E68: The Executor Playbook with Michael Kulbak

Wellington R. Burt was not just rich, he was Gilded Age rich. He built a fortune in lumber, iron, railroads, salt, and finance. And local historical records say that when he died in Saginaw in 1919, his wealth was estimated at up to $90 million, so large that in Michigan only Henry Ford was said to be able to write a bigger check, while nationally This was the same era as John D. Rockefeller and the great robber baron fortunes. Bert left behind a handwritten will signed in 1917 that locked up the bulk of his fortune in trust until 21 years after the death of his last surviving grandchild, who was alive when he died. Not after his children died, not after the funeral, not after probate. After the last qualifying grandchild died, plus another 21 years. Later writers would call it a spite clause, but whatever Burt intended, the result was the same. He turned inheritance into a waiting game measured not in years, but in bloodlines. And the clock ran for a very long time. Burt's last qualifying grandchild, Marion Stone Burt Lansill, died on November 21st, 1989. Only then did the final 21-year countdown begin. The trust condition matured in 2010, and after court orders and family agreements, the money was finally distributed in May 2011, 92 years after Bert's death. By then, the estate was valued at roughly $100 million to $110 million, and it was split among 12 descendants ranging from great-grandchildren to great-great-great-grandchildren, ages 19 to 94. Today's guest says even a straightforward estate can often take around 2 years to work through. So if 2 years is normal, what do you call 92? This podcast is brought to you by Ginsler Wealth. The information discussed today is meant to be general in nature and not tailored to your specific investing circumstances. This means that you should talk to your regular Ginsler Wealth advisor or your own advisor before acting on any information we discuss today. Nothing in this podcast is intended to be a solicitation, and past performance does not guarantee future returns. This is another episode where we discuss planning around death. I promise we'll move on to happier subjects in future podcasts. Today on the Unlimited Podcast, we speak with professional executor Michael Kolbach, founder of Kolbach Trust Solutions, on what an executor actually does, what they are left to deal with, and how you can help them help you or your estate with some tips from our guest. Let's go. Welcome everyone back to the Unlimited Podcast. I feel like we've been on a tiny bit of a break. It's been a few weeks between our last one. The last podcast was an investing theme on our friends at Farm Lending Canada. But if you are following along here this year, from the start of the year until as we continue here, is a theme that we call Wealth Hard. Wealth is not easy. Managing it is not easy, and dealing with some of the intricacies is not easy. And we kicked off the year on the podcast with the lawyer Jessica Feldman Chitley talking about why you need a will. We then followed up with Matt Goetzler from Torque Mains on a little bit of tax strategy around estate planning and other And now we are maybe the last in this miniseries around wills and estates and, you know, passing away. Unfortunately, not, not always the best topic to cover. We're going to talk to a professional executor and we're going to really dive into what happens when someone has passed away and what they've left their executor to take care of. So excited to have Michael Kolbach with us. Hello, Michael. Welcome.

Hi, Brian. How are you? Thanks for having me.

Thanks so much. So I'll give you a quick intro to Michael, and then we're going to dive right in. And as we go through this discussion, he'll flesh out sort of what a professional executor does here. So Michael is a Toronto-based professional executor and estate trustee and the founder of Callback Trust Solutions. He is a chartered professional accountant with prior experience as a chief financial officer, director, and officer of both private and public companies. He has a TEP, which is a Trust and Estate Professional designation, and he works with individuals, families, and advisors to manage the full estate process, serving as a professional executor, agent to executor, trustee, and attorney under power of attorney for property. And we're going to talk about all this fun stuff today. In addition to his client work, he's a columnist with Investment Executive. He lectures on succession planning, estate administration, and taxation for CPAs. And is recognized for bringing a highly practical, real-world approach to a process that's often far more complicated than people expect. And as if you've been listening to this series, you know that I can attest to that as an executor. Still, you're going to be tired of me saying I'm an executor. The reality is it goes on and on and on. So again, Michael, welcome, and look forward to diving in here.

Likewise.

Okay, so let's literally dive right in. So someone, you know, passes away. It's a whole new world of, I call it like the chaos of what you have to deal with. You know, being named an executor might sound like an honor when someone tells you, you know, I'd like you to do this. To be honest, it probably is, but it, you don't really know what you're getting. It's, it's a big job. It has financial, legal, and other consequences. So tell us, like, what, what happens from an executor's perspective when, when someone passes away?

Okay, so the first thing is, is someone— I get the notification. The first thing I'll say to somebody, okay, what's happening with the funeral arrangements? Is somebody taking care of those, helping, associated with them? Hopefully there's been some discussion prior to that to go ahead and kind of— and it's been outlined what, what should happen with it. But I'll go ahead and kind of talk to the family members with respect to that, and I might help and assist in that. In that area. My next goal is I gotta safeguard assets, specifically household contents. So there's something called the vulture syndrome. You'd be surprised to how many people all of a sudden start walking into the deceased's house or area or whatever they're living in or nothing like that, and all of a sudden start taking stuff away. Okay? And again, all under the auspices, oh, this was promised to me, this was mine, this, I just lent it to the deceased individual or something of that. So, So big part of it is got to safeguard the assets with respect to that point in time and hopefully depress if it actually is vulture syndrome. Otherwise, I got to allow family members to grieve and avoid putting pressure on them in any manner during the grieving process. In the background, what am I doing? I'm accessing the will. Hopefully there's one. And again, I'm beginning to compile the information. To assist with the probate application process. So that's what I'm working in the background. Big focus is let people grieve, give them the opportunity. Nothing has to be done tomorrow.

