Who is the Right Person to Protect Your Money?
This is the 4th post in my series on choosing the right executors.
You worked hard and saved your money. What will happen when you are gone? Don’t let the wrong executor blow it all.
Executors protect your stuff for your loved ones and your favourite charitable causes. I’ll explain the 5 possible executor choices you can make. You need to select from among these 5 possibilities. I’ll give you factors to consider for each option.
But remember these two keys:
- You must choose more than one executor.
- The wrong executors can waste everything you worked hard to obtain.
Always Appoint Backup Executors
You always need to name a backup executor. The backup is ready in case your first choice is unable or unwilling to act. This can occur if they have a conflict of interest.
When you make your will: name more than one executor.
Your First Choice of Executor May Not be Available
Here’s an example to explain.
Michelle picks her husband, Jason, to be her executor. Jason will handle Michelle’s estate when she is gone. However, the couple often travel together. In a tragic accident neither of them may survive.
What if Michelle name’s Jason as her executor and Jason cannot act?
Both Michelle and Jason’s side of the family may argue. They may not agree who is in charge. They will end up in lawyers’ offices and perhaps in court. If they cannot agree, a judge can appoint a neutral third party as executor.
Avoid Executor Conflicts of Interest
Let’s consider potential conflicts of interest with Michelle and Jason.
Let’s say Jason survives but he:
- has children from a first marriage/relationship
- is separated from Michelle
- is a common law spouse but not a married spouse
- signed a prenuptial agreement or marriage contract
- died before signing a draft post-nuptial agreement
- told Michelle he would not touch what Michelle inherited
All of these issues raise potential conflicts.
Get legal advice about how serious these issues are before you disregard conflicts. Someone like Jason may still be Michelle’s best choice.
Look at the 5 categories of choices below. Choose at least 2 executors and consider my list of pros and cons for each.
Caution: get legal advice to evaluate your final choices.
The 5 Categories of Possible Executors
1. Your Spouse
- May have claims to your estate
- Rights affected by laws and marriage contracts
- May be disqualified if there is a conflict of interest
- Family issues: friction, control and entitlement2. Your Children
- Minors cannot be executors
- Should live in the jurisdiction
- Have knowledge of your relationships
- Efficient, economical and may not charge fees
3. Relatives, Friends or Partners
- May be too busy, too old, too far away
- May not want to inherit your problems
- Need guidance and may lack motivation
- Business associates may be conflicted
4. Professional Advisers
- Need experience administering estates
- Not enough estate experience
- May be too busy and delegate work
- Not a regular income source or not insured
5. Corporate Trustees
- Have experience with complex estates
- May be impersonal with changing staff
- Dishonesty is not an issue
- Have minimum fee requirements
What to do next?
“Ed, I understand. I need backup executors. But how many executors should I name?”
Look at Rachel. Rachel has to protect her money for her 3 young children. Rachel has no spouse but 3 brothers and 2 sisters.
I’ll give you my insider tips for Rachel and more in the next post How to Choose the Right Executors.
Don’t miss my Ultimate Tips to Select the Right Executor coming soon.
Need a consultation with a certified estate expert? Contact me now.
Have you missed any of the other posts?
- Make Sure Your Executor Isn’t Dracula
- The Right Executors Save You Money
- Choosing Who Protects Your Money Made Easy
About Edward Olkovich
Executors facing estate challenges call upon Ed Olkovich who is a Toronto estate lawyer and Certified Specialist in Estates and Trusts Law. Ed is an author and edits Carswell’s legal guide Compensation and Duties of Estate Trustees, Guardians and Attorneys. He has resolved estate disputes and probate problems since 1978. © 2016Posted By: Ed Olkovich In: Advisors, Executors On: May 30th, 2016