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How do I chose an Executor that can handle everything?

CV TrustCo December 2, 2015

At CVTrustCo, we often run into this situation when a Client is updating their will.  The question becomes:

I have personal assets and needs that are much different than my business assets and needs.  How do I select an Executor that can handle both?

The simple answer is that you don’t need to.  Depending on the Client’s age, there are two solutions that can achieve a segregation of personal and business assets and needs.

For those under 65 years of age

It is now possible to have multiple wills.  In this case, the Client could have a Business Will that only holds the shares of their private company and a Personal Will that deals with their personal assets and needs.

As separate Executors are required for multiple wills, the Client could appoint:

  • A business Executor for the Business Will that understands complex corporate issues and who is trained in achieving the result the Client wishes. This could range from succession to family, an orderly sale of the business to third parties or management or liquidation. All of these options have complex financial, legal and tax issues that require specific expertise.
  • A personal Executor that understands you and your personal needs. Ideally this person could be a family member or friend. Dealing with family heirlooms is often something one does not want to leave up to a business Executor – there can be a lot of family attachment.

As an added benefit, probate fees may be avoidable on the Business Will’s private company shares, which is a savings of 1.4% on the value of the private company shares.  If a will is not probated, it has the added benefit of not being a “public document” allowing for greater privacy.

For those 65 or older

Alter-Ego (one person) and Joint Partner Trusts (husband and wife) provides greater flexibility for those over 65.  Both require a tax deferred transfer of assets to a trust during the Client’s lifetime.  Note that there are specific rules to deal with the trust’s income and capital.

To achieve this separation the Client could:

  • Create an Alter-Ego or Joint Partner Trust and transfer the shares of their private company to that trust. During the Client’s lifetime they could be the trustee and when no longer able to, a corporate Trustee could be appointed to achieve their wishes as discussed above. It should be noted that the addition of a corporate co-Trustee together with the Client could provide greater governance and independence to the trust.
  • Leave the Clients personal assets behind to be dealt with thru their will. The Executor of this will could be a family member or friend to deal with the family home, contents, heirlooms, etc.

Added benefits of the trust include no probate fees, privacy and the possibility of avoiding a challenge from a disgruntled family member.

The bottom line is that there are a number of alternatives available to achieve your objectives.  Of course, professional advice is required to implement these opportunities.

How about a separate will for your art collection, antique cars, etc.?

 

About the author

Ron Voyer has 25 + years experience in Canadian income tax advisory primarily focused on Estate Planning and Transaction Advisory.
In a personal capacity, Ron has taught numerous courses for the Institute of Chartered Accountants, Certified General Accountants and the Canadian Tax Foundation; been a Director of the Canadian Tax Foundation; and acted as an executor and trustee.

 

Our estate planning posts consider estate planning issues at a high level.  Before you commence any form of estate planning, please consult with tax and legal advisors.