Okay. But one thing you said was you're finding the will. Hopefully there is one, but you have been— haven't you specifically been named in the will or your company as the executor?

Sometimes, most times that is the case, but a lot of times what's happened is Family members have contacted me, say, we know our parent died intestate. Oh, we'd like you to go ahead and act. We're going to go ahead and sign the probate application assigning you as the executor. So they died intestate, the beneficiaries are going to recognize, and they're going to say, we'd like you to act. So sometimes I might even get that call and say, okay, like, let me have an understanding of what's going on at that point in time. Okay. That can happen.

Reminder for folks, we, I'd suggest actually listening back specifically to the Jessica Feldman-Chitley episode. You'll, you'll know what dying intestate means and some of the other, other language. Okay. And then what happens maybe right away also with the assets at the banks and others? Like, what's going on immediately when someone passes away?

So frozen. So you should be notifying the banks. We should be notifying Service Canada, Service Ontario, OAS, CPP. All of these individuals stop pension providers. Stop, put a hold, stop distributing funds, make sure that they're notified of the death. Okay. That's an overwhelming— another additional process. Going back to your first question, additional process that comes into play there where people feel that they're overwhelmed with, right? If they haven't got a third party, an exec, an executor is a third party dealing with this, if it's family members. Okay. So then that even comes into it. So there's all of this communication that has to go on. You got to get lots of copies of that death certificate. And you got to go ahead and some people will take a PDF version, but a lot of times you have to mail it. They want to see originals, working on that. So you got to notify all of those particular providers, but the assets, big picture is bank accounts frozen, investment accounts frozen. Nobody has the ability at this point to provide instructions until the will is probated to the actual institutions. Okay. And the institutions won't do anything until they probably see that probated application.

Wow. Okay. So maybe I didn't say it up front, but by the way, the quote unquote audience for this episode, I think, is anyone who may have been named an executor and might be thinking about what's going to happen. Most people don't think about it, and then they just, you know, obviously a sad thing happens and now it's all thrust on you. And this, the, this is the audience should be the person who has asked someone to be an executor. Basically, as you think about your life and finances and organization and documents and all that, just, I've already heard Michael mention 2 or 3 tips just in that last question. So, so, so keep that in mind. So maybe we'll, we're going to keep going through this process here, but actually I wanted you to start off with that, but now let's, let's just step back one bit and, and explain So what do you actually do, or more specifically, what is a professional executor, estate trustee, power of attorney? What is your role and why do you exist in this world?

So it's funny, I'll go ahead and, you know, meet people. You know, I was at an event yesterday and they go, so what do you do? And I go, basically I'm a fiduciary. And I go, that's a fancy way of saying I act as a professional with respect to estate administration. Okay. Or power of attorney for property. So typically a professional executor, it's someone who— this is their career, this is their job, this is what they do. They understand what's a process with respect to the estate administration process. They understand what a fiduciary is and that there's a Trustee Act that they need to abide by. Each jurisdiction has a specific Trustee Act and it outlines what duties, requirements of a fiduciary. And the individual understands it's typically because they're professional. Most times they're either a lawyer, an accountant, some are trust officer. They're professional. And I like to say they should have at least some type of financial acumen, strong financial acumen.

Okay. And, and, and why does someone call you versus like, what's the difference between you dealing with all this as an executor or a family member?

So typically family members may not have the requisite skills. Okay, so here's my big— here's a big question I always ask people. I go, you ever reconcile the bank? You ever reconcile the bank account, right? And I'll do it to lawyers. It's a typical thing. Reconcile the bank account. What are you talking about? Yeah, compare general ledger or account to an actual. If you've never done that, well, guess what? This is going to be problematic for you. Okay, potentially, because there's an accounting requirement for each of these administrations. So A, do family members have the requisite skills? Is the big part. Do they understand the nuances of administration and the ability to go ahead and plan and understand, have obviously some tax knowledge, hopefully some investment knowledge. They understand something called the prudent investor rule. What's current? So that would be, you know, one of the things. But overall, Brian Ginsler, all of that great to have. Can they communicate with people? Are they able to deal with conflict? Are they able to say to a family member, no, this particular fur coat that you say is yours, and mom says it's in this, doesn't belong to you. It's part of the estate and this is how we're going to deal with it.

Right.

Can they communicate effectively weekly, monthly, whatever with these individuals? And that's kind of what a professional executor would do. Go ahead.

Yeah. I mean, you know, it's like all the, you know, like any profession, I guess most people, if this gets thrust on them, they're doing it for the first time ever and don't know what the pitfalls are, what to do or what not to do. Obviously helping someone who does it every day, all day. You know, we always look for those people in any, in any field when we're helping clients. We, we don't do everything. Our job is to find the experts in, in each.

If I can tell you something, if I can tell you something that really freaks me out, you have beneficiaries who have waited for that wealth transfer to happen and they've already spent that money, a lot of them, or they've already expected that money to come to them. And now you have somebody, a family member saying to them, no, we gotta do this, we gotta deal with that. Well, they're freaking out.

Right.

They're gonna go, well, what are you talking about? No, no, no, this belongs to me. This is, this is mine. So that family strife, that family issues, that's, you've gotta be able to effectively communicate with that family member and say no, or say no, this is what we're gonna do based on the terms and conditions of the will.

