Selecting Your Personal Representative (Executor)

Selecting your Personal Representative (executor)

Executor and Personal Representative
The term “Executor” traditionally refers to the person responsible for carrying out the wishes of the Will-maker, as outlined in the Will. Historically, the feminine form was “Executrix,” though this term is now nearly obsolete. It may still appear in Wills drafted before 2012.

In 2012, Alberta lawmakers streamlined Wills and Estates legislation into two comprehensive acts: the Wills and Succession Act and the Estate Administration Act. These Acts introduced the term “Personal Representative” to replace both “Executor” and “Executrix.”

A Personal Representative fulfills the same duties and responsibilities as the roles previously known as Executor or Executrix, ensuring that the Will is properly executed and the estate is administered according to the deceased's wishes.

Choosing The Right Person: Key Considerations for a Critical RolE

When drafting wills and estate plans, many people may overlook the importance of carefully selecting a personal representative, often referred to as an executor. It’s common for individuals to be unfamiliar with the scope of responsibilities involved in this role, and even fewer have experience serving in such a capacity. However, whether you are appointing someone or have been named to the role yourself, being unaware of the duties can result in costly mistakes, unfulfilled wishes, and unexpected liabilities. Consulting a qualified legal professional is highly recommended for personalized guidance.

Understanding the Role of a Personal Representative

At its core, a personal representative is responsible for administering the entire estate of a deceased individual. Below is a general breakdown of the key duties:

Arranging the funeral: Ensuring that final arrangements are made according to the decedent's wishes.
Obtaining necessary documentation: This includes death certificates, court approval, and probating the will when required.
Managing assets: This involves handling all types of assets—physical, financial, and digital—including real estate, household items, and investments.
Addressing liabilities: The personal representative must settle any debts, bills, or contingent liabilities associated with the individual or the estate.
Handling estate finances: This includes paying costs, such as taxes, legal fees, and any expenses related to administering the estate.
Recordkeeping and reporting: Detailed financial records must be kept for all estate transactions and distributions.
Hiring and overseeing professionals: A personal representative may need to enlist experts, such as appraisers, tax professionals, real estate agents, and legal advisors.
Fulfilling tax and legal requirements: Managing tax filings and adhering to legal obligations for both the decedent and the estate is essential.
Communicating with beneficiaries: The personal representative is responsible for keeping beneficiaries informed, addressing their concerns, and distributing assets according to the will.

Selecting someone for this role requires careful consideration of their ability to handle financial matters, navigate complex legal obligations, and communicate effectively with beneficiaries. A personal representative should also have the time and organizational skills necessary to fulfill these responsibilities over what can sometimes be a lengthy process.

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:

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.

It is acceptable for a personal representative to charge for their services. A simple, well-planned estate may only take several months to administer but a typical Canadian could easily have a more complex estate requiring years of administration (yes, years). If that Canadian has not adequately prepared their personal representative and beneficiaries for the estate administration, it could take even longer, lead to conflict, costs and liabilities. In selecting a personal representative, people have been known to choose a certain family member or friend, thinking they will create hard feelings if they don’t choose a particular person.

Questions to help you cHoose

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?

By now, it should be evident that expertise and continuity is needed in handling an estate. Naming an individual who does not have the time or ability can be a disservice to all who are 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.