Common questions about being an executor in Canada

Leanne Kaufman:

A few weeks ago, we did an episode of this podcast with Clare Burns from WeirFoulds focused on the role of the executor: what it is, who makes a good choice for the role, and some of the things that we thought people should know. Well, we wanted to go a little deeper on the topic as the role of the executor really isn’t one that most people know a lot about, but we know from information online that it is something that people have a lot of questions about. The internet is of course the primary source of information for most of us, but it’s hard to get information specific to your situation and needs. So, we wanted to take some time today to dive a little deeper into the most common questions that we see people asking online about estates, executors, and the things in between.

Hello, I’m Leanne Kaufman, and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. With me today is a dear colleague of mine, Bianca Krueger, senior manager of the Professional Development team at RBC Royal Trust in our Ottawa office, who specializes in the area of estates and trusts.

Bianca, thanks for being here with me today to discuss some of the commonly searched questions around executors and why this matters beyond wealth.

Bianca Krueger:

Absolutely. Thanks for having me, Leanne.

Leanne Kaufman:

So, let’s start with our listeners who might be considering taking on this role or, I mean, really anyone who’s thinking about even naming an executor in their Will. What’s the process like? How does one actually become the executor of an estate?

Bianca Krueger:

Fortunately, or unfortunately, it’s as simple as naming someone in your Will, and in fact, the executor doesn’t even have to agree to that appointment. So, some executors are actually surprised when they find out that they’ve been appointed in someone’s Will. Now, naturally, it’s always best to speak to that person or the trust company before appointing them, and also no one’s going to force you to be an executor. So even if you’ve been named in a Will, you can always renounce, as long as you haven’t done any of the work already. So that’s also why it’s important; I always tell people to name a backup as an alternate or even two alternates just in case that person can’t or doesn’t want to act.

Leanne Kaufman:

Yeah, that’s great advice that I often share as well, because, well, we won’t get into the consequences, but just suffice it to say it’s a good idea.

Bianca Krueger:

Yes.

Leanne Kaufman:

So, let’s go to the nomenclature for a minute here. Maybe this is where I should have started, frankly, but listeners probably heard these terms, executor or the executrix, which is the old-fashioned female version, estate trustee, liquidator, are these all the same things or are there differences people should be aware of?

Bianca Krueger:

So, I’m going to say estate trustee is a very Ontario-centric term.

Leanne Kaufman:

Right.

Bianca Krueger:

In the rest of the common law provinces and territories, we say executor. Liquidator is a Quebec term, but frankly, all of those terms mean the named person, the fiduciary in the Will that’s responsible for administering the estate to the best interests of the estate and the beneficiaries. It’s all generally the same rule.

Leanne Kaufman:

So, what about then the duties? I mean, if the name changes a little bit across jurisdictions, are the duties different across Canada between the various provinces?

Bianca Krueger:

So, you’re right, absolutely, estate law is provincial. So, although as I mentioned, the core duties and the role of the executor generally [are] the same across Canada, the law and the regulations under which an executor will find itself—and I’m going to use the word executor generally for our purposes—it does differ from province to province.

For example, the limitation periods you’re dealing with, whether you advertise for creditors or where you’re advertising, inventories, fees, all of those differ slightly from province to province. So, you need to know the rules under which you find yourself.

Leanne Kaufman:

Which makes it important, particularly when the executor themselves is not in the same province as the deceased.

Bianca Krueger:

Absolutely.

Leanne Kaufman:

Yeah, you got to make sure you’re getting advice in the right province.

You’ve just touched on two things like advertising for creditors, what does that mean? Limitation period, what does that mean? But I think that we can agree that being an executor can be complex, which leads to stress and probably also quite time-consuming. We always say from our firm perspective that there’s at least 70 different tasks and the estate settlement can take anywhere between one to three plus years to wrap up. For most people, if they’re acting as executor and they’re not the sole beneficiary of the estate, they might wonder how they might be compensated for their time, efforts and frustrations, and also whether they’re obligated to cover any of the expenses. So, talk to us about executor compensation and out-of-pocket expenses.

Bianca Krueger:

Great question. So, every province is slightly different, as I’ve alluded to already, and it also has to deal with how you’re seeking compensation. Now, generally across Canada, you can seek, this is just generally, up to five percent, but the calculation varies across the country. It’s usually based on

• the complexity of the estate;
• the work that’s been done;
• how long the administration took; and
• frankly, the court can reduce that compensation that’s being sought depending on the work that was done.

