Understanding the Role of an Executor - Hull on Estates and Succession Planning #222
Listen: Understanding the Role of an Executor
This week on Hull on Estates, Ian Hull discusses the role of an executor and how you can anticipate problems that may arise.
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Understanding the Role of an Executor - Hull on Estate and Succession Planning #222
Posted on February 15, 2011 by Hull & Hull LLP
Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag. The podcast you’re listening to will provide information and insights into estate planning in Canada. From the offices of Hull & Hull in Toronto, here are Ian and Suzana.
Ian Hull: Hi and welcome to episode 222 on Hull on Estates and Succession Planning.
Welcome back. I’m Ian Hull doing a solo podcast today without my compatriot, Suzana Popovic-Montag. Today is episode 222. It’s a great show that some of us of my vintage remember, Room 222. So it had a nice resonating history to it and I wanted to speak about a topic that ties into that historic show in the sense of this, and that is, is that we went to class, we watched 222…Room 222 when we were kids and as young teenagers and it taught us to understand and appreciate leaders, and leadership through education. Taught us to respect our teachers and some we didn’t respect and some we did. Sometimes we were wrong; sometimes we were right. Probably didn’t know until many years later. It ties into the same theme in my view as to being an executor. It’s an often criticized role and it’s easy to, as my dad used to say, it’s easy to kick down sandcastles – it’s not so easy to build them up.
And like every executor has, is that when they get the job of executor when someone passes away, the beach is flat. There are no…the water has been just waving across the rocks and the sand is flat and maybe not even wet enough to build anything with. Well the executor has to go and start from the beginning and building the sandcastles. And we often and too often in my view, see beneficiaries who just turn around and try to kick down the sandcastles as opposed to admiring them and respecting the work that they’ve done. Having said that, that’s life. And if you’re gonna take on the job, it comes with its own warts, so to speak. And we’ve been talking about in this series, in this mini-series, about some of the warts and some of the problems that executors run into with a view to trying to anticipate them and anticipate where you’re gonna get poked and prodded and complained about.
One of the easy things that I think is easily addressable is the whole question of the bank accounts. Early on, you’re gonna be required, as an executor, to determine the nature and extent of the bank accounts of the deceased. We tell our clients, please make some sort of list, even if it’s a photocopy of the bank statement that sits in a safe area where when you pass away someone can at least match up what institution, give some lead to the bank and so forth. Sometimes what helps is that when we ask our clients to draw Wills, we’ll say to them look, we want all this information about where your banking is, even the bank account numbers, so that it’s a record that should the executor come to us and say I don’t even know where my great uncle banked, I’ll have a note of it at least. Starting points. Leads.
But having said that, once you’ve identified it, we have an obligation to create our own estate account which we’re gonna talk about. But this is about pulling in assets at this point. We’re in the early stages. The water is just still rippling across the sand and we’re still trying to get our feet wet and determining whether the sand is too dry to build our sandcastle up or do we need to add some water to it. And so what we’re often faced with is, is what bank accounts exist and where are we gonna find those and locate those. There’s some Internet searching that’s available as well in most jurisdictions, a very easy one. One of the interesting searches that you can undertake is to look at old accounts through the Bank of Canada to see if the deceased just left money in an account that went dormant. But let’s just talk about easier ideas, sort of the low hanging fruit accounts. And those are the ones you kind of knew that they always banked at a certain bank and you’re gonna be able to find that out because if you show the bank the Will, they’re gonna give you that information. And in so doing, we’re often faced with the problem of it may or may not be in the form of a joint account. Now we have spent time over the years in our podcasts and we will continue to talk about this issue in some level because the Courts still struggle with it. But a joint account is a very classic estate planning technique and so as an executor if I come into this role and I meet a joint account issue, those are the sorts of issues that I want to seriously consider and probably seriously consider getting some legal advice or some help from my financial advisor or accountant as to how to deal with that joint account. But identifying the nature of the account, solo or joint, is a crucial, initial step that again, when we see attacks on an executor’s role and their duty, those are easy, low hanging fruit attacks as well in the sense that we see it too often, that the executors didn’t move quickly enough to determine the nature and extent of the assets in the context of bank accounts. Do determining if there are any bank accounts is vital.
The other sort of…now there are dramatic illustrations of this…but the more simple estates and the more straightforward estates are, we’re obligated as executor to really determine what the liabilities are. And it is sort of like chasing the bank accounts. It’s finding out what Visa cards are out there, what car leases are out there, what day-to-day automatic withdrawals are coming out of the account and for what purpose. And nature and extent of the liabilities is a core element of expectation of the executor. So again, we sit back and we say well where can we enhance our position with the beneficiaries, so that they’re not making attacks on us? Well we can show and document to the extent that it’s necessary…maybe a memo or a note…I went to these banks. I did this to find out the bank accounts. I determined their status, joint or not, or otherwise. I’ve determined if there is a corporate bank account, if there’s a private held company. I’ve determined that these are the liabilities that need to be addressed right away. And whether they’re funded through the bank account and the estate bank account is for another day and how we do those mechanics are for another day. But often it’s the itemizing, allocating and organizing of both the in assets and the out assets, so to speak. The in – finding the bank accounts; the out – paying the liabilities. That we see a lot of attacks on trustees unnecessarily if it’s done in an organized, efficient…and when I say efficient, that means timely as well. Because the Courts have consistently said if you’re not timely with these things coming out of the gate, you are going to be susceptible to criticism. Whether you should or shouldn’t be is another day and that’s for another lawsuit and it depends on the facts. But it is a very fundamental and basic organizational tool to expect of an executor and it’s an easy area to defend if you’ve done it right and you’ve identified it in a meaningful way.
So tomorrow we’ll talk a little bit about...the next podcast we’ll talk a little bit about what we’re gonna do with that in and out information and what our expectations are. But I wanted to cover the sort of basic parameters and the expectations I think that touch on our leaders, and those leaders being the executors. And coming back to my Room 222, the leaders are the teachers in our classroom or the people around us or the people that are prepared to take on roles such as executor.
So thank you very much for joining me this week. I’m missing Suzana and I apologize for her non-attendance and we look forward to our next podcast. Thank you very much.
You have been listening to Hull on Estate and Succession Planning by Ian
Hull and Suzana Popovic-Montag. The podcast that you have been listening
to has been provided as an information service. It is a summary of current
issues in estates and estate planning. It is not legal advice and you are reminded to always speak with a legal professional regarding your specific circumstance.
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