smoothly is an incredibly complex and multifaceted process that relies on a wide spectrum of legal, financial and sometimes social skills.

Does your chosen executor have the expertise to successfully carry out your plans? Do they have the time to dedicate to this matter? Are they prepared to reach out to beneficiaries regularly and make final decisions, to the point of saying “no” at times?

They may also have to handle disputes between inheritors. Dispute resolution is an important skill set for this process.

2. Complex family dynamics

Acting as an executor can propel someone into an emotionally fraught environment. This can be particularly true when parents choose a child to preside over the inheritance of other family members—including siblings.

Since it’s not just the legal and fiscal complexities of an estate that need to be taken into account, having a professional appointed executor can help mitigate any concerns of impartiality which can go a long way toward helping diffuse emotional and heated family dynamics.

3. Liability

It’s important to understand that asking a friend or loved one to take on the role of executor means asking them to potentially take on legal responsibilities.

Though many people may grasp the intellectual and emotional challenges estate administration entails, few appreciate the legal accountability trustees and executors assume.

Not everyone realizes that as an individual executor, you’re 100 percent liable. This means you could personally be sued if something goes wrong. Your personal assets could be at risk—not just the assets of the deceased.

4. Time and location

Being an executor is also extremely time consuming—and it can be even more demanding if proximity is an issue.

Managing an estate for a HNWI can place huge and possibly unfair demands on a person’s time. Matters can be particularly complicated for the chosen executor if they live in another province or, worse, another country adding potential tax consequences. Distance and competing time zones, coupled with the legal complexities of another country, can make communication a real challenge and prolong the administration of the estate.

5. Agent for executor

For those who want a family member or loved one to have a key role in administering their estate, hiring a professional to assist them, known as an “agent for executor,” can be beneficial.

A family member or friend can act as trustee or executor but work alongside a corporate executor who can guide them on issues such as taxes and real estate as well as assist with financial decisions while they maintain their decision-making authority.

If an adult child is named the executor, they may feel a sense of obligation to stay in the role, but it’s important to recognize that they may be busy with a career and responsibilities of their own.

Identifying your executor

Given the various considerations and complexities involved with selecting an executor, it’s important to consult with professionals who can help evaluate your situation. Doing so will make things simpler for your beneficiaries while ensuring that your family legacy remains intact.

Once you’ve made a decision, be sure to share the name of your chosen executor with your advisor, so they know whom to contact when the time comes.