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Q: I don’t want to burden my family by being my executor. Can I hire someone?
A: It’s a bit of work to be an executive. This is an incomplete list:
1. Organization of disposal of bones and funeral services
2. Identifying and securing money, jewelry, artwork, and other valuables
3. Make sure pets are taken care of and returned home
4. Cleaning of refrigerators and freezers and securing the apartment and providing insurance
5. Securing computer, e-mail, social media and other online accounts
6. Ensuring payment of property taxes and other bills related to the home
7. Ensuring that vehicles are properly insured
8. Identifying mortgage, credit card and other creditors and ensuring that accounts are kept in good standing and interest expense is minimized
9. Mail Redirection and Handling of Incoming Mail
10. Preparing a complete inventory of assets and their values ​​and organizing assessments as appropriate
11. Working with financial institutions to obtain account details and amounts
12. If applicable, arranging for the temporary management of a business
13. Ensuring investment management
14. Keeping and maintaining records and an accounting of all these steps
15. Searching the deceased’s home, safe, computer and elsewhere to identify any written (including digital) indication of their testamentary intentions, be it a formal will or an informal document
16. Hiring and/or instructing a lawyer for the application for verification and the provision of information/documentation
17. Tracing of Beneficiaries and Others Who Should Be Notified of Verification
18. Hiring and/or instructing a real estate agent for the sale of the property and a lawyer for the real estate transaction
19. Keeping the beneficiaries informed and dealing with the division and division of the estate together with the conflicts that may arise between the beneficiaries
Some people are really organized, making sure their chores are in order. Others, not so much.
Some properties are very simple, consisting only of household furnishings of minimal value and investment accounts. Others are very complex. Executor work can be relatively minimal, but it can also be part-time work.
If you have children, it is common to name one of them as your executor. How many of your children could reasonably add a part-time job to their lives? Keep in mind that it’s a job they’re unlikely to have any experience taking on.
They may struggle to manage their lives and finances, let alone be suddenly tasked with a variety of administrative functions they are unfamiliar with in addition to managing your own.
If you have no children to name as your executor, there is an added level of complexity. Children are likely to be at least somewhat familiar with your affairs, not so much if it’s a sibling or a friend.
Finally, to answer the question posed at the beginning of this column, yes you can hire someone to be your executor, but it will cost you a lot.
Correction. It won’t cost you a dime. You will be dead. The cost of a professional executor will come out of your estate, reducing the amounts received by your beneficiaries.
I spoke with representatives of two large banks. I will share with you my understanding of the cost of their execution services without mentioning the banks. Please note that fee structures get complex, so if you have any interest in a corporate executor, you should speak directly to a bank representative.
There are minimal fees per executor. For a bank it is $25,000. The other is $20,000.
But when we look at the numbers, these minimums are unlikely to be enforced.
Let’s take a $2 million fortune, 50% of which is an average house in Kelowna, with the balance being investments.
A bank would charge 4.25% on the first $1 million and 3.25% on the second million, for a total of $75,000. The other bank would charge 4.5% on the first $1 million and 3.5% on the second, for a total of $80,000.
Each of them offer executor fee discounts on investment assets held in their accounts, giving a strong incentive to the testator to invest with them. The discounts are 15% and 20% respectively for investments under 2 million dollars. The deductions are not applied to the total fee of the executor, but to the fee attributable to these investments.
In addition to these enforcement fees, there are fees for the actual administration of the assets, which for each of the two banks would amount to at least another $15,000, given our scenario.
That’s an extremely high salary for a part-time, mostly administrative job – even at the more complex end of the scale.
Is the work of a professional executor cheaper? You can set whatever arrangement you and your chosen implementer agree to. One of the banks specifically invited a discussion with a potential customer for the purpose of negotiating fees.
I know many solicitors will agree to act as executor and I suspect there is a wide range of fee arrangements. I would think that accountants, bookkeepers, financial planners and many others would make suitable executors and could agree to enter into a reasonable compensation agreement with you to act as your executor.
But whoever you enter into an arrangement with will want to make money — money that one of your beneficiaries may prefer to avoid paying out of your estate, so more income goes to the beneficiaries.
In a future column, I will write about the fees executors can claim, even if there is no separate fee agreement made in advance.
This article was written by or on behalf of an outside columnist and does not necessarily reflect the views of Castanet.
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