Bob Simpson: Welcome to our series of podcasts, Plan Your Estate Outside the Box. We’re here to talk about estate planning in a friendly and informal way. My name is Bob Simpson. I’m here with Nicholas Meyer director of business development at a Estate Stewards inc. Nicholas is a trust. and estate practitioner. He has extensive experience in the trusts and family office business, both in Canada and internationally.
Having worked for many clients, Nicholas understands how unique each family is and how complex the family dynamics can be. Especially when dealing with the settlement of an estate. Now, why do we make these podcasts? Our main goal is to help you to preserve the family harmony and intergenerational peace of mind.
This is our passion. This is our mission. Now, how are we going to achieve this? We’ll share with you over the next series of podcasts, our stories, our experience, and our knowledge. Just to maybe just take a step back before we do this, Nicholas, we looked, first of all, in podcast, number one, we looked at why do we have a will?
Why do we need a will? Why do we need things like powers of attorney? In the last session we talked about, what does an executor do? And whether we should be tipping and executor after they do all the hard work they do in the settlement of an estate. And today we’re going to look at how do you choose an executor?
So Nicholas, welcome to the podcast. How are you doing today?
Nicholas Meyer: I’m doing very well. Thank you. And I hope you’re doing also very well.
Bob Simpson: Well you look good and that’s what matters. So let’s dig in and let’s. Take a look at the, how do you choose an executor? So let’s start out with our five questions, which is kind of the format that we follow in this.
Question. number one is what are the skills required to be an executor Nicholas,
Nicholas Meyer: There are several skills which are required. I would say technical skills because now to settle an estate requires at least some legal knowledge, some accounting knowledge, some tax knowledge. I’m not saying you have to be an expert in these areas areas by far large not, but you must be able to understand that the challenges, the deadline, for example, there are strict deadlines in terms of filing the terminal tax return, because it is the responsibility, of the executor to file the terminal tax return of the deceased.
And there are strict deadlines and this tax return is more complex than your usual tax return. And usually will have a much higher tax bill. So technical skills typically understanding the legal challenges, the accounting ones that’s on the technical side. Now. I think there’s also another one, which is basically probably almost as important is the relationship one why I’m saying that because when you’re dealing with a settlement of an estate it is anything but obvious, let’s say that for example, your spouse or your parent has passed away and you are the executor.
You are grieving. It’s not nice when your loved one has passed away, but you have to start working basically immediately. For example, if the funeral was not pre-planned, you have to ensure the organization of the funerals with, uh, with the family. So if you’re a family member, it’s immediately a burden on your shoulders.
That’s one thing you have also to ensure good communication process between you and the beneficiaries, because let’s put it this way. The beneficiaries will expect at some stage to get the money in their bank count. That’s the, real world. And I would say that ensuring a proper communication with the beneficiaries on a regular basis is quite key, which means that you have to be able to manage these relationships that can make it quite difficult.
Why? Because let’s say for example, you’re one of the children you don’t really get along with yourself, siblings that can be quite challenging. So yes, that part to manage what I would call the emotional, the personal aspect is in some respect, the most complex one because of the technical aspect. So you can always seek assistance from the experts, but with regard to the emotional and personal aspects, that can be far more challenging.
Bob Simpson: As I listen to your response on that, Nicholas, it makes me think that that doesn’t sound like the way that most people choose an executor.
Usually they choose somebody, they know, maybe it’s a family member, maybe it’s a friend, but I’m not sure that it’s, you know, they go through a sort of formal process to identify somebody like you would, if you were hiring somebody for a job. And this, you know, it sounds to me through the last couple of discussions that we’ve had, that being an executor is really a job, isn’t it? And, you know, do most people know somebody who is qualified? Maybe has an accounting background in their family, somebody who is in financial services and understand some of the lingo, you know, do you find from your experience that many people are, uh, are signed on as executor who really don’t have the skills?
Nicholas Meyer: I think that in effect a lot of people will appoint the executor based on one factor, which is I know him, I trust him or I trust her, which is a factor to be taken into consideration.
For sure. The thing is, there’s one thing that is totally overlooked and you raised it. It’s a job. It’s really a job. It’s a, at least a 12 to 18 month job, which has to be carried out at a reasonable pace because there are quite a number of deadlines. And there is also the expectation from the beneficiaries.
And the thing is, I think that a lot of people do not take that into consideration. So the major issue that, for example, you will appoint one of the children, or because I like him or her more, whatever, I don’t know exactly the reason, but the thing is, does this child have the two skills that are really needed, a good knowledge of what it means to settle an estate from, as I said, legal accounting, tax, standpoint, just on a high level basis, not as an expert, but on a high-level basis and can the executor manage the relationships with the beneficiaries and with all the parties involved. And that is really not obvious. I’ll tell you a story.
