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18 • The Columbia Valley Pioneer December 14, 2012 YOUR MONEY Should you charge an executor fee? Many Canadians will be the executor of an estate at some point in their life. This is because most people elect a family member such as a spouse or children as their executor. This is often a good fit, as a person’s family generally has a vested interest in their affairs and the well being of everyone else involved. During the course of settling a person’s estate, an executor can be faced with many important dilemmas. One of these choices is whether or not to charge an executor fee to the deceased’s estate. Before making any decisions, it’s important to be familiar with the scenarios in which an executor may or may not want to. Estate settling fees An estate may incur a number of fees and expenses during the settlement process, such as commissions on the sale of real estate, fees on investment transactions, probate fees, and minor administrative expenses. These fees are merely the cost of doing business for the estate and must be paid for by the estate. The executor also has the right to charge fees to the estate for their time, effort and skill. Sometimes, the executor’s fee is explicitly stated in the will. Other times, it is up to the discretion of the courts. Under British Columbia law, the executor may charge up to 5 per cent of the gross value of the estate, and five per cent of its income. When writing a will it is Brendan Donahue BCOMM, CIM, FCSI Senior Investment Advisor Insurance Agent Sara Worley Investment Advisor Insurance Agent important to clarify compensation if one would rather the executor(s) charge a different amount to the estate. The executor may also receive an annual care and management fee of 0.4 per cent of the estate in cases where the executor continues to act over a long period of time. Should I take a fee? The decision of whether or not to take an executor fee is a difficult one. Certainly in the case where the estate is very complicated and takes a lot of the executor’s time and efforts, a fee may be justified. There are, however, scenarios where taking a fee might not make sense. One of these scenarios would be when the executor is also the sole beneficiary of the estate. As a beneficiary of an estate, any assets received from the deceased’s estate are non-taxable. If an executor receives a fee from an estate, it must be included on the executor’s tax return as taxable income. For example, imagine that a person is named the executor and sole beneficiary of an estate with $100,000 to disperse. If the person waives their fee, they would receive $100,000 tax-free. If a 5 per cent executor’s fee was claimed, the person would receive $95,000 tax-free and $5,000 of taxable income. If their marginal tax rate was 40 per cent, they would owe $2,000 in tax, leaving $98,000. Another scenario would be when the executor of an O� ering the valley… Investments Stocks, Bonds, GICs, Income Trusts, Preferred Shares, ETFs, Mutual Funds and more. Accounts RRSPs, RRIFs, TFSAs, LIRAs, RESPs, Corporate Accounts, Cash Accounts Services Estate Planning, Financial Planning, Insurance Planning, Retirement Planning Selection 19 GIC Companies, 15 Insurance Companies, 100 Mutual Fund Companies Research TD Newcrest, Credit Suisse First Boston, First Energy Capital Corp, MFC Global Investment Management estate is one of two or more named beneficiaries. For example, that same person could be named executor and a 50 per cent beneficiary of the same estate. They could choose to waive the fee and receive $50,000 tax-free, or charge the 5 per cent fee and receive $47,500 tax-free, plus $3,000 after-tax from the $5,000 executor fee for a total of $50,500. If the fee executor fee were charged in this scenario, the other beneficiary would only receive $47,500 tax-free. If the number of beneficiaries is higher, the after-tax percentage of the estate’s assets to the executor increases as well and this may cause ill will among beneficiaries. Final thoughts Ultimately, the executor’s fee should be fair, and accurately reflect the amount of work and complication of the estate in question. It’s also important to remember that while taking a fee might make sense from a financial standpoint, it can sometimes be viewed as inconsiderate to the other beneficiaries. For example, if one beneficiary spent a great deal of time caring for the deceased during their life it may seem inappropriate for another to take a fee for settling the estate. One thing is for certain: being an executor is a huge responsibility, and one not to be taken lightly. Investments, Insurance & Financial Planning GIC Rates* as of December 10 th . 1 year 1.90% 2 year 2.20% 3 year 2.25% 4 year 2.40% 5 year 2.50% *Rates subject to change without notice. Manulife Securities Incorporated is a Member of the Canadian Investor Protection Fund. Insurance products and services are o � ered through Manulife Securities Insurance Agency (a licensed life insurance agency and a� liate of Manulife Securities) by Manulife Securities Advisors licensed as life agents. The Manufacturers Life Insurance Company is the sole issuer of the Manulife GIF Select insurance contract which o � ers the IncomePlus bene� t and the guarantor of any guarantee provision therein. Call us for professional, free consultations! • Ph: 250-342-2112 • Fax: 250-342-2113 • 712-10 th Street, Invermere