I had a case long, long time ago in a prior life where I represented a beneficiary and the executor was actually knocked down to two percent by the court because they were found to have been negligent in some of their duties. They had to pay back to the estate the fees, penalties and interests that had accrued to CRA. So, it’s a lot of work, you want to make sure you know what you’re doing.

Now, out-of-pocket expenses, sometimes there is a gap after the person dies before the executor has access to money from the estate. Some executors will choose to pay out-of-pocket for some expenses like funeral costs, travel to get to where they need to be– as long as they’re reasonable expenses they should be reimbursed to the executor from the estate when the time comes.

Leanne Kaufman:

Right, and I mean your point on the court is a good one too, because I’m sure most people don’t know that their activities are subject to the scrutiny ultimately of the court if the beneficiaries choose to take them there to say, did you do your job well and are you being fairly compensated? That’s something that every beneficiary has a right to do, right?

Bianca Krueger:

Exactly, yep.

Leanne Kaufman:

So, we want to help people, point them to resources that will help them do their job once they are acting as executor, and there’s lots of executor checklists that float around online. We have a version at RBC, a lot of funeral homes have a version. How do you suggest that executors decide which checklist is right for them? Are there certain things that they should be looking for when they’re trying to follow a bit of a guideline in this regard?

Bianca Krueger:

Absolutely, and the theme I think seems to be make sure you’re in the right jurisdiction. That’s my first starting point. Quite often when you Google search, you’re going to end up in the U.S. or in Europe, in the UK, so make sure you’re at least in Canada to start with.

Then because it’s provincial, make sure it’s the province in which you’re dealing with the probate work and where the person and the assets are actually that you’re trying to administer.

A lot of online resources then, I would make sure that they’re quality resources.

• As you mentioned, Royal Trust has Artie, the Executor Helper™, which is a good resource.
• Most major respected estate law firms will have good resources on their website.
• Also you can check provincial government websites and probate courts. Some provinces have done that too, to provide information guides to their executors.

But all of those, you have to make sure first jurisdiction, and secondly that it’s a quality resource.

Leanne Kaufman:

Yeah, that’s a great point about the jurisdiction, but like most things on the internet, I guess, it’s make sure you trust the credibility of the source that you’re using. Both good pieces of advice.

Well, we know that there’s lots of unexpected hurdles, and we’ve already talked a little bit about the complexity. I mean, we’ve barely cracked the surface of the ice on the complexity. But we know that generally because this isn’t something most people do on the regular that there’s always going to be things that they don’t know they don’t know. So, when an executor is concerned about that, or if things are particularly complex, where should executors be turning for help?

Bianca Krueger:

First of all, definitely don’t try to do it all yourself or feel like you have to, because frankly, part of your role as an executor is to seek help when you need help, and you can be held liable if you don’t.

I always say when you do look for help, make sure that those people that you’re seeking have expertise in that area. What I mean by that is don’t necessarily get the residential real estate agent in Toronto to sell commercial real estate in Thunder Bay. You need to know you’re hiring the right people for the right jobs. So, the accountant, the lawyer, the real estate agent, make sure they’re not just familiar with estates, but also your circumstances in your estate that you’re dealing with.

There are also, of course, corporate trustees that can really help with the heavy lifting if you plan on staying on as the executor. Of course, as you said, you don’t know what you don’t know, so those people such as Royal Trust can certainly guide you and make sure that all the T’s are crossed and the I’s are dotted.

Leanne Kaufman:

Yeah, I guess the message there is surround yourself with the experts just like you do in all other aspects of life, right?

Bianca Krueger:

Absolutely.

Leanne Kaufman:

Yeah, it is interesting that it seems to be one of the last places where people feel maybe out of a sense of duty to the deceased that they have to struggle alone. And I think we need to help people disavail themselves of that concept.

So, here’s another scenario that we’ve seen come up. It’s one of those commonly asked questions, can you be both an executor and a beneficiary of an estate or is that considered a conflict of interest?

Bianca Krueger:

Yeah, I’ve pondered this many times. And yes, although it appears as a conflict, yes, you normally can name a beneficiary as an executor, whether you want to do that or not, that’s another story. Remember that if you name one of your beneficiaries an executor, they are going to be wearing two hats. So, the question becomes can that person stay objective or not in their role as an executor.

I’ve seen situations where one child is named executor and the other adult children are not, and they’re only beneficiaries, and then you’ve created a power dynamic that can go sideways quickly if they don’t all get along.