A lady wanted to appoint her two children as her co-executors. And when she was asked, well, how do they get along? ” Oh it’s more than 10 years that have not talked to each other”. How can you expect that to work? That will not work because it requires to agree on a lot of things. So, no, unfortunately there’s most of the times there’s no proper reflection process.
When people are appointing the executor, this requires far more reflection. Then people expect that because often they see that, Oh, it’s an honor. It’s an honor, but it’s a great job with a lot of work attached to it, a lot of responsibility and a lot of liability. So that’s why we are also here to help you in that process, which is anything but obvious.
Bob Simpson: So Nicholas, the more I hear you talking about the role of an executor, the more I think this sounds like a job and it sounds like a job that’s fairly thankless that isn’t very highly paid and has lots of responsibilities and liabilities. Um, have you ever drafted up a, job description, that somebody could share with a potential executor and say, you know, these are the requirements, here’s the, here’s what you need to know. And here’s the work that’s required. Have you ever, uh, created anything like that?
Nicholas Meyer: Yes, Bob, we have created a job description, which will set out the basic responsibility and the work generally speaking, which has to be performed by the executor.
So yes, that will set out in a, in a nutshell, what is expected from the executor, both in terms of workload various areas to be addressed. And I will say an expected timeline,
Bob Simpson: Right, and where can somebody find a job description?
Nicholas Meyer: And this link will be available in the description of the podcast.
Bob Simpson: That’s wonderful. I think that’ll be a great tool to help people out moving forward. So next question is, as we look at it, So now that we’ve got a job description, you’ve narrowed down the kind of people who would be suitable for this. Who should you appoint and who should you avoid? Appointing as executor to your estate
Nicholas Meyer: That is a complex question, which requires a relatively long answer.
I’ll try to make it as short as possible. One of the very common setups is to have your spouse being your executor. So it’s not a bad idea as such, except that you have to bear in mind that. When you pass away, usually your spouse might be relatively old in my no longer want to act as your executor or might not be able to act as your executor.
So in any event, there should always be an alternate executor. And typically a professional executor is a good idea because it ensures that in any event they would be an executor. Because the thing that you really want to avoid is to end up in a situation where there’s no longer. An executor named you have had just named one executor and actually they are unable to act for any reason.
And then you end up with no executor. That is really the situation, which has to be avoided Quite often parents might appoint one or all of their children as executors. I must say I have always. Some sort of reservation about that. And for the following reason, if you put all of your children, let’s say you have three children as your co-executors either you force them to agree on everything, which means that have to get on very well.
Or you might put in place in majority clause, but is it really healthy in terms of family relationships? I have a have a major doubt on top of that. Very often the children might not live in the same province or might live abroad, it makes it even more complex. So I don’t find that it’s, a great setup.
And in other instances, parents might appoint one of their children as the executor. Well, quite often they will say why, because he or she is more skilled. That might be the reason. But it might also be due to the fact that this child has spent more time as a caregiver to the parents. It’s not impossible.
It does require a very open discussion infact I will never insist enough on that. Don’t let that be known when you die. It should be discussed whilst you’re alive, because otherwise if the children discover your decisions and your choices, when you have passed away, the likelihood that. It turns into something extremely unpleasant is pretty high.
Another option obviously is to appoint a friend, a good friend. Well, actually I’ll be honest. It’s a bit of the poison gift. I’ll put it this way, uh, because Oh yes. It’s a, it’s a great honor. And then the friend starts working on that say, well, why did I accept that. Again, I’ll tell you a story.
A professional, a professional accountant told me once I was appointed as an executor I took on the executorship, this was a personal matter. And I promise to myself never, again, this is really not something which is obvious. So lots of options, but a lot to be discussed.
To be clearly reflected upon if ever you decide to choose a family member. Think about it very carefully, be honest with yourself. For example, if you appoint your children, do they really get along or not be honest with yourself. Don’t try to, to believe something which might not be the case. Saying oh they get along so well, when, you know, they don’t get along. That is really key because otherwise. It will not, work. And have a clear and open and transparent discussion about that. I know it’s not an easy discussion to have, because you’re talking about your future demise. I’m fully aware of that, but it’s the best way to prevent unnecessary, if ever there was a necessary, family dispute. So spouse, alternate, a professional executor. That may very well be one of the best, set ups in order to ensure continuity and peace of mind. That’s what we are always trying to achieve.
