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Executors are the managers of estates: they administer the last will and distribute assets to beneficiaries and other specified parties in the will. An executor has responsibility with significant potential for moral hazard and a large influence on the velocity and amount of capital that is preserved within an estate; hence, it is paramount to elect a trusted and appropriate executor for your will and estate. To be an executor is to assume a legal responsibility that can be called upon at any time.
This responsibility is often assigned to family members or close relatives. However, the selection of an executor should not be handled lightly, and there a number of considerations you should keep in mind. These include tax and fee implications due to your choice of executor and the complexity of estate size and any significant changes thereof. This article focuses on the implications of choosing an executor in light of the above considerations for high net worth estates in Canada.
There are tax implications associated with your choice of executor in Canada. Changes in your residence or the residence of the executor impacts the fees associated with will administration, and the time in which an executor can distribute assets. The provincial court which manages wills and estates (the probate court) only has jurisdiction over its residents. The court which would administer proceedings would be the one in which the estate’s primary holder is located. In certain provinces such as Alberta and Nova Scotia, non-resident executors are required to post a bond of insurance. This bond of insurance is charged as a percentage of the estate’s assets: for example, the bond may be $100 to $1,500 per year for a $10,000 policy till the estate is settled. The executor will charge the amount paid for the bond on the estate, decreasing the amount distributed to the beneficiaries. As such, if movement or assets across provinces is a concern, it’s important to either change executors on move, or to select an executor with services across the provinces.
Connect with your Echelon Investment Advisor to Discuss your needs, this information or any other questions you may have.
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