Right. How many, how, how often is it that folks have actually appointed you as an executor in their wills, or where a family member's the executor, but then they're calling you to act as, I think it's called as you I mentioned earlier, I should say agent to executor. That seems like a good pairing, actually.

Yeah. So it's, I would say it's probably 60/40, 60% of the time I'm acting as the executor, 40% of the time act as an agent. The beauty of acting as an agent for me in my world is I do the exact same thing. We're administering the estate, everything is on. I just don't have decision-making authority.

Right.

Executor still has the decision-making authority. So, and they can pick and choose what they do or don't want. Us, me to get involved in. Right, right. They decide.

But you wouldn't, as the agent to the executor, correct me if I'm wrong, I don't imagine you could actually walk into the bank and, and do anything without the executor literally right beside you.

Or the executor saying, this is my agent, this is the individual, here's my engagement, here's the engagement letter or something.

Oh, that can happen.

That happens. It's like your accountant dealing with your, your bank, right? Same type of ability. Okay. Can you send it for the immediate? He's 5 slips.

Yeah.

Yeah, I can do that.

Okay.

Same type of thing.

Okay. Got it.

Okay.

So we know what, we know what happens right after someone passes away. We know now what you do. So let's go through a bunch of things. First of all, so you're coming into the picture, uh, unfortunately again, after someone's passed on, like where do these things break down the estate plan or the will? What causes you the most challenges when you have to step in and now the situation looks like X?

Cash. Access to cash. So they didn't factor in the immediate cash requirements to deal with the administration. Okay. So big picture-wise, people— my experience is a lot of people are asset-rich, cash-poor, and they didn't figure out that we need this liquidation to deal with these cash-related items. We got to deal with the funeral costs. We got to deal with the probate application. We got to deal with the terminal tax return. Okay. And if we don't have access to that cash, okay, it becomes even more problematic. Okay. And in some cases, a big problem I have a lot of time is, well, I'm not allowed to go ahead because in the terms and conditions of the will, I'm not even allowed to mortgage the property that's been left behind. So in a market like we've had right now, you can appreciate everybody thought it was going to be easy to sell. Condominium or not. Well, it's not. The condo is free and clear, but I now have to be able to mortgage it to access cash to be able to go ahead and pay for these items that I just outlined. And the will doesn't give me that power.

Well, I, and I imagine there's situations where, you know, one of the spouses pass away, they had an individual account, maybe not a joint account, and maybe that's the account that was paying all the bills or the, or the mortgage or something that gets frozen too, correct?

Yeah, exactly.

So how did the other spouse, uh, you know, if, if their account doesn't have the cash to meet the day-to-day obligations, how do you, how do they, or you as the executor, solve that problem?

So we go exactly the same way if they didn't have it, if they didn't have a spouse. We got to go to the banks, we got to go to the financial institutions, we got to show obviously the death certificate, we got to show that we're in the process, or maybe not in the process, to getting the will probated. Or what the will actually says. Most times it's a mirror will where the money should go right to the child and see, see, but still going to, they're still going to demand, we want to see the death certificate. We want to go ahead and make sure that the will does or doesn't have to be probated before they're going to go ahead and allow a third party or at least a spouse or anything access to the account. They're not going to treat it any differently.

Right.

Their protocol is still risk management, risk management. They're going to take the least risk-averse approach to these particular administrations.

So then what's your advice to those listening who, you know, planning ahead of this inevitability, what should people be doing to make life easier for both their executor and their family?

Cash flow for the 6— for 6 months. Take into account those 3 major items. Those are your biggest outlays. I'm assuming that there's limited preferred creditors outside of that. Make sure there's access to cash. It's either via a spouse, a third party, in a joint account or something. That can handle that particular deal with those immediate cash needs. The will contemplates that. So it says, yes, we've set up a joint account. I put Brian's name on that joint account, but this is still an estate asset. We just put it on the joint account, go ahead to deal with these particular immediate cash requirements. Brian Ginsler has to provide an accounting for that at that point in time. So make sure the will has contemplated that particular scenario, it's taken into account and dealt with. If it's not in the will, then there's a codicil to deal with it so that the testator's intents are specifically specified. I'm not a huge fan of joint accounts. I'll be blunt with you because I can see where they— it becomes problematic because somebody says, well, this isn't a joint, this account is mine. It's not the estate account. This now belongs to me. And now we have kind of the presumption of resulting trust versus presumption of advancement issues, which is the major part of the most of the litigation that happens with administrations. Goes on. So if you are going to set somebody up a joint account, specify your intent, why you're doing it, and make sure the cash needs are, you know, it's indicated why there's a cash flow or something of that sort to deal with it.

But presumably if it's a joint account with a spouse, you know, probably set up for that reason.

Yeah. Yeah. Yeah.

Okay. So any other sort of key tip or a key thing, maybe there's one or two things that folks should do, you know, to prepare their estate for this situation aside from cash flow? Anything else?

Well, then I think the other part of it is sit down who you're going to choose to be your executor and give them the lowdown on the family dynamics here, what the contingencies are, what are the issues that are going to be potential issues that can come up. Okay. Make sure they have an understanding, the executor, what they're going to be dealing with, with respect to those family dynamics. Make sure that they have an— they probably, hopefully they've met with the beneficiaries prior to this. It's been a family group meeting. There's organizations who've done that, and if it's been specified, this is what reason why I'm doing this, these, this being the testator, why they've left their will this way. This is why I'm choosing this person to be the executor. And here are kind of the hiccups that could potentially be avoided as a result of that communication in those meetings to deal with it.

