Appointing an estate trustee or executor is one of the most important decisions people will make in their lifetime – strangely for their life after death. In affirming this decision there are several considerations that should be contemplated.
In situations where a testator has a life partner it almost seems obvious that they would appoint each other as their Estate Trustee in the event the other passes away. Alternatively, as people age and outlive their spouses, they often appoint their children, if any, or a relative. In making this decision, it is essential that the testator ask: “Did I choose the right person/people to preserve my life’s legacy and honour my estate?”
Being appointed as an estate trustee can be an honourable title. It does however come with complex duties and legal obligations. An estate trustee is a fiduciary. They are expected to be loyal and act in good faith and honestly in using the powers granted only for the purpose of administering the estate and carrying out the testator’s wishes. They have a duty to properly invest estate assets, act impartially, be transparent with their activities and continuously account to the beneficiaries of the estate.
In appointing an estate trustee, it is essential that the individual or individuals are made aware of their appointment and accept the same. It is important that they are advised of their duties and obligations as a fiduciary in the role. It is critical that they are well versed in the testator’s wishes and the reasons for bequests made. It is also key that they are not put in a position of conflict, where it can be avoided, or that any conflict is minimized through clear provisions in the testator’s will with respect to specific bequests or compensation for their services.
The beneficiaries of an estate are often family members who do not always see eye to eye or agree with the testator’s wishes. In selecting an estate trustee, it would be wise to consider the testator’s family history and dynamic among children, spouses, as well as parents of the testator. If an estate trustee will also be a beneficiary of the estate, a testator should consider the estate trustee’s ability to manage and minimize conflict, seek appropriate advise, legal and financial, as needed, and effectively execute the role in light of their personal circumstances. The individual or individuals appointed should be those who the testator can trust in their absence.
In addition to the above, it is critical to consider the potential size of your estate, including the complex nature of your assets and liabilities. There are alternatives to appointing family members or relatives or close friends as estate trustee. Testators can appoint a professional trustee, their lawyer, their accountant, or an institutional trustee to administer their estate. The trade-off is that it may appear to be more costly to appoint someone who is not family or close to the testator. However, in the event of an estate dispute between beneficiaries, which often includes grievances regarding an estate trustee’s administration of the estate, the legal costs that are often incurred by all parties can amount to the same cost as appointing a neutral party or institutional trustee.
With the above considerations it is important for a testator to have these discussions with their lawyer and the anticipated estate trustee to ensure that they appoint a party who will be able to administer their estate effectively, efficiently, and with empathy while preserving the testator’s legacy. Estate trustees should know without any ambiguity the reasons why a testator planned their estate in the manner they have. They should have explanations and supporting documentation for the decisions a testator makes with respect to the gifts, legacies, and distributions to beneficiaries as they can significantly curb any baseless allegations raised by disgruntled beneficiaries of the estate.
In making the decision as to who to appoint as estate trustee, whether it be an individual family member, or a professional, or an institutional trustee, or a combination of these options, it is essential the appointment be placed in the hands of those the testator has the utmost confidence and trust. Life after death can be long for a testator whose estate trustee is unable to administer the estate in a timely, conflict-free, and straightforward manner. A testator’s legacy can live on for much longer than desired when facing lengthy litigation amongst family squabbles, all because serious considerations were not given in the appointment of their estate trustee(s).
This article was originally published by The Lawyer’s Daily, part of LexisNexis Canada Inc.
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