As baby boomers age, a growing number of your clients are confronting the deaths of parents, siblings and longtime friends. Many boomers are being asked to take on the responsibility of being an executor of an estate — and, in some cases, have been appointed without being consulted.
The job can be baffling and overwhelming, with duties ranging from packing up the deceased’s personal effects to selling the house, settling outstanding debts and completing a final tax return. But financial services firms such as Toronto-based DundeeWealth Inc. and the big banks have identified death of a loved one as a life event in which they can provide support to their clients and earn their gratitude — as well as extra fees, in some cases.
You, as an advisor, can support your clients who have been named executors by steering them toward such services.
“About 95% of people appoint a family member or a friend as their executor,” says John Hamilton, president of Royal Bank of Cana-da’s estate and trust services division in Toronto. “It’s a trusted appointment, and most people want to appoint someone close to them. They don’t realize that the honour can be a burden, and can mean two years of hard work for the executor.”
RBC’s estate and trust services division has built a team of some 350 people across Canada, trained to assist with various estate-related issues, including executors’ duties. Among the offerings is an “agent for executor” service, whereby bank staff will offer whatever assistance is needed to the client, from completing specific tasks to managing the entire process. The estate-planning team has also put together a kit that will help clients who want to handle the executor process themselves. Hamilton says he has seen the stress visibly roll off clients’ shoulders when they realize help is at hand.
“Being an executor is extremely complicated, and many people don’t know where to begin,” he says. “When people are in over their heads, we can step in with our menu of services, and clients can choose what they need.”
Hamilton adds that there are at least 70 tasks an executor must complete, from an administrative point of view, and even more when there are properties and investments to deal with or beneficiaries who live out of province.
For example, once a home becomes vacant, it may require changes in insurance coverage as there is a higher risk of vandalism and burglary. Someone needs to think about mowing the lawn in summer and shovelling the snow and regulating the heat in winter so pipes don’t become frozen. The bank’s team has access to professionals who provide these services.
DundeeWealth’s Dynamic Funds Ltd. subsidiary has recently launched a program called Snapshots, an online tool that helps advisors deliver customized information to clients experiencing specific life events. The section covering death of a spouse includes useful information on an executor’s duties, including a guide that helps clients do everything from take an inventory of the deceased assets and liabilities to issuing death notices and letters of cancellation for items such as drivers’ licences and social insurance numbers.
Snapshots provides information in a variety of formats, including articles that may be emailed, printed and mailed, or presented to clients in person. The articles cover a variety of topics, including the basics of acting as an executor and preparing a final tax return.
“Our material on being an executor is one of the most popular pieces of the puzzle, when it comes to using Snapshots,” says Terri Williams, director of value-added programs with DundeeWealth.
An executor’s job involves developing a full valuation of household goods, furniture, artwork, automobiles, jewelry and personal effects, as well as determining benefits due under insurance policies and pension plans.
There are also a variety of tax issues, including calculation of capital gains and losses at the date of death, and preparing a final income tax return. All claims and debts must be settled, loans and mortgages must be discharged, investments and other assets may need to be sold, and assets must be distributed to beneficiaries. On top of all that, if an executor improperly distributes the estate’s assets or deals with assets or investments in an unsatisfactory manner, he or she may be held responsible for the losses that occur.
Hamilton cites one example of an executor who unknowingly let the insurance lapse on the deceased’s house; the house subsequently burned down and the executor was held liable by the beneficiaries of the will. Professional help ensures such oversights don’t happen.
“There is a growing amount of litigation on estates, and even the lay trustee or executor is not excused through ignorance,” Hamilton says. “Liability issues can arise with the maintaining and selling of properties. And sometimes the executor will be called upon to prove to beneficiaries that he or she got the best dollar when assets were sold.”
RBC’s estate and trust services division will assist with executor duties as much or as little as the client desires, Hamilton says. For example, the client may want to take advantage of RBC’s expertise on specific issues such as taxation or the selling of financial assets, or may simply hand the entire job over to the experts. Charges can be based on a fee-for-service or a percentage of the value of the estate.
“We can do a multitude of everything or just bits and pieces of it,” Hamilton says. “We help on a level that makes sense for the client, often acting as a partner and allowing the client to maintain control.
“We can take a simple estate and clean it up in six months with staff members who do this full-time,” he adds. “Some executors who go at it on their own will spend up to two years on it, and be emotionally and physically drained by the end of process. At the same time, he or she is going through the grieving experience of losing a loved one.”
Once someone goes through the job of being an executor, he or she often thinks twice about inflicting the responsibility on someone else and makes arrangements in their will for professional expertise, Hamilton says: “People think it’s an honour to be an executor until it bites them. It’s important to be aware of the liabilities and responsibilities.” IE
When your client is named executor of an estate
Although some consider the role of an executor to be an honour, it can be an onerous responsibility fraught with legal liabilities
- By: Jade Hemeon
- January 7, 2010 January 7, 2010
- 11:40