Amazing. So that's prep and meeting discussion. What about all the backup material or documentation or bank account details or password? Like what's been your experience with all of that? My experience was actually pretty good. My uncle was very organized, but I did feel like a little bit of Sherlock Holmes on a few things where, you know, it said somewhere in a prior will that wasn't valid anymore. Uh, we knew that, but it said there was a safety deposit box and there was a key in the dresser in the drawer to the right. And if you flick the switch, it's like, and lo and behold, there was a key there. So I'm running around to the bank saying, does this work for anything? You know, I think in the end it was like a bike key or something like that. But, um, what have you seen for organization of all this stuff? And what, again, what's good and what's bad and what should people do?

Okay, so again, it's the pre-planning discussion. So my experience right now is a lot of people use email as their filing cabinet. Okay, so stuff is all over the place with respect. You gotta go through, okay, let's see the bank, what emails do we have, where are the statements, where it is. So it's exactly like you said, it's Sherlock Holmes. It's finding where all of these things outlined. A lot of people just rely on tax returns. They're insufficient. So big picture-wise, there should be a checklist. If you go to my website, my firm's website, you see I have what's called the Executor Handbook. And you'll see there's a checklist there, right? That goes ahead and hopefully somebody's sat down with the testator prior to and gone through that checklist and has an understanding of what it is, what, what they have, be it digital assets, being it, like you said, a safety deposit box or whatever those particular elements. So working through that checklist, the other thing that I'm a big proponent of is establishing what's called a digital vault. Okay? And it, it's a filing repository. So it's again, a fancy way of saying we're gonna take all of that stuff that you have electronically and we're gonna centralize it into a vault, a specific software where everything gets categorized. So it has what we call tiles for your will, tiles for your probate, tiles for your tax returns, tiles for your investments. When I mean tiles, like categories, like big category 7, and out underneath that you have the ability to go ahead and put the specific documentation that requires. So like your jewelry information, you're going to have your jewelry and you're going to have your insurance for those particular items. Okay, for your real property, you're going to have your mortgage, you have F1 and your title, title information. So it centralizes that particular data gathering documentation into one particular area that I find helps significantly with the administration as opposed. So lessons to Sherlock Holmes, right? My big thing is I do a lot of speaking and I always talk about loyalty rewards, and I find that people are great at choosing their loyalty programs and they know exactly how many points they have and how many dollars they have and everything like that. But guess what? Their will is entirely mute on this subject. And now everybody's going, oh, we think he had, you know, this card or that card. Oh, sure enough. Yeah. You know, there's $10,000 here of travel rewards somewhere. Well, who gets this? What do we do with it? Okay. But nobody factored it into it and it just happened by somebody was going through his, his wallet and he saw that particular travel loyalty reward program in there, or they found it on his phone or his, her phone and they had this like that.

Yeah.

So that's why I'm a fan of those. They're not perfect, but they do, they do help centralize that particular element. Yeah.

And you know, we have a, side of our business, which is our family office business. We look after families, we help them sort of with their full financial life. And one of the things we do is exactly that. We create a digital vault over here that they have access to, we have access to, whoever they want can have access to it with everything you've just described. And oh, and by the way, it comes with us as the knowledge base. If they were to disappear, we know, we know everything as well. So that's even a little bit better than a digital vault. But yeah, we agree with you that Definitely.

Yeah, I use it to, I use it to a very similar, what we call collaboration. You're able, when you send out your email statements right away, your investment statements every month, they go also to our vault. It sits there, it gets filed, it's located. It's beauty.

So we're talking about tips and what to do and how to prepare and this and that. You deal with many, many situations, many families. Can we run through like just a couple scenarios where you sort of have to deal with in your role as the executor at solving these issues? I know when we had a call a few months ago, you talked about, you know, property where some family members in the property, but that's actually owned by the person who passed away, or siblings that don't get along, or a situation where beneficiaries are not, you know, you might describe them as a vulnerable beneficiary and have to work around that. Just to share with folks like what, what this can look like for an executor, because everything is not all nicely wrapped in a bow, I'm sure.

Definitely. So here's, here's one that I have coming up quite often recently. So parents unfortunately passed. They have a child living in the deceased family member's property, their deceased family member's principal residence. Right. So they have a child there who's been living in that property for a number of years. And now they're one of 3 or 4 beneficiaries of the estate. And that particular asset, the principal residence of the deceased, when they get sold, it's going to provide some funds to that child who was living in the property, but it's not going to be maintained. They're not going to be able to take those funds and buy the same type of property or live the same type of lifestyle, or you'll be able to afford something like that. So you can appreciate right away they're looking and going, oh my God, I got to split this particular house. I've been living here myself or with my parent for X number of years. Now I gotta split it 4 ways. There's not gonna be problematic, right? So the likelihood that they're gonna want to go ahead and leave is difficult. And the other beneficiaries are saying, well, you know, we want access to the residual of the estate. We're entitled to it. We want to get those, that particular asset. We want the asset sold and we want it, or liquidated, whatever the situation. And I feel for my sibling, I feel my, but That asset, that one, one-fourth of that asset, 25%, that belongs to me too. So let's move on. So I'm obviously sensitive to the, the family member that's living in the property, what's going on. But my goal, the conditions that I'm engaged for, to go ahead and meet the terms and conditions of the will, and that is basically sell the property, take the funds and distribute to the beneficiaries. And I'm, in that difficult situation that I have to tell this person, you're gonna have to leave. You have to go ahead, you're gonna inherit something, but it's not gonna potentially be the same asset that you are currently living in. And I trust accordingly.

