Risks of acting as an executor

At Camber, we spend a considerable amount of time throughout the year preparing, implementing, and revisiting the financial plans of our clients. Our conversations center around helping clients maximize the utility of their money, structuring personalized solutions to achieve their financial goals, and navigating the sometimes complex emotions we associate with personal finances.

An inevitability of this process - and of our lives -is the need to prepare for, and deal with, death. Camber recently sat down with Jenna Carvalho, Founder &Principal of Calgary-based Guardian Estate company, to discuss estate planning and the role of an Executor. 

We felt it was important content and asked Jenna if she would put together some thoughts for our readers:

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Acting as an executor is often considered an honour. Many family members agree to take on the role without consideration of the tasks and responsibilities involved.

Administering an estate, however, requires countless hours, numerous steps, constant communication with beneficiaries, and the ability to navigate financial and legal requirements. More importantly, it also can lead to personal and financial consequences.

Before you agree to act as a loved one’s executor, you may wish to consider the potential risks.

Financial Risk

Executors can be held personally liable to reimburse an estate if mistakes are made during the course of the estate administration.

Innocent mistakes, including failing to review or reduce the risk of an investment portfolio that later declines in value, can prove costly to the executor. Other common mistakes, including not obtaining adequate property insurance or misfiling tax returns, can also expose the executor to financial liability.

If you’re acting as an executor, ensure you meet with the deceased’s financial advisors as soon as possible to protect the estate’s assets. If you’re not yet acting as an executor, confirm you are comfortable with the potential financial risks of your upcoming role.

Relationship Risk

The death of a loved one can change family relationships, particularly when money is involved. Executors are often required to make difficult decisions in emotionally charged circumstances – decisions that are not always favoured by all beneficiaries.

Deciding how to distribute personal items between family members, or choosing how often to make cash distributions to beneficiaries, may seem simple in theory, but are often the cause of estate disputes or litigation.

If you already have strained relationships with family members, consider whether you are willing to expose yourself to further emotional or stressful circumstances.

To learn more about the role of an executor and discuss whether a professional executor is appropriate, speak with your team member at Camber.

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 Disclaimer: Camber has no business or personal relationship with Guardian Estate Company, nor does Camber receive compensation for any referrals to or from Guardian Estate Company. We simply believe in the work they are doing: providing clients with the knowledge, tools, and expertise to best manage the challenges that come when acting as an executor.