As the youngest of the Baby Boomer generation nears their 60s, the effects of an aging population are being felt¹ everywhere – from consumer spending to public health care and the labour market. It has also meant a surge in estate planning. RBC Wealth Management reports that $150 billion is set to change hands by 2026². As the great wealth transfer³ rolls out, many people will find themselves tasked with the role of executor.
Although most people know what a will is, fewer people are aware of what being an executor entails. If your loved ones are exploring their options, or you’ve been appointed to the role already, it’s critical you understand what to expect, how to prepare and ensure you’re ready to fulfill your obligations to achieve the outcomes your loved ones envisioned for their legacy.
Understanding the vast responsibilities of the executor
Choosing an executor is one of the most important decisions for someone who is making end-of-life arrangements. And it’s also a serious undertaking for the person selected for the job.
Different from a power of attorney⁴, who is authorized to represent someone should they become incapacitated, an executor is the person designated in the will to carry out the instructions and wishes of the person who has passed away. Although the executor is usually a person, it can also be an entity like a trust company, says Sue-May Talbot, a Portfolio Manager and Partner at Genus Capital Management.
“The executor’s responsibilities are vast,” says Talbot. “But the main job is to oversee the deceased person’s estate, primarily managing the assets, such as distributing them to the beneficiaries as outlined in the will and paying off any debts.”
Executors may have to exercise a wide range of skills including financial and legal considerations, making funeral plans and even mediating conflicts among beneficiaries. On top of all that, the executor may also be dealing with their own grief. While it’s an honour to be asked to administer someone’s final wishes, it isn’t mandatory, and Talbot says there’s no shame in declining the role before being appointed.
“Being named an executor is obviously a huge responsibility and a lot to take on during a time of emotional stress,” says Talbot. “Fully understanding what is involved in the role before accepting is a must. It’s better to have someone prepared to take on the challenges of this role rather than someone who feels obligated to say yes without fully realizing their commitment.
Communication and preparation: the keys to success
Although executing a will can be challenging and time consuming, there are things you can do to make the process more manageable.
Once you’ve agreed to help your loved one handle their final affairs, it’s important to keep the lines of communication open. The deeper your understanding of their wishes and the intention behind them, the better equipped you’ll be to ensure everything is handled appropriately – from health directives to distribution of assets.
Talbot recommends meeting with the person who has appointed you and having an in-depth conversation. “Gather as much information from them as possible,” she says.
You’ll need documentation like the will and death certificate, but you’ll also need a list of assets and liabilities, relevant financial statements, insurance policies⁵, beneficiary designations and tax records. Legal documents like powers of attorney, health care directives or contracts may also be required, and it’s important to make plans for gathering digital assets like photographs, reward points and digital currencies.
It’s a lot to keep track of, so encourage your loved one to assemble an estate binder⁶ containing copies of important documents and a list of things like bank accounts, investments and passwords. If they don’t have one, work together to ensure you’ll have what you need in their absence. This includes names and contact information for their professional advisors – accountants, lawyers, financial advisors – and their beneficiaries.
With or without an estate binder, it’s a good idea to create a to-do-list that guides you through who to contact and which tasks to complete. “It will be a very emotional time when you’re grieving the loss of a loved one, and the role of an executor is overwhelming at best,” says Talbot. “Having a prepared list will make things much easier when the time comes.”
Navigating the wealth transition process
Of course you’ll want to honour your loved one’s legacy⁷ by ensuring their values and desires are reflected in how their life is celebrated and their assets are distributed. That doesn’t mean you need to be an expert in wealth management, however.
While Talbot says a basic understanding of financial matters is helpful in ensuring the assets are properly managed during the estate settlement, you won’t be on your own. “Executors can seek professional advice from lawyers, accountants, financial advisors or planners who can provide guidance and answer any questions,” says Talbot.
But ultimately, early preparation and communication is the best course of action. Genus offers guidance in preparing an overall estate plan. With the help of certified financial planners, lawyers and accountants, you and your loved ones can be sure no stone is left unturned and no scenario goes unanticipated.
Because emotions can run high when it comes to wealth planning, Genus also advocates for transparent, honest meetings not just between the executor and the person who’s doing the wealth planning, but with other family members to discuss family values and goals⁸.
“This ensures that everyone is informed and reduces any misunderstandings or unrealistic expectations,” says Talbot. “It’s best to strive for no surprises and manage expectations so that everyone has a clear understanding of the loved one’s wishes – this will give beneficiaries the opportunity to speak up if they are dissatisfied with any of the choices and cut off any bad feelings at the pass.”
An executor’s job isn’t easy, but by understanding what the role entails, what the expectations are and how to mitigate the most common mistakes, you’ll be adept at handling whatever comes your way.
Looking for guidance with your estate planning and wealth management? Contact a Genus advisor today.
References
- The greying of Canada’s population (no date) TD Economics – Canada. Available at: https://economics.td.com/ca-demographics (Accessed: 29 September 2023).
- McGill, T. (2020a) The great wealth transfer – billions to change hands by 2026, St. Louis Private Wealth. Available at: https://ca.rbcwealthmanagement.com/devin.stlouis/blog/2560368-The-Great-Wealth-Transfer–Billions-To-Change-Hands-By-2026 (Accessed: 25 October 2023).
- (2023) How the Great Wealth Transfer Will Power Impact Investing, Genus. Available at: https://genuscap.com/how-the-great-wealth-transfer-will-power-impact-investing/ (Accessed: 29 September 2023).
- (2023b) Watch on demand – you’ve been named power of attorney – now what?, Genus. Available at: https://genuscap.com/watch-on-demand-youve-been-named-poa-now-what/ (Accessed: 29 September 2023).
- (2023) Why insurance should be part of your investment portfolio, Genus. Available at: https://genuscap.com/why-insurance-should-be-part-of-your-investment-portfolio/ (Accessed: 29 September 2023).
- (2023) How to make your will and estate planning easier on your family, Genus. Available at: https://genuscap.com/how-to-make-your-will-and-estate-planning-easier-on-your-family/ (Accessed: 29 September 2023).
- (2022) A modern approach to building a financial legacy, Genus. Available at: https://genuscap.com/a-modern-approach-to-building-a-financial-legacy/ (Accessed: 29 September 2023).
- (2021) How to preserve your legacy of family wealth by redefining what wealth means to you, Genus. Available at: https://genuscap.com/how-to-preserve-your-legacy-of-family-wealth-by-redefining-what-wealth-means-to-you/ (Accessed: 29 September 2023).