And do you have to then, you know, it's probably not in your job description, but do you then have to maybe help that beneficiary figure out how they're gonna?

That's exactly what you said, it's not my job description. They ask and they want to go ahead and engage us to go ahead and potentially deal with that potentially, but Really, it's not our job description. It's not part of my thing. One of the things about being an executor, they have to— it's called something called the Trustees Act outlines called the duty of impartiality, the duty of care. Okay, and it's called an even hand rule, and I got to treat everybody the same. So I can't spend all my time focused on one particular beneficiary and their issue at the detriment to another beneficiary. So I always have to be cognizant of that particular, that situation. I feel for them. But they have to leave or we're gonna have, they have to go 'cause we're gonna be selling the asset.

And so speaking of treating everyone equally, so what happens in situations where, 'cause this is, you know, this is not just an asset. The estate is not just made up of assets and dollars. It's the beneficiaries as well. What happens when there's challenges, disagreements with the beneficiaries and are they interacting with you with those types of issues or beneficiary arguments between themselves or with the estate? Uh, either or.

With the estate particularly, my job is not to evaluate the fairness, the equity of the will.

Right.

Okay. Uh, that's not my job. I'm there to go ahead and deal with the terms and conditions of the will and execute upon those terms and conditions of the will. If they have a problem with the will or anything like that, they should have talked, you know, I can't really do anything about it. I have a, a simple mechanism. It's I call Michael, shut up and listen and don't say a word. And I just let them vent. And I look at them and I say to them exactly what I just said to you. That is, I'm here to execute the will. I'm here to terms and conditions of the will. That's my job. It's my fiduciary responsibility.

Right.

As far as the beneficiaries themselves having arguments or dealing with something like that, again, if they're looking for some type of, you know, ability to go ahead and kind of resolve it, I'll go ahead and suggest the professionals that they should seek to. And talk to them. But again, I'm not going to— I'm going to go ahead and try to stay outside of that. If they want to make a deal post-distribution of the funds, fine, let them do that.

Yeah. Okay.

If they want to go ahead and kind of make— fine. If they want to go ahead and factor in some of their share of the residual of the estate and the distribution and all parties agree to it and stuff like that, then that might come into, come into play. And I'll go ahead and get an act as a guide with respect to that and make sure that everybody signed off and legally it's all been I's, T's dotted, and splices with that. But otherwise, if they're fighting amongst themselves, again, outside of the estate, that really is, my responsibility doesn't exist. I won't get involved.

And you had mentioned, again, you had mentioned to me situations where there's a beneficiary that, again, we use that term vulnerable, maybe not able to manage the financial stuff. Sometimes the wills contemplate that, but maybe they don't always. And again, just based on what you've said, it sounds like it might not be in the job description to worry about that, but you bumped up against that, I suspect. Yeah, yeah, yeah.

I wrote an article in Investment Executive recently about vulnerable beneficiaries. So what I find is, and it's the article kind of talks about it, my typical call, I'll get a call like this every once every 2 weeks, I would say on average. Hi, uh, I'm the executor of this, my parents' estate. I have a troubled sibling who's either has a mental health issue, a gambling problem, an alcoholic, whatever the situation is, and they know that as soon as they get the funds from the estate, that it's going to be gone. What can they do? And my parents, the other thing they'll always say to me is, my parents knew about this, I talked to them about it, but they just buried their hand in the, you know, their head in the sand. They didn't want to deal with it. They didn't want to like that. And they asked me, what can I do? And I have a very nice thing. Not much, if anything. Again, your job as the executor, I said, of the estate is to go ahead and execute on the terms and conditions of the will. It's not to rewrite the will.

Right.

Okay. However, I say if this beneficiary is willing to be flexible and willing to go ahead and have the ability to go ahead and receive their inheritance over a period of time, here are some opportunities for you. Okay. Again, if they, if they agree to this, one of the opportunities is to go ahead and call by what's called an annuity settlement.

Yeah.

So an annuity settlement basically means that their share of the inheritance, the vulnerable beneficiary's share of the inheritance, the executor goes ahead and provides, again, with the consent of the beneficiary, the vulnerable beneficiary, they go ahead and purchase an annuity that's going to go ahead and pay that over time to that individual and invest it and deal with it. And depending upon the terms and conditions, the terms of the annuity, that could be lifetime, it could be a 10, whatever the situation, At the end of the day, they're not getting all of their money upfront. And that's the goal. That's the goal. Outside of that, the other thing, when I go back to that conversation that when I talk to that individual is you have a graduated rate estate. Again, if it abides by the terms and conditions of the graduated rate estate, what's that mean? You got 36 months to deal with this. You don't have to distribute right away. Okay? You have 36 months because of the fact that you're still enjoying graduated rates of tax. So there's no force. It's kind of neutral with respect to the beneficiary receiving the investment income versus the estate, typically depending on where the beneficiary's tax marginal tax rate is. So you've got 36 months. Leverage that time to go ahead and see if you can talk to that vulnerable beneficiary and see if they'd be open to not receiving all their funds at once, but over a period of time. So that, but if they're not, they're unwilling, you as the executor distribute their share of the inheritance to them. And they have to deal with it. Mary should have set up a testamentary trust for that vulnerable beneficiary.