On the other hand, naming them all can also be a bad idea because then you’re going to end with struggles to get everyone to agree to things and to be available. So, I like to say, yes, there can be a conflict. It may be a good idea, it may not be a good idea, it depends.

These discussions need to happen with trusted advisors and be honest with yourself about the personalities you’re thinking of appointing as your executor. As I’ve said a million times to clients, love and trust aren’t always the same thing. So, make sure just because you love them, look at how they handle their own finances and how they deal with their siblings or their family members, and that will usually lead you to the right answer.

Leanne Kaufman:

Yeah, and I mean, I think it’s a simpler thing when if it’s a small number of beneficiaries and you’re thinking of the same ones or most of the same ones also acting as executor. When you’ve got a big number of beneficiaries and you’re asking one person to take on the role, then that’s where maybe some of the complications might arise in that regard. But yeah, yeah.

Okay, so another kind of common question or point of confusion is the difference between the role of an executor and that of a power of attorney. We know that sometimes people just kind of assume that they should just name the same person, but what’s the difference between those two roles and should it be the same person in the broad general cases?

Bianca Krueger:

Whether it should be the same person? Much like my last answer, I would say it depends on the family dynamics. It doesn’t have to be the same person. It would create some continuity between knowledge of what existed prior to death and after the death.

The way I like to describe what a power of attorney is—that’s the document, the attorney is the person actually named. I like to explain it as simple as the power of attorney document, it dies when you die. Meaning the authority that the attorney had over the assets or personal decisions for that person that ends when the person dies, so it no longer applies. I’ve seen situations where power of attorneys continue thinking that they just keep going and that can be extremely problematic.

From death forward, you’re talking about the executor, and that’s the one with the authority. There are some small technical exemptions across the country, but for the most part, death ends the power of attorney.

And the POAs, as we call it, is the extremely powerful document. So that person, of course, while you’re alive is the person who’s acting and making decisions on your behalf. Again, back to the love and trust comment, you want to make sure you can trust that person. And they have a lot of time on their hands because a POA can go on for years. I’ve heard you say it, we live 10 years past healthy now. So, does that person have 10 years to be making decisions on your behalf? It’s a huge role, but yes, it does end on death and then the executor takes over.

Leanne Kaufman:

The other thing I sometimes hear people get confused about is because we call it an attorney, an attorney in the U.S. is a lawyer or someone with legal training, but I think the point sometimes needs to be made, it sounds silly, but your attorney doesn’t need to be a lawyer. But anyway, we’ll just put that one out there as another little gem.

Bianca Krueger:

Good point.

Leanne Kaufman:

So, what about trustees now? So, we’ve done this high-level overview of executor, we’ve had even higher level on the power of attorney, what about trustee? How does the role of the executor differ from the role of a trustee in a trust?

Bianca Krueger:

So not everybody needs a trustee. A trustee is the person that will be the fiduciary, the person who is responsible for what’s called a trust. So, in a Will, because we’re talking about executors, some people will create what’s called a testamentary trust. In that document, you can name your executor, can be your trustee, doesn’t have to be, again, you can split up those roles. I know in Ontario the term estate trustee muddies the waters a little bit, but an estate trustee with a Will is an executor role. Then the trustee role can be the same person but sometimes, again, much like the POA, the executor may not be available to do that role because an estate, as you said, takes 18 months, possibly three years plus depending on the complexity, but that’s nothing compared to the length of time that a trust can take.

A person who’s developing a trust might have minor children or a beneficiary with a disability or a blended family that they’re planning for, and they want to set up a trust in their Will. So, they name someone or a trust company to look after those trusts. Those can go on for years or even the lifetime of the beneficiary. I always recommend, although a friend or family member may be happy to act, they may want to look at the length of time that that trust may go on for. In fact, that person may not be alive themselves by the time the trust ends. That’s why many testators consider appointing corporate trustees because the trustee role really is a long period of time.

Leanne Kaufman:

Yeah, you make such an important point there that I don’t think enough people give consideration to, which is: is the trustee going to be able to be around for the full length of the life of the trust? And if we’re appointing friends or contemporaries, family members that are siblings rather than the next generation, well, probably not. It comes up more often than I would’ve expected it to come up, that there’s just no way that this trustee is going to be able to act for even a majority of the portion of the life of the trust. So, I think it’s something that we need people giving more consideration to, so thank you for raising that.

