Use Caution When Tapping an Executor

Choosing an executor is one of the most critical parts of planning your estate.

Setting Up a Health Care Directive If you suffer from an accident or illness and become unable to communicate the type of medical treatment you wish to receive, your family must guess what you want. A health care directive, or living will, eliminates the guesswork by making it clear what your wishes are. Usually, a living will contains specific directions on the course of action you would or would not like to take if you are in a terminal condition, a permanent coma or in a persistent vegetative state. It may provide instructions on whether or not you wish to receive artificial life support, artificially administered food and water or comfort and care. Here are the answers to some common questions about health care directives: Q. Who can make a health care directive? A.Generally, any person who has the ability to understand information relevant to making a medical decision and appreciate the consequences of a decision may make a heath care directive. The provinces and territories also have varying age requirements. Q. Do I need a health care directive if I already have will? A. Yes. Health care directives and last wills are very different. Your will deals with property and the directive deals with medical treatment and care. Q. Are health care directives legally binding? A. Yes. Once they are properly signed and witnessed, family, friends and health care providers must follow the directions as long as they are consistent with generally accepted health care practices. Keep in mind that health care practitioners are not required to ask whether you have signed a directive or to search for one. Make sure that your family, friends and health care representative know that you have signed one and that they know where it is. Health care providers that are unwilling to follow your directions are usually obliged to refer you to a provider who will.

In some families, that decision is based on tradition or culture, where the oldest child or male is automatically given that role. But this may not be the best choice. It can cause family resentment and the person named may not be suited to the task.

If the administration of your estate is expected to be complicated — or there is family disharmony — consider naming someone else as executor. Your surviving spouse or children can receive regular reports from the executor, keeping them advised of the process of settling the estate.

In general, you can select anyone, or a group of individuals, to serve as your executor, but it is important to consider whether the person:

• Will outlive you;
• Is honest, trustworthy and will carry out the wishes you put in your will; and
• Lives close to the decedent’s home and will be able to access the local court and settle the estate without delay.

Two questions commonly come up in discussions of naming an appropriate executor. Here are those questions and the answers:

Q. What qualities and abilities should an executor have?

A. When you write a will with the help of your attorney, it’s important to choose a competent and trustworthy executor and alternate executors. Otherwise, even careful estate planning could be rendered useless.

Your executor can be any person or institution that you desire. If you feel you cannot trust a family member, consider naming your accountant, attorney or bank trust department. Whoever you choose, keep in mind that your executor should be:

• Familiar with your family situation, including children, step children and former spouses.
• Able to spend the time necessary and is willing to perform the duties.
• Willing to work with the estate’s attorney and accountant.
• Familiar with your finances, property and other assets; and
• Experienced and competent in business matters to provide for the continuation of your business if you have one.

Q. What are the executor’s responsibilities?

A. Your executor becomes your personal representative and fiduciary after your death and must administer the estate and ensure the will is carried out. In general, the executor must:

• Arrange the funeral and pay for it;
• Pay any outstanding bills of the estate;
• Collect and preserve assets;
• Pay debts, taxes and administration expenses of the estate; and
• Distribute estate assets according to the terms of the will.

Besides naming an executor, you should consider giving someone Power of Attorney to make decisions about and sign official documents involving your finances and assets.

There are two general types of Power of Attorney:

1. Durable Power of Attorney: An individual acts on your behalf if you are unable to make decisions. This person would control your finances and your assets, so you need to choose someone you trust to ensure that your wishes will be heard, understood and carried out to your specifications. You set up the durable power of attorney to come into effect only if you are unable to act on your own behalf.

2. Non-Durable Power of Attorney: An individual acts on your behalf if you are not available to sign legal or financial documents for one reason or another.

Common examples of what a Power of Attorney allows a person to do on your behalf are:

• Manage your money, bank accounts, and safety deposit boxes.
• Enter into contracts and settle claims.
• File tax returns and handle government benefits.
• Sell, mortgage, and manage property.
• Plan an estate and financial gifts.
• Maintain business interests.

Because the individual’s powers are significant, there is often a clause in a Power of Attorney to appoint a second person if the first is unwilling or unable to perform the duties. This person is called a successor agent or a successor attorney-in-fact.

Consult with your adviser. Naming an executor and giving someone power of attorney are critical decisions and your adviser can help you choose the right individuals.