Just want to make clear, like, the responses, your sort of answers for some of these questions, I can see are very clear as a professional executor. You are hired to do a specific job. You are required to follow the terms and meet the desires of the person who wrote the will, et cetera. Do those answers hold perfectly true, do you think, for when it's a family member trying to deal with this? As a professional hired person to do this, you, you have this little bit of a distance from the beneficiaries and, you know, you have a different position than maybe their brother who is the executor. Would, would the answers be the same, you think, in that? I mean, technically they're probably the same, but practically, are they the same? Or you would answer it different if it was, hey, I'm the brother of all these people and I have to deal with this. Now tell me what to do.

Should be the exact same. The only thing that they have that I don't have is I'm always cognizant of litigation. They might be less concerned about litigation, right? Right. They might be okay, you know, we're gonna make a side deal here. Here, we're gonna give you this much money and here's, you know, outside what happens outside of that. Okay. All the family agrees with respect to that. Me, I'm not gonna go ahead and take on, I'm gonna go ahead and, you know, basically not deviate from the terms and conditions of the will, right? If they wanna make a side agreement or side deal after the distribution, and I've received my release, my clearance, fine, let them do that. Okay, but I'm not going to go ahead and assume that risk here. The problem that family dynamics come in, Brian, is the thing that I see, it's not the siblings that are the issue. Rarely the siblings, the pecking order of who the oldest child versus the youngest child, that has a dynamic unto itself. It's the spouses of the siblings that becomes problematic, and they all have an opinion because they don't have the family dyna— they don't have that family that kind of relationship with respect to the sibling, sibling packing order. And that's where it becomes difficult because somebody says, oh, they should have done this, should have done— oh, you're getting beaten up because your brother or sister did that, or you're not getting your fairness, or you're entitled to this. And again, if you look at my, my articles I've written, there's always a number of cases like that where it's, it's not the siblings, it's the spouses of the siblings have created the, the impetus for the litigation or the problems.

Yeah, not, not clean and simple, that's for sure.

Right.

Okay. So we talked about, you know, what happens right away when this happens. We talked about, you know, the banks are going to freeze this and that, but give a little bit of, as an executor or the person that's going to appoint someone executor, what does it look like? What should they expect? What should they not be surprised about and not get upset about? Maybe you could have told me that before I became an executor and keep getting upset at some of these banks. Sorry to our big banks., but they're very upsetting. What should we keep in mind if you're going to be coming into this role from a, you know, the whole process perspective?

Okay. So outside of what we've kind of, kind of too, I have a slide when I do a bunch of teaching and it's called hurry up and wait. Yes. It's like you're, you're in a process. It's like a funnel, right? You're going ahead and just putting all this information, all this information, you're getting it to the lawyers, you're getting the probate application. You've gone ahead and compiled all these assets. You've done all of this work here and you submit to the application and sure enough, you're waiting. And that waiting period, depending upon the courts and the jurisdiction, you're in, can take 4 to 6 months. During that period, your bank, your accounts are frozen, investment accounts are frozen, nothing's going to be able— you being the executor to be able to provide instructions doesn't exist. You actually haven't been formally appointed even though you've done all this work.

Right.

Okay., but you're on the, on the hook still for litigation, but you haven't been formally appointed. So understanding that dynamic, then you get the estate account, you get the application, you get the estate account, you get the go ahead to go ahead and provide instructions to the advisors with respect to this. You can deal with certain CRA, certain items that maybe that you couldn't previously or what have you. Get all of that work and you're flowing through that. So timeline, we're talking about probably at the minimum, a 12-month horizon right now until you've actually been formally appointed, and then you're going ahead. Now you're formally appointed, you're working through it. Hopefully you've got a good project plan, you've got ideals, you've established the objectives. Hopefully at the, at that time, it's gonna take, you know, another 6 to 12 months. So big picture-wise, I'm saying anywhere from, I would say, 18 to 24 months is the time horizon that you're dealing with. And that's ex— accepting there's no hiccups. And what I mean by hiccups, title on the property wasn't an issue. Okay. You didn't have found all of a sudden an asset that you didn't contemplate when you did the probate application that you didn't realize exists. Okay. So it should hopefully, if you've done a good job and everything like that, it should go ahead and settle itself anywhere between 12 to 18, but 18 to 24 is by no means considered a long period of time. That long time horizon. And even then you've settled the estate, you're at the point you want to distribute the money, you want to get it to the beneficiaries. And all of a sudden at that point, one beneficiary comes back and says, hey, I don't like the way this asset's been held, dealt with. So I'm not going to go ahead. I, in my practice, I exchange releases for checks. You want your distribution of your inheritance? You want the— fine. Release me as the executor. You're not going to go ahead and come back and sue me. And they say, well, I might want to. Okay, then we got a problem. I'm not releasing, then I'm— why? Okay, why do you have, why do you have a problem? I want to know. And throughout this whole period, I've been communicating and providing them with accounting and everything like that. They have an issue. So then that even goes ahead and compounds the estate administration process. And then we have to go ahead and deal with that particular issue. That's what we're looking at.

