Our aging population is driving some much-needed critical thinking about wills and executors.
It is now widely acknowledged that being an executor is not an honour – it’s potentially time-consuming, aggravating work. You need a financially experienced person with good organizational skills to be an executor – it’s not enough to just pick one of your children. Also, the idea of having an adult child be your executor without any compensation is being challenged.
In a recent newsletter, I looked at some potentially costly options for people who don’t have someone who can be their executor. Estates lawyer Barry Corbin read that post and thought it perpetuated the idea that a child acting as executor should not be compensated. In an interview, he outlined his reasons why people drafting a will should consider compensating a child who serves as executor.
“Number One, it takes time and trouble, sacrificing your normal day-to-day life, to do the job and do it properly,” he said. “And, Number Two, you’re assuming a risk. Are you going to find yourself at the wrong end of a lawsuit by one of the beneficiaries who says, ‘Why did you sell the house for that low amount of money?’ I could go on and on about the nature of the complaints that a beneficiary might have about the way that an executor has carried out the responsibilities.”
Executors are typically entitled to claim “fair and reasonable” fees for the time and trouble in administering an estate, and this amount tends to be in the 3 to 5 per cent range. One reservation parents have about paying a child serving as executor is that it shows favouritism toward that person and can be seen as diverting money away from siblings. Mr. Corbin said there are cases where parents specifically prohibit compensation to a child serving as executor.
Here’s what Mr. Corbin suggests for parents who recognize the time and trouble their executor will go to and want to open the door to compensation: simply add a sentence to the will that encourages the executor to claim compensation to the extent the law will allow. “There’s a message there,” he said. “Don’t feel guilty about making the claim.”
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Rob’s personal finance reading list
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How to save thousands in mortgage interest
A thorough rundown on the mechanics and benefits of making a mortgage prepayment – a lump sum payment against the principal. There are penalties for fully paying off your mortgage early, but there is usually room to make limited prepayments. An example is included here that generates $89,501.72 in interest savings. Now, for a look at how the recent rate cut by the Bank of Canada will affect mortgages costs.
A new low in rental shortages
A Vancouver senior offered a $350 finder’s fee to anyone who helps him find a new place to live. He’s been told he has to vacate his current rental by Aug. 1.
Grading EQ
A thorough evaluation of the bank card from EQ Bank, an online challenger to the Big Six banks. The EQ card offers functionality like access to ATMs and payment wherever credit cards are accepted. Basically, you get the digital version of what was once known as a chequing account with no fees.
Ask Rob
Q: Often with my credit card while abroad, I get offered to pay the sum in Canadian dollars. It seems high to me, but what is best, pay in the local currency (euros or dollars) on in Canadian dollars while in the U.S. or Europe?
A: “Say no to paying in Canadian dollars while travelling,” Preet Banerjee, a personal finance expert, wrote in a column for The Globe not too long ago.
Do you have a question or comment for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
How to unlock a locked-in retirement account. LIRAs are where your money goes when you withdraw money from a pension plan when you leave an employer. LIRAs do not generally allow for lump-sum withdrawals, but there can be exceptions.
In the social sphere
Social Media: The best Canadian credit card when you’re living abroad.
Listen: An investment adviser talks about how much life insurance he decided to buy himself and his wife. Term insurance, that is.
Money-Free Zone: Check out the seven incredible minutes of gospel-jazz fusion in the song Angels, which appears on a new album called Amen from Joy Guidry. I also recommend you listen to Members Don’t Get Weary. If you feel bored by what you’re listening to these days, start here.
More PF from The Globe
- When it comes to housing and money, when do parenting obligations end?
- Younger Canadians deserve compensation for enduring higher home prices
- Consider these last-minute planning ideas before capital-gains tax changes arrive
- Triggering a capital gain by June 25? Here are five ideas for what to do with that cash
More Rob Carrick and money coverage
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Rob Carrick