A lot has been written about how should choose an executor, and some of it in this blog place.
A couple of years ago, fellow boggler Emily Hubling wrote eloquently about the risk and rewards of appointing a professional advisor as executor.
I would like to revisit some of the points made in the context of appointing a corporate executor, some who is specifically skilled and trained for the role. Why would you want an estate to want a corporate executor?
A corporate executor would possess knowledge of complex trust, estate and tax law to assist in efficiently managing an estate. This is particularly important where the estate will likely include a certain level of complexity, such as where there are significant assets or real estate, where there are assets held abroad or beneficiaries living abroad, and where the possibility of having beneficiaries (or those who may challenge the will) being difficult to deal with.
A corporate executor would be impartial and can service the estate without being impacted by conflicting interests (such as in blended families) and emotions. This can also be viewed as a negative, causing concerns that the needs of some family members may be ignored. Appointing a personal executor with a corporate executor would be a means to deal with this issue, particularly, if the person executor will be viewed as being sensitive to the history of some issues etc.
A corporate executor is available to provide services at any time without the risk of becoming incapacitated or even deceased, an issue specifically raised in Ms. Humbling’s blog in the context of a “personal” mandate.
Frankly it is probably easier to sue a corporate guarantor for errors are made in the management of an estate or trust. If a family member is the executor and an error is made, legal recourse may be harmful to family harmony and/or becoming very personal.
Engaging a corporate executor means that a family member, friend or other person will not be burdened with the difficult and time-consuming job of being an executor.
Where long-term bequests or trusts need to be managed for an ill or incapacitated family member, a corporate executor can provide continuity and ongoing services.
A corporate guarantor will charge a fee for their work, which may be a concern as the fees will reduce the value of the estate to be distributed to beneficiaries. It is general practice to charge fees based on the value of the estate as well as earnings in the estate. Sometimes, personal executors won’t. Some corporate executors will negotiate their fee arrangements when the will is drafted. Also, a corporate executor may be able to provide professional services (such as valuations of assets, accounting and tax preparation, or probate applications) which a personal executor would have to engage a professional further reducing the value of estate assets.
Bottom line – As noted in this blog space over the past decade, I think you have to look at the size and complexity of the assets in question, the nature and extent of the beneficiaries and bequests associated with estate, etc. amongst other factors to determine the best type of executor for the estate. It is nice to know there are a number of options.
Robert StewartJuly 14, 2020 - 1:31 pm
I am seeing the value in having a non family member as a second executor for an estate. This is especially true if the family is dysfunctional and has a low level of trust compounded by jealousy.