Being named the executor of someone’s estate may seem like a great honour, but it comes with an array of practical and emotional challenges. Family dynamics, complex legal responsibilities and grief can make managing an executorship a daunting task — but it is something you can prepare for.
On top of the emotional distress of losing someone dear, you will be expected to deal with legal and financial issues. If you are an executor to the estate of a physician with a corporation, you will have to manage that aspect as well.
What things should you consider?
Ask yourself these questions — whether you’re considering the request or have already been named an executor.
1. Do you live in the same city as the person who has made the request?
Many executor duties need to be completed in person. It is a lot more costly, time-consuming and inconvenient if you have to travel.
2. Do you have time?
Being an executor takes a lot of time. Familiarizing yourself with the various duties of executorship will help you better understand what and when things need to happen.
Based on our experience at MD Private Trust (MDPT), an executor can expect a simple estate settlement to take approximately 250 hours of direct involvement. A more complex estate could take more than 400 hours, typically over the course of at least a year — and it is not unheard of to have matters continue for much longer than that.
3. Do you know what to do?
Here is a comprehensive checklist of executor duties. Generally, the responsibilities can be summarized as follows:
Gather the required information and documents, including the will, and make funeral arrangements.
Assess the estate’s assets and liabilities, including settling and paying any outstanding debts and claims against the estate.
Take care of administrative details, such as filing all income tax returns (current and outstanding).
Distribute the estate’s assets.
4. Do you have the financial expertise?
If you’re named the executor for a physician with a corporation, it can be quite complex to settle their estate. The corporation doesn’t “die” with its physician shareholder, so ongoing management of the corporation is required. In addition, you will have to decide whether to wind up the corporation and, if so, which windup strategy is best to implement.
Inefficient tax strategies can result in double taxation — being taxed once on corporate shares and again on distributions from the corporation to the estate. But with good estate and corporate management, more value can be passed on to beneficiaries.
There’s no doubt that being an executor can be difficult, but with some thoughtful planning and a little help, the challenges you’ll face can be overcome.
What if you can’t manage all the duties of an executor?
During what is likely to be an emotionally stressful time, missteps can occur. This can result in delays in the execution of the will and could also lead to fractured family relationships, inefficient strategies for dealing with taxes on the estate, and less value for beneficiaries. As an executor, you might also be personally liable for your actions.
The good news is that if you’ve been made the executor of an estate, you don’t have to face these responsibilities alone. MD Private Trust (MDPT) offers professional executor services and can act as an agent for your executorship, allowing you to take some of the responsibilities off your shoulders, while still retaining your decision-making authority.
As an agent for the executor, MDPT can help you understand what needs to be done and inform you about options. We carry out your instructions and help with your estate administration responsibilities. We can answer your questions and — with your permission — questions from beneficiaries and other interested parties, and explain why certain steps are being taken.
With years of experience managing the estates of physicians, MDPT can give you professional guidance during a time filled with emotional distress.
To learn more about MD Financial Management’s estate and trust offerings, contact an MD Advisor* and find out how we can help.
* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice, nor is it intended to replace the advice of independent tax, accounting or legal professionals.