It took seven years, 10 court appearances, and $50,000 in lawyer fees to settle the estate of David Edey’s parents. Everything he learned has been packed into a book he wrote called Executor Help: How to Settle an Estate Pick an Executor and Avoid Family Fights.
With our aging population, an increasing number of people are turning their attention to the question of who will administer their estate after they die. What should you look for in an executor, and what should you expect if you agree to serve as an executor? Let’s consult Mr. Edey, a Certified Executor Advisor (CEA) and a 35-year veteran of the financial planning industry:
Q: I’m executor or co-executor in the wills of a few family members. What am I in for?
A: Short answer: Trouble. Most people have no idea what the job entails and the amount of time it will take to settle the estate. It takes about 100 hours or more and 12-18 months to get the estate settled. However, due to COVID-19, it may take longer. You must also deal with beneficiaries who will not think twice to want to sue you. It is a thankless job. The three goals: One, file the right kind of tax return. Two, distribute to the beneficiaries. Three, close the estate.
Q: What are some tips to help me be an efficient executor?
A: You can’t do the job alone, you must have a team of professionals. You must start with: An accountant, to make sure you file the right tax return and you pay the right amount of taxes; a lawyer, who you may need to deal with unco-operative beneficiaries; and, a financial advisor to help manage the assets until they can be distributed. Also, a real estate agent to help sell a property. You also have to stay in constant communication with beneficiaries. Leaving them out of the process can lead to needless tension, conflict, and sometimes legal action
Q: What should people look for when deciding on an executor?
A: Here are some questions to ask yourself if this person would make a good executor: Are they honest? Do they have a lot of patience? Are they well organized? Do they pay attention to details? Can they get along with other people? Do they have time to spare?
Are they willing to take time off from work during the day?
Q: Are executors compensated for their time in any way?
A: The various provincial and territorial Trustee Acts across Canada stipulate that a trustee is entitled to such fair and reasonable financial allowance. There is no fixed rate of compensation applicable under all circumstances for the services of trustees. Canada Revenue Agency regards compensation received by an executor to be taxable income.
Q: When someone asks you to be an executor, is there a polite way to say no?
A: You could say that you are honoured to be asked, but you do not have the time it would take to settle the estate and you do not want to have to deal with the family dynamics.
Q: There are a lot of solo seniors out there who don’t have a close family member or friend who can be an executor? What do you recommend for them?
A: If you cannot find anyone, then look into using a corporate executor through a bank or trust company. I know it is hard, but you need to find someone or you will end up with a court-appointed individual.
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Rob’s personal finance reading list
Houses sold sight unseen
My wife and I have bought four properties in our 30 years together and we probably looked at each of them at least two times. But in today’s housing market, people are buying houses they’ve seen online only.
Real estate ad for $2-million home says “The property is livable”
This update on Toronto’s expensive real estate market includes a look at a humble two-bedroom bungalow on sale for $1,999,988.
Products for people who are cold all the time
Some fluffy BuzzFeed content here, but let’s get real. We all know people are cold all the time in the winter. Plus, natural gas prices are rising, and so will your winter heating costs.
How to handle an inheritance
Advice from the Blunt Bean Counter on taxes and other matters related to receiving an inheritance.
Today’s financial tool
The Ontario Securities Commission’s GetSmarterAboutMoney.ca is answering investor questions. The hook – the answers are clear an unbiased. And, here’s some education material from GetSmarterAbout Money on compound interest, a foundational principal of successful investing.
The money-free zone
Some of the most iconic book covers in history. The Great Gatsby cover takes me right back to high school.
Listen to this
The Globe and Mail’s City Space podcast looks whether there’s a future for the middle class in urban housing markets. I’m one of the guests interviewed.
Who I’m following on Twitter
Sparx Trading – news for online investors about deals and brokerage industry developments.
ICYMI
What I’ve been writing about
- The debate over buying a home versus renting is done – renting lost and it was never close
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- Add Microsoft, Disney, Visa and Facebook to the list of U.S. stocks available to Canadians in a low-cost version
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances? • Can you afford to live downtown? • The cost of kids
- ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
- 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
- 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob Carrick