Something about the start of a new year is an excellent motivator for change. Many of our clients at Regan Schiller & Associates focus on setting financial goals or reviewing investments as part of their new year rituals. One area of financial planning that often gets overlooked is planning for your estate. While you’re younger, this may not seem like a priority, but if the COVID-19 pandemic has taught us anything, it’s that sometimes the unpredictable catches us off guard.
Creating a comprehensive plan for your estate requires a lot of strategic planning. When January rolls around each year, you have an opportunity to make necessary changes or updates as needed. You don’t need to rewrite your estate plan each year, but if there is a new beneficiary in your life, you will want to ensure you include them in your will. The same action might be necessary to remove someone from your estate that you no longer wish to have as a beneficiary. Aside from naming your heirs, you might also consider reviewing your designated executor and looking at what that person will be responsible for and how you can help ensure it’s a smooth process.
What Is an Executor?
The executor is the person you designate to carry out the wishes of your will and manage the financial matters of your estate when you’ve passed on. The executor might be one of your beneficiaries, but they don’t need to be. You might prefer to hire a Trust company, lawyer, or accountant to be the executor of your estate, especially if you have substantial wealth involved.
What Does an Executor Do?
While the role of the executor may be an honour, it can also become a burden. In examples where large sums of wealth and assets are involved, rifts and quarrels amongst surviving family members may arise. Sometimes you can avoid family disputes by hiring a professional, but it’s not guaranteed. Your executor is also responsible for completing the process accurately and according to law. Mistakes in the process that result in financial losses can make an executor liable.
The role of the executor of your estate is similar to a project manager of a multi-faceted program. There is always a timeline involving deadlines related to filing taxes, withdrawal payments, and distributing assets. The majority of the tasks fall on the person you’ve appointed as the executor of your estate, while the other beneficiaries must wait patiently. Usually, the more wealth and assets that are involved, the greater the executor’s workload will be.
What Happens When You Don’t Have an Executor?
If you do not appoint an executor of your will or estate, the job will fall to a court-appointed administrator. The court-appointed executor will concentrate on following the law, which means if you don’t have an updated will with clear instructions of your wishes, your estate may not be divided fairly or as you intended.
Another scenario is that a friend or family member can petition the court to become the executor of the estate.
The Responsibilities of an Executor
Executorship is not an easy task. There are many facets to a will and finances that require action. Some of the functions an executor is required to accomplish are as follows:
- Order copies of the death certificate
- Locate the will and identify the estate’s assets
- Pay off any outstanding debts
- Contact rightful heirs and beneficiaries
- File applicable tax returns
- Pay any tax liabilities
- Distribute the remainder of assets to the rightful heirs and beneficiaries
- Bring in professionals as needed
The executor’s responsibilities are the same whether you name a family member or a lawyer. However, there are several actions you can take to help make managing your estate a lot easier for everyone. All it takes is a bit of planning and a discussion with a wealth management advisor.
3 Ways to Help Your Executor
Create a Comprehensive Estate Plan
Creating a comprehensive estate plan leaves little room for your heirs and beneficiaries to argue or doubt where your assets are going. The first step is to clearly appoint an executor and keep them up to date as best you can. You can also notify your other family members, so they’re aware of who you’ve selected. The next step is to review your will if it has been a while since you created it. You’ll want to ensure you haven’t forgotten any new beneficiaries, such as grandchildren. You can also remove anyone from your will if they’ve already passed or you no longer want to have them as beneficiaries.
We also recommend assuming your assets will be taxed after your death and planning accordingly. Any errors made while administering your will and assets are the responsibility of your executor, and they can be held liable by other family members and beneficiaries. Involving financial experts in the process can mitigate that risk.
Personalize Your Estate Plan
The best strategy to avoid conflict for your executor is to consider how to distribute your assets carefully. We know that each circumstance will be different. You might have estranged relatives or feuding children who are challenging to work with, but you still want them in your will. Whenever possible, it usually helps to communicate your plan clearly with everyone involved, rather than leaving the surprises for your executor to reveal. The more you personalize your estate plan to your unique desires, the easier it will be for your executor to follow your wishes.
Sit Down with Professional Financial Advisors
Sitting down with trusted wealth management advisors can benefit you and your executor, especially when several accounts and large sums of money are involved. At Regan Schiller & Associates, our trusted advisors are here to listen to your wishes and provide support in making your plans. We can help you prepare for tax filings, create a list of accounts that your executor will need access to, and provide tips for how to best distribute your wealth to the people you care about most. For example, you might want to consider giving a living legacy to your family members to provide them financial assistance while you’re around to see the benefit and to avoid paying taxes. We can also help your executor when it comes time to begin their duties, continuing to act as trusted advisors for your estate.
Financial Estate Planning in Edmonton and Surrounding Areas
Contact the Private Wealth Management Consultants at Regan Schiller & Associates if you’re ready to create a comprehensive estate plan. Our team is dedicated to serving you, your family, and your estate long-term.
This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Regan Schiller is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant.