An executor is the person responsible for ensuring that the terms of your will are carried out, so the individual should be chosen very carefully. Since an executor carries many responsibilities (probating the will, distributing your assets to beneficiaries, filing tax returns and even arranging the funeral), you should choose someone reliable in whom you place your trust.
An executor can be a person, a company or a professional advisor such as a lawyer or trust company. This person should be someone who will probably outlive you so they can manage any trusts you may have for several years after your death. A contingent executor should also be named in the event that the primary executor is unable or unwilling to act.
Ultimately, an executor should be tactful and competent. The person is legally responsible for administering your estate and should act in your best wishes and not be influenced by any conflicts that may arise among family members.
In some cases, the executor is compensated for his or her time and services.
A beneficiary is a person designated to receive funds and/or other property under a will, RRSP, TFSA, trust or insurance policy. A beneficiary can be either a person or an entity, such as a corporation or charitable organization. There is usually no limit to how many beneficiaries you can name.
It’s important to name beneficiaries for your RRSP, TFSA, life insurance policy or other retirement plan so the money will go directly to those individuals after your death. If you don’t name beneficiaries, the money goes to your estate, (which in some cases, is appropriate).
If your children are minors and you name them as beneficiaries, someone must be named to manage the assets for them, or you can set up a trust and name the trust as a beneficiary. The trustee should be given direction as to when and for what purpose funds can be used by the beneficiaries.
It’s also very important to review your will regularly and make any necessary changes, especially in the event of a significant change in your life. If you remarry, you have to redraft your will as your existing will is deemed null and void. If you leave everything to your new spouse and he or she dies, then everything will go through the spouse’s estate, and your children from a previous marriage may be left out.
A guardian is a person who is legally responsible for the care of a minor or a person who is unable to care for him or her self. (e.g., a disabled adult)
Naming a guardian in your will provides peace of mind in knowing that someone will take care of your minor children or other dependents should something happen to you.
A guardian is responsible for a child’s physical care, health, education and welfare until he or she reaches the age of majority (19 in British Columbia). Although the guardian is financially responsible for the child, money is usually provided by the estate for that purpose. A guardian does not receive remuneration for his or her services.
The person you choose as the guardian should be willing and able to accept the responsibility of raising your children and should have good parenting skills and values similar to yours. Family members or trusted friends are good options; you should ask the potential guardian for their permission to be named as this is a significant responsibility. Naming a guardian is an important aspect of drawing up a will and should not be taken lightly.
When a will is created, the person making the will (the testator) nominates a personal representative (executor) to administer his or her estate. The testator may also nominate a trustee to manage assets that are left in trust to beneficiaries of the estate, such as a minor or someone with a disability. The trustee and the executor have different roles; however, the same person may serve both functions. The trustee is generally granted the power to make decisions on the distribution and management of estate assets that are included in the trust.
When choosing a trustee, it is important to select a person whose judgment you trust. The trustee need not be sophisticated in all accounting, financial, legal and tax matters, as long as the trustee knows when to seek counsel from an accountant, financial advisor or attorney. Other important factors to consider are the fees that an individual or corporate trustee would charge, and whether an individual trustee would serve without being paid.
Trustees may be selected for their ability to manage funds as well as for their knowledge of the beneficiaries, which can help them determine when distributions should be made. The purpose and duration of the trust, as well as the investment knowledge and other responsibilities of the trustee, are some of the factors to be considered when selecting a trustee. In some cases, you may want to consider separating responsibilities and having two or more trustees, one whose role is to invest funds and the other whose role is to distribute them. Consideration should be given to whether naming a corporate trustee is appropriate. The trustee must be familiar with applicable trust law, including the trustee's duties, powers and liabilities, or should retain counsel for such advice.