Bob Simpson: And Nicholas, it sounds like, kind of the sum this up a little bit is that we’re looking when you’re choosing your executor, that you’re looking within your personal network or potentially your business network for an individual who has both the technical and communication skills to fulfill the position, somebody who’s objective and somebody who is well-respected by your beneficiarie and any family members who may be involved in the estate process, does that sum it up? Or if I miss much?
Nicholas Meyer: Bob, it is a perfect summary. And that is one of the complexity.
When a family member is appointed, because there will always be an emotional aspect. So that means that these family members. If you really decide to choose a family member has to be very well respected by all the beneficiaries. And again, it means that you have to be very honest with yourself and say, well, is it likely to work or not?
Because that’s the main thing. Is it going to work once you pass away? Because once you pass away, you’re knowing that. They’re there to help or to act as mediator to try to get along and to, get things moving. So yes, it is a perfect description and to remain as objective as possible. And that is quite difficult for a family member because you are not objective.
You have your own feelings. You get along with perhaps, your brother. Not with your sister. There’s so many different situations. And whenever one of the parents passes away, it changes immediately the family dynamic sometimes you can see things happening that you will never have felt. And I don’t want to, to make things look darker than they are. I’d just like to draw your attention on the fact that there are a lot of factors which have to be taken into consideration and appointing your executor is a very serious thing.
Bob Simpson: This is probably going to date me, but yeah. As I, as we have this conversation, it reminds me and most people who are thinking about doing there will probably remember the Smothers brothers from back in the 1970s and Tommy and Dickie Smothers, and the debates they had where Tommy would frequently lash out and say, “Oh yeah, mom always liked you best.”
Right. And that is going to influence who is probably chosen and maybe the. The person that mom always liked best. Isn’t the right person. and maybe as you scan through your personal and your business network, if you can’t find somebody who meets the qualifications to be a really good executor for you, is that Nicholas where we turn to a professional and maybe the right idea.
Is not the choose somebody in your personal and business network, but to reach out to a professional as your executor.
Nicholas Meyer: You’re absolutely right. So it must be in effect on the due diligence process and you must feel absolutely a hundred percent comfortable that the person you were appointing as your executor, A, is aware of that, B, feels comfortable about that and that you feel comfortable that this person will have the skills, both technical and relation skills to be able to handle, uh, The settlement of your estate, you have to be 150% comfortable with that, which means that there will certainly be a number of cases where you will not find that person within your personal network.
And let’s say, for example, all these older couples who don’t have children or who have moved to another province, or whose children have moved to another country, these situations are more often the case now that they were perhaps 20, 30, 40 years ago. So in effect you are absolutely right if you believe that there’s no one within your network who would be able to meet all these criteria or requirements or whatever you will name them, then yes.
It’s really the perfect opportunity to think about a professional executor. Don’t forget that the professional executor has no emotional involvement. Well, it’s a job to be done. And it’s a job that the executor does on a day to day basis on a regular basis. It’s the executors bread and butter.
Bob Simpson: It also seems to me, as we, discuss this, that what we’re also looking in part of the job description. Nicholas is an individual who is good at managing conflict. Is that something that we should be looking for when we are naming our executor.
Nicholas Meyer: Absolutely. Because the possibility of conflicts between the beneficiaries is pretty high.
Again, each family is different. So there are families who tend to get along pretty well, just because they have also a very clear relationship. Those families who get on pretty well are those families who I think that readily be open and transparent. But when things are not said, when things are hidden, when parents don’t address some unpleasant aspects, these will come up one day or the other.
It’s not the. If it’s the when. And as you said, the executor must be able to act in certain instances as the mediator in effect. So the executor cannot be a divisive person. It has also a, that has to be taken into consideration when you consider the appointment of your executor, because it cannot be divisive.
Bob Simpson: Nicholas, you are a wealth of knowledge, you know, I’ve been kicking around the financial services industry for, I don’t know, 30 or 40 years, I try to lose track, but every time we have these conversations, it helps me to see a little more clearly, um, many of the issues that you face every day when working with, with clients.
Nicholas Meyer: Yes. That is absolutely the case, but that’s what makes it fascinating. This job is fascinating because we helping families and we’re helping families to keep great family relationships. That’s such a fantastic objective to achieve every day.
Bob Simpson: You know, when we deal with people, we want to find people who are passionate about the work that they do.
And it clearly, your passion is helping people to deal with highly emotional situations like planning or dealing with an estate and getting it settled, and helping people to achieve peace of mind, intergenerational peace of mind and family harmony.
Thanks to everybody for tuning in to this episode of find your estate outside the box.
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