Okay, another term that comes up a lot and is one of the number one searched things from the research we’ve done is “probate,” and I’ve heard you mention it earlier in our conversation. We’ve already done a full episode on what probate is, but just for the purposes of rounding out today’s conversation, can you tell us what is probate, what’s the process look like, and why do people get so hung up about it?

Bianca Krueger:

They do tend to get hung up on it, don’t they? So, it is slightly different in each province, as is the theme again for today. There’s no concept of probate for notarized Wills in Quebec. So, I’m speaking for generally for the common law provinces and territories.

Generally speaking, it’s the process where the executor submits the original Will to a probate court and they receive in return, if everything is in order, what’s called a “grant of probate” or “letters probate” or a “certificate of administration,” all different terms across the country, that’s a court order. And although the executor already gets the authority to be the executor from the Will, depending on the nature of assets, this probate step may be needed to provide verification of that authority to certain institutions.

A good example would be land registries, banks, financial institutions of any kind frankly, they want to see that verification that the executor is in fact the correct person to receive the assets and be able to sell and move the assets.

Once the application for probate has been filed, I know you did a whole section on probate, but I just want people to know that it can be issued within—it depends where you’re filing, there’s not one probate court in each province, there’s many locations. So, it can be issued within a few weeks, or it can take months and months depending on not only the province, but where in the province you filed and how long the waiting list is. So, people aren’t always generally aware of that.

Leanne Kaufman:

I think, again, we can refer listeners back to the earlier episode on it. The point that you made is so important around, it doesn’t give the executor authority, it just proves to everybody else that the executor has authority. I mean, it’s a bit of a nuance, which is kind of tricky to explain, but of course, the reason I think going back to the “why do people get hung up about it,” is back to your jurisdictional specificity, some jurisdictions have almost no fees to do this, and others like Ontario and New Brunswick, Nova Scotia, BC, their fees can be quite high and so people tend to try to avoid going to probate because they don’t want to get the fees. They don’t have to pay the fees, right?

Bianca Krueger:

Absolutely, and some people call it “probate tax.” Frankly, I see a lot of people going through a lot of planning and jumping through a lot of hoops to avoid probate where it costs them more money than the probate fees or very close to the probate fees. So, I always say, look at what your—it depends, and there is court oversight with probate. I’m not saying that probate is the best thing for everyone, but you have to be careful. Sometimes you’re trying to plan too much to save $15,000, and it may not be the worst of all the evils to go through probate court and have that oversight over top of your estate.

Leanne Kaufman:

Yeah, and the probate tail wags the total dog, and then it becomes a bigger mess.

Well, we’ve done a real little potpourri here, I would say Bianca, of some of the commonly asked questions that we get or that the internet gets depending on the source. But if you could distill this down to one little overarching thing for listeners to remember from our conversation today, what would that one thing be?

Bianca Krueger:

I would say the nugget would be don’t take the role of executor lightly. Every time I ask people if they’ve been an executor, and I know you’ve done this too, Leanne, and they say yes, and then you ask them again if they’d do it one more time, and it’s almost always a resounding no.

Leanne Kaufman:

Yeah.

Bianca Krueger:

When you’re thinking about naming executor, remember about that person, they’re stepping into your life. Do they have the time? Do they have the knowledge? I do this for a living, you do this for a living, Leanne, I mean, I can’t fathom stepping into someone else’s life right now with my full-time work and my kids and taking on that appointment. So don’t take it lightly when you’re naming somebody, think of their personal circumstances as well.

And I mean, the other theme of course is remember the jurisdiction. It is a big difference, province to province.

Leanne Kaufman:

Great pieces of advice. Well, thanks so much, Bianca for being with me here today to discuss these things we think people need to know about being an executor and why this matters beyond wealth.

Bianca Krueger:

You’re very welcome. Thanks for having me, Leanne.

Leanne Kaufman:

You can find out more about Bianca Krueger on the RBC Wealth Management Canada website or on LinkedIn .

If you enjoyed this episode and you’d like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review.

Until next time, I’m Leanne Kaufman, thank you for joining us.

Outro speaker:

Whether you are planning for your own estate, the needs of your family or business, or you are an executor for a loved one’s estate, we can help guide you, simplify the complex, and support your life’s vision. Partner with RBC Royal Trust and ensure your legacy will thrive for generations to come. Leave a legacy, not a burden™. Visit rbc.com/royaltrust.

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