I recently received an email from the member services department of the Canadian Bar Association which began as follows:
“30% of our clients are lawyers that accept personal executor appointments. If it’s good for the lawyer, shouldn’t you tell your estate executor clients that it’s good for them, too?”
The “it” in question is Estate Administration Insurance (or Executor Insurance).
The language of the communication is pretty provocative: “executor risk is significant”; “you can’t predict where an executor negligence claim may come from”. The proposed solution? Estate administration insurance from ERAssure.
While estate administration insurance may well make sense and protect executors from personal liability in certain situations, it’s neither a panacea nor the only option.
In our experience at Scotiatrust, actual or proposed executors express four key concerns about the role, they:
- find the scope of tasks and duties involved in settling an estate overwhelming
- are concerned about the time commitment and other logistical problems (travel, for example) they may face
- express anxiety over the possibility of family or beneficiary conflict
- find the potential for personal liability unsettling
Estate Administration Insurance addresses only the final concern. It cannot relieve an executor of the administrative burden or lessen the time commitment. Although it may protect the executor in the event she is sued by a disgruntled family member or other beneficiary, it doesn’t remove or insulate the executor from the conflict.
As such, clients considering whom to appoint as their executor, or clients trying to decide whether they themselves want to assume the role, may wish to consider another option: appointing or retaining a professional executor. By appointing a trust company, clients can relieve family members of the administrative and time burden and remove the potential for personal liability. Though not foolproof, appointing an independent, objective third party to act can lessen the potential for family or beneficiary conflict. To a large degree, the same applies where a named executor opts to retain a trust company to act as their agent in respect of the estate administration.
So while it may be a good idea to “tell your estate executor clients” and, I suggest, your Will-making clients, about Estate Administration Insurance, where concerns extend beyond the potential for personal liability, you may want to advise clients about other available executor and executor assistance options.
Both you and your clients may find the document included with the CBA’s communication useful.
Thanks for reading.