How Often Should you Review and Update your Will?December 9, 2010
Supported Decision Making in Medicine HatMarch 21, 2011
Being asked by a family member or friend to be the Executor (also called a Personal Representative [PR]) of their Will is a big honour. It can be hard to say no to someone who trusts you and respects you with this responsibility.
The PR’s role is to gather the deceased person’s assets, pay their expenses, and then distribute what is left (sometimes referred to as the residue) in accordance with the Will. While this sounds rather straight forward, there are several issues a PR should be mindful of when accepting the role of PR.
A PR is responsible to the beneficiaries to do the job correctly, and in accordance with the Will. This includes ensuring there is money to pay all the bills before distributing assets to the beneficiaries. If a PR distributes assets to the beneficiaries and as a result the estate could not pay a debt, the PR could be personally responsible for the debt. This is why some PR’s put ads in the Saturday classified section of the Medicine Hat News called Notice to Claimants. The Notice gives a date for creditors to contact the PR with their claim. If a creditor gives notice of their claim after the date, it will only be satisfied by the undistributed portion of the estate. In this case the PR will not be personally liable if there is not enough money remaining in the estate to pay that creditor.
A Will might state that a child or grandchild not receive their inheritance until they reach a certain age (for example, 25). The PR holds/invests the money for this child until they reach a certain age, and may also advance some money to the child or their guardian from time to time (for example, for university costs). Depending on the age of the child, this could be a long-term responsibility. A PR can be personally responsible for losses due to unwise or risky investments, (think Bre-X or Nortel stocks) if they fail to be prudent with the investments.
It is important to find out whether all (children) beneficiaries are being treated the same, or if the black sheep is being excluded. In the Medicine Hat area, this may also occur in farming families, where children who work on the farm receive the farm assets, and children off the farm do not. In my experience, children expect to be treated equally. Your good relationship with a beneficiary who is receiving less than their siblings could be impacted. A PR may play an active role mediating family disharmony while completing the estate administration as efficiently as possible.
A Will may allow a PR to charge a fee. If you choose to charge a fee, it is taxable to you as income. You should consider how the fee may impact you if you are retired, and receiving OAS benefits as there could be a clawback.
Accepting the role of a PR can be a major commitment. If you have any concerns in acting as a PR, you should consult a lawyer in our Estate Department before agreeing to be named a PR or accepting the responsibility of acting as PR.