Okay. Amazing. Well, I feel pretty good because, well, I don't feel good, but from the process, I think we are, we may have all of our stuff done for my uncle's estate. I'd be surprised if it goes longer than 12 months, but again, we have a full team here. We do this for people who are alive. Unfortunately, now we were doing it for someone who's not. Or for the estate, but maybe I should pat myself on the back here and our team, our team, most importantly, for getting this done. We'd much rather be helping folks, you know, while they're, you know, enjoying life.

Get a CRA clearance certificate though, right?

Yeah. We have not done that yet.

Yeah, get that. That's going to take 4 months. Yeah.

Well, that's okay, right? Okay.

So that's—

that we will do.

Yeah.

You're a professional. Obviously people pay you. Just so folks understand whether they are a nonprofessional or a professional executor, how do executors get compensated? I, I guess there's also professional trust companies that can do this. So like, how, how does this work from a compensation perspective typically?

So there's a misnomer out there. So the misnomer is it's a percentage. The misnomer is it's a flat rate as a percentage of estate assets under administration. So you talk to people, well, you get 5% of the estate value. That's what you get. No, that's a guideline that the government has set up. The provincial government has established it being 2.5% of capital receipts and disbursements, 2.5% of income receipts and disbursements. Okay, that's what they've set up as a guideline. It's not that's what it has, it doesn't have to be. Okay, it doesn't have to be that amount. If you look, there's a recent case in the paper right now regarding the Rogers estate and their particular percentage, and it kind of outlines, it leverages that 5% as a guideline here and the fact that the executors actually received less than that. So therefore it's, you know, their compensation is not unreasonable. It's just a guideline. It's a percentage, typically it's a percentage of estate assets under the administration. So again, if somebody has significant probate planning where they've gone ahead and put their RIFs under, they're outside to the beneficiaries as opposed to the estate, or there are any type of registered accounts or whatever like that, that's outside of the estate. The executor doesn't get compensated on it. It's always a percentage of estate assets under administration. The trust companies and myself, we have basically declining, um, declining basis. More assets, more number, more zeros, less percentage, less the actual percentage number is less. And the other, uh, again, it's a one-time fee, but there is the ability to go ahead and charge what's called an annual care and management fee, which is the average value of the estate assets under the administration. And it's typically 40 basis points or 0.4%, okay, that they'll charge to. And it's the average value of the estates under the administration. So what it started at, what it's dealing with near the end, the average, and that during a typical annual horizon, you get paid on that.

And so some folks may say, well, first of all, hopefully it's clear this is complicated and having a professional might be a good idea. But some folks would say, well, I don't want to do that. Why would I want to pay all this stuff? I can, you know, estimate the mag— not estimate, we keep track of it, the magnitude of time and effort that we've spent. And I'm going on something pretty straightforward here. Like give people the, well, the other side of it is, you know, do it yourself, which most people do. And it's probably fine too. But like, what's the magnitude of work hours or effort for going start to finish as an estate executor? Because I really don't think people understand the magnitude of this. Yeah.

So here, let me give you a specific administration, kind of like, so say somebody lives in the GTA and they have a house. Their major asset is a house that's worth $2 million. Okay. The trust companies and myself, the typical, say, 4% of the value plus HST. So roughly $90,000, right? Yeah, that would be that estate, and that's the major asset to deal with that particular estate. Okay. Stuff like that. That estate, just to go ahead and get the house ready, deal with the— obviously there's tax issues and some other items that you got to go ahead and like that. That simple estate will probably take at least 200 to 250 hours.

Yeah, I bet.

Okay. That's assuming there's no other hiccups or anything like that. That's, you know, cleaning up the house, getting it ready, hiring a real estate agent, dealing with the real estate agent, dealing with the banks, dealing with tax returns, dealing with, you know, the funeral home or whatever other situation, other liabilities, going to the safety deposit box and make sure there's nothing hidden or anything like that. That simple estate will probably take, I said, between 200 and 250 hours. Just a real simple like that estate like that.

I agree with you wholeheartedly. That's for a simple— and I also agree with you, that's for a simple estate. So imagine there's a hiccup. You have an extra I say this to the audience, do you have an extra 250 hours to spend over the next year or two, uh, yourself? So it's a good question. Okay, got it. So, okay, last—

can I tell a quick story? Sorry, let me just tell you a quick story. Yeah, sure. That's how everybody asks this to me. Oh, I have a— everybody says the same thing. So what I'm talking— oh, I have a simple estate, right? Oh yeah, okay, great. I have a simple estate. I go, yeah. So as we're on a Zoom call, she's telling me, yeah, I have, you know, I'm a pensioner, I worked here work there, we have a house, we have this. And as I'm talking to her, her cat's walking by on the Zoom call. Okay. And I'm seeing that and I see there's another cat in the background. And then she tells me her deceased spouse was an avid photographer and he's got a huge collection of photographs that are going to be donated to some type of organization here and like that. And yet they haven't been cataloged. Or anything of that sort, but I have a simple estate.

Right.

So I go up to her and I go, well, have you factored in who's gonna deal with the cats and what's gonna happen with the cats? No. Okay. Have you factored in the hours it's gonna be able to catalog all these pictures and to go ahead and deal with it and then be able to get charitable donation receipts to deal with that?

No.

So your simple estate here, just those two little, and again, it's a 30-minute call, introductory call, just to talk to her and stuff like that. I already added at least 100, 150 hours to the administration. Yeah, for sure.

