The burden

Poor Mark. His dad died. Sad but inevitable.

Not inevitable, however, was the bad decision the old guy made – to name both M and his bro (who lives in the UK) as co-executors of his estate.

“I’ve read your posts warning people not to burden their children by making them executors, and particularly your view that naming two children can be even worse,” Mark admits. “I’ve discovered that my sibling and I are exactly those two executors. Sadly, they didn’t act on my request – based on your sound advice- to not name me as an executor.

“So I’m now living the problem you described. I didn’t choose the role, but having been put in it, I’m trying to work out the best way to get most of the burden off our shoulders without renouncing. My instinct is to remain executor but hand as much of the actual administration as possible to a professional estate service, lawyer, trust company, or similar.

“Is that effectively the best escape hatch once the mistake has already been made? Complicating the matter is the fact there are two countries with assets (Canada and the UK), plus the sibling executor is also in the UK. I’m terrified.”

First, why not name your kid to look after things when you croak?

Because chances are (a) they know diddly about winding up an estate, paying beneficiaries, preparing terminal tax returns, dealing with registered accounts and portfolio assets, record-keeping, repaying social and pension benefits, probate or the big liability an executor faces, (b) they’re busy living their own lives, with career, marriage and kids or (c) they’re an emotionally crippled basket case after the death and in no shape to dispassionately handle matters. Why would you want to burden them?

Making things w-a-y worse is to name more than one person as executor. Maybe you think having your two sons and a daughter handling your final wishes is a cool and equal thing to do, but it’s folly. In that case all executors must agree on all decisions made. Each of them is legally liable for all determinations and actions. For example, the CRA can come back for example, for an error one person made. That liability can extend for years.

For most people estates are complicated. If the child-executor is not an accountant or lawyer by training, it’s almost a certainty errors will be made unless outside help is sought. You need an accountant. You need a lawyer. Having a supportive golden retriever is also recommended. And it takes a lot of time. Months. A year. Or more.

So, again, why would anyone ask their kid – who may be a salesguy, a carpenter, a teacher, a server or the CEO of a metal fabricator – to do this job? Because you’re cheap and don’t wish to pay fees for estate management? May we remind you that, ah, you’re dead? Who cares what it costs?

Well, Mark, it’s good you’re terrified. There are two things to do.

First, get your brother on board wth the idea of handing off most of the estate stuff. Second, contact a trust company, or the trust division of your bank, and hand this thing over for professional management. You and bro remain executors in name, as dad wanted, but the day-to-day meticulous and complicated tasks involved are assigned.

The trust guys close bank accounts, open one for the estate, inventory assets, file tax returns and probate docs, prepare and support the terminal return, communicate with beneficiaries, deal with the federal and provincial governments, notify any pension administrator, dispose of holdings, keep careful documentation and shield you from bureaucracy, liability and grief.

All that is not free. The fees involved are paid directly by the estate, partially offset by the executor fee you’d be entitled to. A rule of thumb is that an executor receives about 5% of the estate for doing that work. For individuals this counts as taxable income. A trustco will charge roughly the same (3.5% to 5%). On an estate worth a million, fees will be $35,000 to $50,000. As the size of the pie grows, the fee scales lower. Above $4 million it might be just 1%.

Well Mark, do it. And remember this lesson when it comes time for you to reach your own finish line.

We all die. It’s always a surprise.

About the picture: ‘I’m sending you a pic of Zoey, a 1 yr old heeler,” writes ERin. “She’s high octane, smart and confident.  With all the advice on the blog, I am able to keep little Z in the good kibble & gravy. Thank you from both of us!!”

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