When it comes to planning your estate, one of the most important decisions in the process is choosing an executor. An executor is a person or entity responsible for carrying out the final wishes and responsibilities detailed in your will. While many people appoint a trusted family member or friend to handle their affairs, you are legally allowed to have a bank as your executor. Having a bank serve as your executor comes with several advantages as well as some key considerations. Before you name an executor, it’s a good idea to consider your options fully, including determining if a bank is the right choice for you.
How a Bank Can Serve as Executor of a Will in BC
Choosing a bank as your executor is not as simple as naming the institution in your will. Rather, the will-maker must consult with a bank or other financial institution while they are alive. Failing to do so will likely result in the bank refusing to act, which can cause significant delays for beneficiaries and relevant third parties expecting to receive assets from your estate.
Banks that serve as executors usually do so through trust or wealth management divisions. If you do choose to work with a financial institution that offers executor services, they will typically require you to sign a fee agreement and may request specific clauses in your will, often in collaboration with a lawyer or notary. These formalities ensure the bank is adequately prepared and legally authorized to manage your estate upon your passing.
How Much Does an Executor Earn?
Under BC’s Trustee Act, executors are allowed to take up to 5% of an estate’s gross aggregate value as a fee for their service. Say you name a bank as your executor and have an estate valued at $500,000. At the maximum fee, a bank can collect $25,000 from your estate. Estates that require ongoing asset management, such as those with real estate, investment portfolios, trust funds, or business interests, are subject to an annual fee of up to 0.4%. If your estate requires, for example, three years of ongoing asset management, a bank will likely charge the full 0.4% fee annually, which would amount to $6,000 in total over those three years.
Advantages of Naming a Bank as Executor
The person or entity you choose to act as executor is responsible for passing assets to beneficiaries, paying taxes, settling debts, and other concerns regarding your estate. Ideally, whoever you choose should complete these tasks promptly and accurately. Appointing a bank as executor can offer several benefits, particularly for individuals with complex or high-value estates:
Legal knowledge
The staff handling your estate are experienced in estate administration and probate law. They understand what is necessary to be compliant with BC’s estate requirements.
Financial expertise
Banks specialize in financial management. They know how to legally handle investments, debts, and taxes, all of which are common assets.
Complex estates
Between legal and financial experience, banks are ideal for estates with extensive assets, multiple beneficiaries, or cross-border elements. Their expertise can simplify these processes and reduce errors that could happen under an inexperienced executor.
Impartiality
Banks act as neutral third parties, which helps minimize conflicts among beneficiaries and ensure the will is executed without personal bias. This may also lower the chances of executor misconduct.
Time efficiency
Unlike family members or loved ones who likely have a lot of other responsibilities, a bank has dedicated resources and staff to manage your estate administration efficiently.
Reliability
A bank’s standardized procedures and resources ensure consistent service and management. Unlike individuals like family or friends, a bank won’t suddenly become unavailable to handle affairs due to illness, relocation, or death.
Disadvantages of Naming a Bank as Executor
Though there are several major advantages to choosing a bank to serve as your executor, there are some significant downsides, especially if you don’t have a lot of assets in your estate.
High costs
As mentioned above, banks are likely to charge maximum fees on your estate. Family members or loved ones, on the other hand, may choose to collect a smaller fee or even fully renounce their fees. The only other exception would be if a bank accepts working on an hourly rate instead of a flat fee, which must be confirmed in your will prior to your passing.
Not suitable for modest estates
The cost of hiring a bank may outweigh the benefits if you have a smaller estate. In these cases, it’s likely more practical to leave a family member or loved one in charge.
When to Contact a Lawyer
Choosing a bank as the executor of your will can provide valuable expertise and impartiality, especially for complex estates. However, even with a bank acting as executor, disputes or concerns can sometimes arise among beneficiaries. If something doesn’t seem right during the administration process—whether it’s delays, perceived unfairness, or questions about how the estate is being handled—your loved ones don’t have to navigate these issues alone. An experienced estate litigation lawyer can provide guidance, protect beneficiaries’ rights, and help resolve disputes, ensuring the estate is managed according to the law and your intentions.