The Executor – the personal representative of the deceased who administers and manages the finances of the estate
An executor (sometimes referred to as Personal Representative or Trustee in other provinces) is responsible for securing the assets of the estate, paying the debts and taxes, and dividing what remains of the estate among the beneficiaries in accordance to the Will. Administering a simple estate may take up to 18 months to wrap up if grant of probate (court order to approve the Will and authorize the executor) is required.
In most cases, people appoint a relative or a trusted friend to act as Executor. In some cases, a professional or trust company is appointed since the legal obligations of an executor are especially onerous and time-consuming. If the option is presented, many tend to renounce as executor once they realize how much work it entails as they prefer to leave it to their trusted advisors to deal with administering the estate. It is also important to appoint an alternate executor in case the first appointed executor predeceases or is unable to act.
We always recommend that our clients review their Wills from time to time (every 5 years) to make sure their executor is still the appropriate person for the job. Not only do life circumstances change, but also legislation and tax rules often change which may leave your estate plan incomplete.
The Guardian – the person appointed in the will to take care of minor children or disabled beneficiaries
In the event that the parents or legal guardian of children have passed before they become adults, a guardian is appointed to step in and care for the children until they reach the age of majority (19 in B.C.). When choosing the appropriate guardian, it is important to consider where your guardian lives and if they have the means to take care of your children. You can also appoint a legal guardian for a disabled adult that you are legally responsible for during your lifetime.
The Trustee – the person appointed to administer a specific testamentary trust within a Will
In some cases, the term trustee and executor can be interchangeable. Often a trustee is appointed because the will-maker wishes to distinguish the two roles. The executor administers the estate and wraps it up and then will transfer the funds to the trustee to set up a separate trust for instance, for the minor children. The trustee will then continue to administer the funds for the duration of the trust, while releasing funds to the guardian for the care and maintenance of the beneficiaries based on the provisions set out in the will. With complex trusts within a will, where beneficiaries may need an extra level of protection we sometimes use the term “protector” to appoint a person who would restrain or direct the trustee, having more discretion and separate powers; for instance the authority to add or remove beneficiaries.
Generally speaking, an executor can continue to act as trustee of the Trust, keeping the estate “open” for a longer period, rather than winding it up. It is important to consider the dynamics of the three roles, Executor, Trustee and Guardian and how they must work together to accomplish what is in the best interest of the beneficiaries and comply with their “fiduciary duty.” In some cases, the will-maker may consider the Executor as the person dealing with finances, often times having to play the “bad cop” and the other roles as care-takers of the beneficiaries. When choosing your representatives, consider who would be the best person to handle these particular roles.