Surprisingly, a 2022 report from the National Institute on Aging revealed that only 48% of Canadians have a will. So, in other words, more than half of all Canadians would prefer to have the government allocate their financial assets and heirlooms to their heirs.

When it comes to estate planning, one of the most crucial decisions you’ll make is selecting the right executor and trustee. If you have a will, you’ll need to name an executor. If you have trusts, you’ll need a trustee. Many affluent individuals have both, and even multiple trusts, each serving a unique purpose. If conflicts within your family are likely, it would be wise to consider appointing a third party as your executor or trustee. While corporate trustees like lawyers or bank trust departments charge fees, even a family member acting as an executor can legally take up to 5% of the estate’s value as compensation.

The first and most essential step in estate planning is simple: don’t leave your family in the lurch by dying without a will. If you die intestate, your assets are distributed according to a standard template set by the provincial legislature, which may not align with your wishes. Signing a will and any relevant trust documents ensures that your assets—both financial and sentimental—go to the people and causes you care about.

For those with complex family dynamics or specific concerns about how their heirs will handle a windfall, trusts offer a way to manage the distribution of assets. Whether you’re worried about a beneficiary’s spending habits, vulnerability to scams, or even a rocky marriage, trusts allow you to control how and when your assets are accessed. You can set conditions for the distribution, such as age milestones, health care needs, education expenses, or housing purchases. This foresight allows you to protect your loved ones long after you’re gone.

If you find yourself on the other side, as the executor or trustee of an estate, your first rule should be: take your time. While notifying pensions, financial institutions, insurance companies, and canceling subscriptions is a priority, distributing assets to heirs should be anything but rushed. The probate process can take up to a year, allowing time for creditors or any potential disputes to surface. Acting too quickly could result in personal liability, as you could be held accountable if other claims emerge after distributions are made.

Serving as an executor or trustee comes with significant responsibilities and potential risks. Consider hiring an estate lawyer or a trust company to navigate the probate process and minimize your liability. It’s also wise to discuss these matters with your loved ones while they are still here, ensuring that everyone is clear on the details and intentions of the will or trust.

Finally, remember that as an executor or trustee, you’re entitled to compensation for your time and effort. If you’re considering taking on this role, make sure you fully understand the responsibilities and the potential pitfalls involved. Estate planning isn’t just about passing on wealth; it’s about ensuring your legacy is managed according to your wishes and protecting those you care about from unnecessary stress and conflict.

Email me at info@financerx.ca.