When providing instructions to your solicitor for preparing your Will, one of the first questions that he or she will ask is who you want to act as your estate trustee (also referred to as an executor/executrix). In short, an estate trustee is a personal representative appointed in a Will to consolidate and distribute the assets of an estate and attend to the payment of any liabilities. It is the estate trustee’s responsibility to carry out the terms of your Will and ensure that your final wishes are respected and fulfilled. Estate trustees are entitled to fair and reasonable compensation from the estate for their role in administering the estate, but they need not take such compensation. You can choose one or multiple estate trustees, and you should also appoint an alternate estate trustee in case your first choice(s) refuses to assume the role, dies before you, or is incapable of acting. The choice of whom you appoint as your estate trustee is a very significant decision that should be carefully considered. Ultimately, it will be your beneficiaries in your Will who will be the most impacted by your decision. Although your estate trustee must follow your wishes as stated in your Will, most Wills provide your estate trustee with a certain level of discretion in making various decisions regarding your assets.
With this in mind, I’ve compiled the following factors to consider, in no particular order, when choosing your estate trustee(s):
Competency, Capability and Reliability – Being an estate trustee is a difficult job – there are a plethora of responsibilities and liabilities at stake. They must work to determine the nature and value of the estate assets, set up and administer trusts established in the Will, settle claims against the estate, manage tax consequences, advertise for creditors, account to beneficiaries, and much more. In this process, they will likely need to deal with banks, lawyers, accountants, investment and financial advisors, and other professionals and governing bodies. If your estate trustee is a close family member or friend, you should understand that they will likely be grieving in addition to managing all these responsibilities and liabilities of your estate – not every individual can handle being in such a position. If you have a business that is to be continued or sold upon your death, you should ensure your estate trustee(s) have the required skill and knowledge to handle such business matters and can exercise good business judgment. As such, especially for larger, more complex and sophisticated estates, it can be worthwhile to appoint a trust company as your estate trustee. Trust companies possess a higher level of experience and more resources to manage investments, estate accounting and other required estate administrative tasks than do most individual estate trustees. Another benefit of trust companies is that they are impartial in their administration of estates, which is desirable if there are estate assets that will remain in trust for a lengthy period of time. Although you want the estate trustee to be flexible and responsive to your beneficiaries’ personal needs, having an estate trustee who is competent, capable and reliable should be top of mind.
Availability and Location – You may have the perfect person(s) in mind to be your estate trustees, but if they aren’t readily available to complete the tasks required, or if they live in another country or out of province, they may not be the best candidate for the position. It is definitely preferable that the estate trustee live in a close geographical region as you do, so that the work that needs to be done to administer your estate can be performed expeditiously and without undue expense or inconvenience. There are also complications with appointing foreign estate trustees. If the estate trustee does not live in the same province as the deceased, then the estate trustee might be required to provide security in the form of an administration bond. This bond is a form of security that protects the beneficiaries and creditors of the estate in the event of improper administration of the estate assets (e.g., the estate trustee absconding with estate assets to a different jurisdiction).
Age – Your estate trustee(s) should be younger than you, with a reasonably high chance of outliving you. Although this factor seems obvious, there are many times when we encounter a client wishing to appoint his or her parents as estate trustees because these are the most trustworthy people in his or her life. Statistically speaking however, children outlive their parents, so unfortunately parents are not the right choice in most circumstances. Nonetheless, as long as you have an alternate executor in place, this would prevent you from having to amend your Will to add a new estate trustee once your parents pass away.
Politics – The view that people change when there is money involved is never quite so prevalent than in the administration of an estate. Even if you’ve provided for all your loved ones equally in your Will as beneficiaries of your estate, whether you appoint one, some, all or none of such people to act as your estate trustee(s) can lead to familial disputes and tension. If you have three children and each are equal beneficiaries in your Will, if you decide to only appoint two of the three to act as estate trustees, it may lead the one child who is left out feeling offended that you did not trust his/her judgment (which may or may not be true) and/or cause the two appointed estate trustees to feel unfairly burdened since they must perform the many estate administration tasks while the non-appointed sibling is able to sit-back and reap the benefits of being only a beneficiary. Furthermore, if you appoint multiple estate trustees, it would be prudent for you to know whether they can cooperate amicably and work well together as a team. You must also decide whether they must act unanimously or rule by the majority. If there are two estate trustees, they must act jointly.
Trust – Above all, you need to have trust in your estate trustee(s). Trust is established over time – it is built and earned slowly, but can be lost quickly. Understand that you are entrusting your estate trustees with your life’s assets, quite literally. Typically, those you trust the most are also your loved ones, which is why the majority of Will planning we do involves close family members acting as estate trustees. Even if they do not possess all the skills and knowledge that is required, so long as they are trustworthy and know you well, you can have comfort in knowing that they will do their best to ensure your wishes in your Will are fulfilled. Moreover, the skill and knowledge gap that may exist can usually be bridged by retaining professionals like estate lawyers, accountants and investment advisors. Trust, on the other hand, can never be bought.
Before finally deciding on your estate trustee, always ask them if they would feel comfortable performing this very important role when the time comes. It is also good practice to provide your estate trustee with a copy of your Will and indicate where to find the original Will.
In considering the above factors, you should be better equipped to make an informed and wise decision of who to appoint as your estate trustee(s) in your Will. If you have questions and concerns about your current Will, need a new Will prepared, or have other estate planning needs, always consult with your wills & estates lawyer who can assist in guiding you through this complex area of law.