December 12, 2017

Corporate Executor – When to Use One

When you prepare your Will you will need to select one or more executors to administer your estate . People will often select their spouse as their initial executor and their children as their alternate executors.

There may be situations where having a “corporate executor” makes sense for you. A corporate executor consists of executor services provided through a trust company. Many Canadian financial institutions offer corporate executor / estate trustee services.

If the administration of your estate will be particularly complicated, or if the gifts in your Will may be spread out over many years, a corporate estate trustee may be a good choice for you. If you are expecting there may be squabbles between your family members following your death, that may also be a reason to consider a corporate executor.

Here are the primary reasons that corporate estate trustee services recommend that you use them:

  • They have years of experience with a wealth of knowledge;
  • They are objective;
  • Their primary responsibility is to  protect your wealth;
  • You may enjoy greater returns on your investments;
  • You’ll receive reliable, professional service.

An executor is entitled to compensation. When you select a corporate estate trustee, typically you enter into a compensation agreement with them before you prepare a Will. A compensation agreement sets out in detail how much they will charge the estate. In many cases, the fees that are charged by a corporate estate trustee are less than the “typical” executor’s compensation.

If there is nothing particularly complicated about your estate and if you do not expect issues between your beneficiaries, there may be no good reason for you to consider a corporate executor. Corporate executors do not bring the same “personal touch” that a family member or a friend does to the role of executor. Corporate executors may also not be as adept at dealing with issues concerning distribution of specific assets among family members because they will not be aware of family dynamics.

A corporate estate trustee will still require a lawyer to assist them in the administration of the estate. Typically corporate executors do not do “legal work” as part of their services. Accordingly the Probate Application, any real estate work and any other work that is normally handled by an estate lawyer would still be handled by a lawyer. The lawyer fees would be paid by the estate out of estate funds and not out of the executor compensation.

The following is a summary of the advantages and disadvantages of a corporate estate trustee:

Advantages:

  • Experience in dealing with complicated estates;
  • No bias in the event of beneficiary disagreement;
  • Can administer estates that run many years (or in perpetuity);
  • Fees are disclosed in advance by way of compensation agreements;

Disadvantages:

  • Less personal touch than an individual executor;
  • Fees may exceed those charged by a family member or friend;
  • The administration may take longer with a simple estate;
  • The beneficiaries may not be provided with reports as frequently as with a relative or friend as an executor;

 

CONTACT US

Feel free to contact us at any point for assistance or advice with respect to Estate Law, Estate Planning, Estate Administration or Estate Litigation. We may be reached at 705.435.4339 or contact us via email.