I CAN’T EVEN READ THIS THING!
MISTAKE #40
Overlooking opportunities to retain help with administering an estate
YOU ARE OUT FOR YOUR EARLY MORNING Sunday run through Stanley Park, and it’s a perfect spring day. You’re enjoying the time to think about your company’s offsite strategy meeting, which starts tomorrow morning. When your cell phone rings, you see your spouse’s name and you answer, ready for her caramel macchiato order, which you will fill on your way home. But instead she tells you your father has died.
Later, that phone call will be the clearest memory of your dad’s death and the day he died suddenly in Toronto while he too was out for his morning jog. After the brief call with your spouse in which you heard the news, the rest of the day was a blur of travelling from Vancouver to Toronto, hugging your mom, starting to talk about the funeral, then taking the next steps. The offsite meeting was cancelled, your business partner graciously telling you to “take all the time you need.” As Joan Didion says in The Year of Magical Thinking, the best-selling book she wrote after her husband’s unexpected death, “Life changes in the instant.”
And in that instant, or the days that follow, you can make one of the biggest mistakes in estate administration: missing the chance to hire professional help. In the middle of a loss like this—be it the death of your spouse, your parent, your sibling or your best friend—when you remember that you are named as his or her executor
2 and you feel overwhelmed by the prospect, keep in mind that you do have options. Because even as your colleagues, close friends and fellow volunteers in your charitable work are all encouraging you to step away from your responsibilities, you know that life goes on and some or all of the other aspects of your life will need to be picked back up in a couple of weeks.
So what can an executor in this situation do? You can:
1. Renounce your appointment as executor.
2. Remain on as executor but appoint a trust company to act as your agent in carrying out the estate administration but subject to you making all of the decisions that the company’s representatives present to you.
3. Remain on as executor and do the work yourself, retaining assistance as needed, for example, a lawyer, accountant, real estate agent, valuator, a service to clean and organize the deceased’s home and get it ready for sale and so on.
1. renunciation
There are several reasons why you may decide to not take on the job at all. Perhaps you didn’t even know that you were appointed and if the deceased had asked you, you would have declined. Or perhaps you did agree when asked, but you weren’t aware of the scope of the job, or something has changed in your own life, making this responsibility too much for you to take on now.
Another possibility is that the deceased person named an entire class of people to act—most likely all of the children—and after some discussion, as a group you decide that the work can be done most effectively by only one of you acting . . . so the rest of you will renounce.
Whatever the reason is, be assured that sometimes the very best thing you can do for an estate is to not take on the job. Although you may feel that you are letting down a loved one, the job done by an executor who is too busy or overwhelmed for the task may result in a far worse outcome for the estate than if that executor had renounced, stepping aside at the time of the death.
We’ve already mentioned that sometimes a renunciation simply reduces the number of executors to a manageable one or two, but what if a renunciation means that no one is left to act? If the executors named in a will have all either passed away or are unable to act, the will is still valid and provincial laws apply as to the ordering of who in the next of kin can take on the job. The list starts with the deceased’s spouse and moves through children and siblings until the first available person agrees to take on the position.
If you are thinking about renouncing, do not take any actions in the estate such as collecting the assets or inquiring into estate affairs. These types of actions are called intermeddling and when an executor signs the necessary paperwork to renounce the role, he or she is required to declare that no intermeddling has occurred, to avoid any later suggestion that any untoward steps were taken by someone without authority.
2. appoint an agent
Under this option, you remain on as the executor, but rather than being both the chief operating officer and the chief executive officer of the estate, you are opting to be only the CEO. This means that the day-to-day work of the estate administration, from cleaning out the deceased’s home to doing the tax returns to selling the home or any businesses owned by the deceased—whatever the particular estate entails—is overseen and handled by professional trust officers who have seen and done it all many times.
If you are considering appointing a trust company as your agent, your best bet will be to meet with a representative of the company as soon as possible after you are notified of the death. They will review with you the work that they do and the fees they will charge the estate, and you will quickly get a sense if you like and trust them and can work well together with them on the estate. The estimated fees will vary greatly from one estate to another; the factors we covered in Mistake #39 on executor’s compensation also affect the fees charged by an agent for an executor, factors such as the size of the estate and its complexity.
In weighing this option, including the estimated fees that the trust professionals discussed with you, keep in mind these points:
• An executor is always allowed by law to retain assistance, even if the will does not specifically state this.
• An experienced company carrying out the work is less likely to forget an important step.
• The trust officers will work with the beneficiaries and be their main liaison as to what is going on with the estate and when, for example, they can expect to receive their bequests or share of the estate.
• If conflict arises among the beneficiaries, you will have experienced guidance in dealing with it.
• In the unlikely event that an error is made in the administration, the “deep pockets” of a corporate trustee will protect you from personal liability.
3. carry on but hire assistance as needed
This is the “CEO and COO” approach, where you decide to oversee and organize the entire estate administration yourself. Although it is a big job, getting and staying organized, seeking out good advice, communicating well with the beneficiaries and hiring excellent professionals along the way will ensure that you stay on track. In the rest of the book, we’ll look in more detail at all of those responsibilities.
points to take away
• Even if you have agreed to be named in the will of your friend or relative as his or her executor, when the death occurs, it may be very challenging for you to accept the appointment.
• There are options that you can consider if the idea of acting as the executor feels daunting. These include (1) completely renouncing the appointment; (2) appointing a trust company to act as your agent to carry out the administration, subject to you being the ultimate decision maker; and (3) hiring professionals to assist you with each step of the work.
• The best decision for you will depend entirely on your personal situation. Consider such factors as: where you live, your organizational skills, your available time over the coming year, especially over the first six months after the date of the death, and how you feel about working with the beneficiaries in the leadership role of being the estate executor.
