This Blog was written by Sara Hillier, Estate and Trust Advisor at MD Private Trust Company which is part of Scotia Wealth Management

“Oh hey! We’ve been meaning to ask you. Will you be our estate executor[1]?” a parent inquires of their eldest child over brunch. “Of course! No biggie.” comes the quick reply. “Alright it’s settled then.” and the conversation moves hastily on to more upbeat topics. After all, contemplating the death of a loved one is probably as uncomfortable as pondering one’s own demise.

Wealth and family dynamics are more complex and multifaceted than ever. Estate settlements are increasingly time consuming and litigious. The actions of the estate representatives are scrutinized more and more intently. For many parents, it’s no longer taboo to discuss their finances with their children and yet, a potentially important step in planning for a smooth estate settlement is often overlooked: The Family Meeting.

It may not be appropriate in all situations to hold a Family Meeting. Family dynamics could be too complicated and/or privacy may be a concern. For those who choose to have a Family Meeting, however, a truly productive session, preferably prior to the execution of documents, should meaningfully address the following:

• The responsibilities and liability of an estate executor. Are those selected truly able and willing to take on this fiduciary duty? The role of executor can be seen as an honour, however, it can also often be a significant burden. Most do not realize what’s involved until they are faced with this daunting task. During a time that will be emotionally challenging, they will need to navigate unfamiliar territory at potentially significant personal risk. They will also need to make crucial decisions while answering to family members who are likely to have differing perspectives.

• Clear communication of the intentions and rationale for the estate plan. Do family members understand the plan and the objectives it is designed to meet? Anything which may not be anticipated should be covered, such as an inequal or unexpected distribution, particularly in common-law or blended family situations. Thorough discussion should cover sentimental assets, such as a family cottage or personal effects. An explanation of any efficiencies, strategies and protections being implemented should be outlined, such as the hiring of a professional executor, the use of testamentary trusts, etc.
• Expectations for decision making and family relationships. Will the survivors respect the ultimate outcomes and avoid strain on their relationships? Any significant decisions which the executor will face should be covered as well as what they will and will not have discretion over. If the beneficiaries are expected to come to an agreement on certain matters, such as personal effects, this should be explored. If there is more than one executor, how they are to address disagreements should be determined. Clear expectations for attorneys for property and personal care should be covered as well.
• How executor compensation will be addressed. Is everyone clear how and why the executor should be compensated? Settling an estate can be a significant undertaking which can require hundreds of hours of work over an extended period. It should be anticipated that the executor will seek compensation given the time required and risk involved.

A well-executed estate planning family meeting is an opportunity to adequately set expectations, prevent strain amongst loved ones, bring clarity and preparedness to everyone and make it much more likely that an estate settlement will transpire as intended.

 

 

[1] An “executor” is called a “liquidator” in the province of Quebec and an “estate trustee” in the province of Ontario.

An “executor” is called a “liquidator” in the province of Quebec and an “estate trustee” in the province of Ontario.