From considering how assets should be distributed to selecting an executor, will-makers have much to consider when creating their estate plan. And, while a trusted friend or family member is often the go-to choice for will-makers when appointing an executor for their will, others may find that they are better served by appointing a corporate executor.
But what is a corporate executor, and what are the advantages (and disadvantages) of appointing one in your will? In this blog post, we’ll introduce what corporate executors do and when it might be appropriate to consider appointing one over a friend or family member.
What is an Estate Executor?
An executor is the individual designated to fulfill the wishes outlined in the deceased person’s will. In certain instances, the person creating the will can designate multiple individuals as “co-executors” or specify alternate executors if the initially appointed executor cannot fulfill their role.
In Ontario, the term “estate trustee” is synonymous with “executor”. These terms are
commonly used interchangeably. For this blog post, we will use the term “executor”.
What Does an Executor Do?
Executors perform a wide variety of tasks when administering an estate, including the following:
- Handling funeral and burial arrangements;
- Arranging for the care of children and pets;
- Completing administrative tasks following the will-maker’s death;
- Identifying estate assets;
- Applying for probate;
- Handling disputes between beneficiaries; and
- Distributing estate assets.
For further discussion on the tasks handled by executors, read our recent blog post, What is an Executor of a Will?
What is a Corporate Executor?
A corporate executor is a professional executor that a will-maker can appoint to manage their estate. Corporate executors often work for trust companies or financial institutions and can be “hired” to perform the role of executor.
The Advantages of Appointing a Corporate Executor in Your Will
Now that we’ve covered what corporate executors are, you might be wondering: why would I appoint a corporate executor? Below, we’ll cover the advantages of appointing a corporate executor and when a corporate executor may be preferable based on your unique circumstances.
Corporate Executors are Highly-Trained Professionals
Acting as an estate executor can be a challenging experience, regardless of the size of the estate. And, when a will-maker has a high net worth or a complex estate, they may not have friends or family members who they feel are well-positioned to navigate the intricacies of administering their estate. Or, simply, a will-maker may want to “leave it to the professionals.”
That’s where a corporate executor can help. With their expertise, corporate executors have the background necessary to navigate estate administration’s legal, financial, and tax implications and minimize the challenges that can arise when administering more complex estates.
Corporate Executors are Unbiased
Every family has different dynamics and challenges. In some cases, these dynamics can create problems – such as disputes or a perception of bias among the beneficiaries – when one family member is appointed as executor.
As a neutral third party, corporate executors can be a great option for will-makers concerned about family dynamics and potential disputes arising during the administration process.
Corporate Executors Have Specialized Expertise
Depending on the nature of your estate, your executor may need to navigate complex administration processes. For example, if your estate includes commercial assets or complex investments, you may need to consider specialized support.
Corporate executors have the knowledge and expertise to administer your estate – regardless of the types of assets involved – and can help bring peace of mind when dealing with a complex estate.
Corporate Executors Can Act When Friends and Family Are Unavailable
One consideration for will-makers (that underscores the importance of discussing your estate planning intentions with potential executors in advance) is availability. For example, while you might intend to appoint a friend or family member as your executor, issues can arise if they are unable or unwilling to act as executor when the time comes.
Corporate executors are a great alternative if you have concerns about your potential executors’ ability or willingness to act. As providers of professional services, you obtain peace of mind in knowing that your corporate executor will act when called upon to do so.
Corporate Executors Can Act In Other Jurisdictions
Suppose a will-maker owns assets or property in other jurisdictions (like another province) or their prospective executor lives in another jurisdiction. The administration process can become more complicated or trigger potential tax consequences in that case.
In these cases, appointing a corporate executor can help avoid the challenges of navigating different jurisdictions. For example, many Canadian trust companies and financial institutions that offer corporate executor services have offices nationwide and are well-positioned to navigate jurisdictional considerations.
How Much Are Corporate Executor Fees?
In Ontario, the Trustee Act, ROS 1990, c T.23 states that executors are entitled to a fair and reasonable allowance for their work administering an estate. Generally, this has been interpreted to mean that an executor will receive fees amounting to 5% of the estate’s value for fulfilling their executor duties.
Depending on the circumstances, including provisions in the will relating to the executor’s fees and the complexity of the estate, executors may receive more or less than 5% in fees. In some cases, they may even elect not to receive a fee.
To that end, a corporate executor’s fees can vary. However, some will-makers choose to appoint a non-corporate executor (i.e., a friend or family member) because it ensures that if executor fees are paid, they will go to a friend or family member rather than a business.
Final Thoughts on Appointing a Corporate Executor for Your Will
At the end of the day, appointing a corporate executor will depend on various factors. However, it’s important to remember that, in most cases, appointing a friend or family member as your executor is perfectly acceptable. To minimize the risk of your executor being unable to act, ensure you notify potential executors of your intentions well in advance and appoint an alternate executor if your “top pick” cannot act for you.
For advice on the right executor arrangement for your needs, speak with an experienced wills and estates lawyer.
Contact Tierney Stauffer LLP’s Wills and Estates Lawyers for Thorough Estate Planning Services
Tierney Stauffer LLP’s lawyers take a client-focused approach, offering comprehensive guidance throughout the estate planning and administration process.
We provide practical and honest advice to clients, supporting them with their estate planning goals and creating effective strategies to protect their interests. Call us at 1-888-799-8057 or contact us online to speak with one of our experienced wills and estates lawyers.