Okay. So with that in mind, simple versus complex, what, and maybe to close out, a lot, most people are just going to do this on their own, whether that's good or bad idea. What's the situation where an estate or a family or whatever is the best candidate for bringing in someone professional and knowing they have to and do it right off the bat so that people can think about this now versus later.

Family dynamics. Okay, so do you have, again, a couple of— if I can— there's been second marriages, okay, where children from one marriage, children from the second marriage, that tends to be, you know, because there's obviously, you know, potentially a distrust right there. If there's a business involved in the estate, in the administration, okay, and that there's nobody naturally who can go ahead and manage that estate, or the executor they've chosen doesn't have that skill set to manage that business, That's problematic, right? Okay. Okay.

So you're actually coming in and taking control of businesses too, correct? Oh my God.

So a lot of times what the trust companies will go ahead and refer business to me and say, Michael, we have this estate. This is where this required— we don't have the talent or the skill set to go ahead and manage this business during this period of time, to go ahead and deal with this transition or financial liquidation or sale or whatever like that. Is this a, a, uh, you know, administration that you'd be interested in? Go ahead and like that. Yeah, that's probably just given my background and my skillset that probably I'm probably one of the, my, me and my firm are probably a really good choice in those specific situations.

Right.

Okay. So if there's a business potentially, if there's family dynamics, there's issues, if they don't have a financial acumen, and I'm saying this more and more and it might sound like, yeah, Michael, because you're an accountant, that's why you're saying that. No, no, no. These are financial administrations. They need financial expertise. Okay? They need somebody who understands, like I said, can they reconcile a bank account? Can they provide an accounting? Do they understand how these particular— can they understand the nuances of taxes and how taxes are gonna impact them? So they need to have that. If they have it, great. And it— even if they're gonna choose a family member, make sure that that family member isn't not too prideful. They're not a know-it-all. They have the, the exact, they're humble and they know when to ask for assistance. 'Cause even though I'm a professional, I still have to go ahead and ask for assistance or help. I don't know the tax rules of non-resident beneficiaries in Switzerland. Yeah. I just don't know that, right? I don't know every tax treaty or everything like that. So can they deal with advisors? Can they deal with professionals? And finally, do they have the ability to communicate effectively and can they deal with conflict?

Wow. Okay. Well, that's a lot of complicated stuff to deal with. That is for sure. Hope people got that. And thanks for the walkthrough on, on what it's like to be an executor. So last question before we let you leave, we ask everyone this question. Our theme here is called, or our tagline I guess, is Your Wealth Unlimited, because in many ways we help families with anything that they need on the financial side. So You know, there's not a menu or a service listing. It's, it's unlimited. So I like to ask people, so Michael, if you weren't doing what you're doing now, you could do anything in the world. The world is, options are unlimited. What might you be doing if not acting as a professional executor?

I would've been a butcher. That's what my dad was.

Come on, really?

I should have been a butcher. Never mind. I, I, I had a really, uh, my strong, you know, my strong suit was, uh, I was good at math. So that was kind of where I chose the profession. I'm like that. But really, at the end of the day, I enjoy going ahead and kind of cutting up— buying a, uh, a clod of beef or a strip loin from, uh, Byron and going ahead and cutting it up and making it look a certain way there.

That's great.

I love to fish, so I fillet my fish and go ahead and catch it and go ahead and— I'm so proud. Look what we're going to eat. And, you know, I don't like that. So maybe I would love probably should have, probably should have been a butcher or anything.

Amazing. My grandfather, so what a coincidence, my grandfather Marty Ginsler was a butcher, had a butcher shop at Steeles and Bathurst.

And, uh, which one, which one?

Well, now I can't remember the name of it, but we could change over time, right?

It's Wycliffe. There was Wycliffe right there. Yeah, yeah. And they become property. Yeah, so it's Wycliffe. Yeah, yeah.

So my My grandfather was a butcher there. He had, we used to joke, he had like his old school, like a group of friends and, you know, it's like the mafia, like they called him Marty the Butcher.

But— Well, my dad's name was Martin. It was Moishe the Butcher.

Right.

Moishe the Butcher. It's funny, it's one of the things when I worked in my dad's butcher shop as a kid, the thing that, again, I'm old, so the big thing is he didn't have a calculator yet. Like calculators weren't coming in, right? So they used to do manual math multiplication. 6 pounds at $4.25, right? And I, the skillset that I had, I can do really quickly math by one digit very fast. So 6 pounds at $4.50 is $27. So I'd be able to, he'd ask me, I got 14 pounds at $3. How much is that? $22, Dad. So, hey, you're too smart to be a butcher. You should do this now.

Right, right, right.

I mean, that stuff like that.

Anyway. Love it. Okay, well, there you go. Hire Michael the Butcher to take care of your estate. Maybe that should be your new tagline. Anyway, thanks so much. Again, I hope folks get the sense that this is not just a nice thing to ask somebody to do. It might actually be a favor not to ask them, frankly. You know, glad we could share some of your insights and thanks for taking the time. Wish you the best.

Thanks. The Unlimited Podcast is hosted and produced by Brian Ginsler and is edited and mixed by myself, David McMillan. This podcast is not to be taken as investment advice. If you like what you heard, don't forget to rate the podcast and follow us on social media @GinslerWealth. Thanks for listening and see you next time.