An executor is the person, people or trust company that you identify and name in your will to administer your estate — and ensure your last wishes are carried out as you intend.
Your executor will have a big role to play in settling your estate, which means choosing an executor isn’t something you should take lightly. But you shouldn’t hold off on selecting an executor either. Here are the basics on how to make the right choice for you.
What is an executor, and why do I need one?
When you die, everything you own and everything you owe together make up your estate. To help sell or transfer your assets and pay off your debts, you need an executor (called a “liquidator” in Quebec, where an estate is called a “succession”).
Your executor will ensure your estate is settled — the bills are paid and the assets distributed — in accordance with your wishes as set out in your will and with the laws governing the jurisdiction where your estate is located.
As you might imagine, your executor will have a lot of responsibilities. They will need to make decisions for your estate after you die, including how and when your assets are distributed, while following the terms of your will and prevailing legislation.
If you die without a will, known as “intestate,” or if your will doesn’t name an executor or the executor is unwilling to act, no one can control the estate, and the estate administration will be delayed until a court appoints an estate trustee.
What does an executor do?
An executor’s role includes many different responsibilities:
- identifying and protecting your assets while they are in the estate
- applying to court to confirm their role in administering your estate, if required
- identifying all the potential beneficiaries, heirs and other claimants (such as creditors)
- settling your debts and addressing any claims on your estate
- ensuring all the assets and debts in your estate are accurately valued, filing your final tax return or returns, and paying any taxes due
- distributing the assets in your estate according to your wishes as set out in your will
Keep in mind that if you are a physician with an incorporated medical practice (or a holding company, if you’re no longer in practice), your estate will be more complex. As a separate legal entity, your corporation won’t automatically be dissolved at your death.
Instead, your executor will need to distribute the shares, or the proceeds from winding up your corporation, in accordance with your shareholders’ agreement, if you have one, and the terms of your will. See our article Estate planning for incorporated physicians.
How to choose an executor
Because your executor will play such a big part in settling your estate, it’s important to pick a candidate who is well suited to the role. Ask yourself these questions:
- Will your executor be impartial? If they stand to benefit from your estate, or they have a close relationship with one or more of your estate beneficiaries, it may be more challenging for them to act with the impartiality that is required of an executor.
- Will they be there when you’re likely to need them? You will want to select an executor who you think is likely to outlive you, and whose geographic location doesn’t limit their ability to administer your estate.
- Do they have the required knowledge and expertise? If your estate is complex, your executor may need special expertise to carry out their duties effectively.
- Are they willing and able to assume the liabilities associated with acting as your executor? If your executor fails to carry out their duties with the care and skill expected of an executor, they may be held personally liable for any losses — so it is important to select an executor who will act professionally and will seek appropriate assistance as required.
If this list seems daunting, note that you aren’t required to pick a single individual or even a group of individuals as your executors. Instead, you can appoint what’s known as a “corporate trustee” to act as your executor.
A corporate trustee is typically a trust company whose primary function is to provide executor and trustee services. This can be a good choice if you’re worried about whether acting as an executor might be overly burdensome to an individual you would otherwise consider for this role.
Why it matters where your executor lives
When you’re choosing an executor, whether that’s an individual, group or trust company acting as a corporate trustee, it’s important to ensure they are resident in Canada. That’s because if you have a non-resident executor, the Canada Revenue Agency might decide your estate is non-resident too, leading to potentially negative tax consequences. If you think this issue might affect you, a qualified tax advisor can help you sort out your next steps.
How MD Private Trust Company can help
As you can see, the list of duties to be performed by an executor can be long and onerous, especially if you have corporate or other complex assets. One option you might consider is to select MD Private Trust Company (MD Private Trust) to act as your executor — or co-executor with others you choose.
MD Private Trust is federally licensed to act as an executor or co-executor and as an agent for executor services (if you’ve been named an executor and want help with that responsibility) and trustees. The professionals at MD Private Trust regularly work with incorporated physicians and have the knowledge and ability required to professionally manage your affairs.
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.
Estate and trust services are offered through MD Private Trust Company.
1 An “executor” is called a “liquidator” in the province of Quebec and an “estate trustee” in the province of Ontario.
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.