December 14, 2012 The Columbia Valley Pioneer • 19 . . . ‘Eagle’s Nest water’ continued from page 3 When the project, with its new $1.64 million price tag, was put to a vote among property owners through an alternative approval process in July 2012, 66 per cent of residents with more than 50 per cent of the assessed property value rejected the idea. The challenges the village faces are compounded by a newly issued Interior Health order requiring the upgrades be completed by September 30th 2013, rather than the original date of January 2015. The order, issued on October 15th, was obtained after council requested it from Interior Health. Staff and council members had hoped that, with an Interior Health order in place, the provincial government would approve borrowing for the project. This would override the need for voter consent. notice of poWer interruption Windermere AreA Time: 9:00 am - 12:00 Noon When: Sunday, Dec 16th The move angered at least one property owner, who sent a letter of complaint to the village on December 10th. “This is merely an attempt by the Village of Canal Flats to go against the wishes of the property owners in the Eagle’s Nest Local Water Service Area,” said the letter, from 391043 Alberta Ltd, a development company principally owned by former Calgary Flames goaltender Mike Vernon, which constructed the 31-lot Painted Ridge subdivision. “This letter serves to notify you that this matter will be hotly contested should it go any further.” But the move to request an Interior Health order backfired on the municipality. When the order was sent to the B.C. Office of the Inspector of Municipalities, the village staff were informed the province would not support the borrowing without voter approval. We will be making electrical system improvements in the Windermere area on Dec 16th. To ensure the safety of our work crews, it will be necessary to interrupt electrical service for approximately 3 hours, from 9:00 am - 12:00 Noon. The area affected is from Hwy 93/95 S of North Street to Windermere Road, West to Wilmai Place, Nelles Crescent & Indian Beach. East on Windermere Loop Road to the end of the Windermere Golf Course. Kootenay #3 South to the intersection of Hwy 93/95 To prepare for this interruption and protect your equipment from damage, please unplug all electronics, such as TVs, PVRs, DVD players and computers. Please also turn off all lights, electric heaters and major appliances, such as your clothes or dishwasher, dryer or oven. For the first hour after the power comes back on, please plug in or turn on only what you really need. This will help ensure the electrical system does not get overloaded. We are sorry for the inconvenience. We will restore your power as soon as we can. Prepare for outages and stay informed by visiting bchydro.com/outages or bchydro.com/mobile from your handheld device. Please call 1 888 POWERON(1 888 769 3766) if you experience any electrical difficulties or for more information. AD # 3766 This leaves Canal Flats with voters who will not approve the borrowing for the project, and a rapidly approaching deadline of September 30th, 2013 to complete upgrades, which it’s estimated will take six months. There is also a ticking clock on the $400,000 provincial grant, which expires in March 2013. The only option left for the Village of Canal Flats is to get property owners in Painted Ridge and Eagle’s Nest on their side to approve borrowing, then apply for Interior Health to extend the deadline to complete the project, Mr. Woodward said, “Council did send out a letter to all owners in November explaining everything,” he added. “They are also discussing a further consultation process ... Without a vote or second counter-petition process, we can’t move ahead.” INVESTMENTS | RETIREMENT PLANNING | INSURANCE Jason A. Elford, CFP® Certified Financial Planner 250.342.5052 | Office 877.342.5052 | Toll Free 866.719.7927 | Toll Free Fax buildingwealth@cmkwealth.com Suite 302, 1313 – 7th Ave. PO Box 429 Invermere, BC V0A 1K0 www.cmkwealth.com Happy Holidays! The Library will be closed from December 23 rd , 2012 until January 1 st , 2013. We will reopen January 2 nd with regular hours. 250-342-6416 • invermere.bclibrary.ca • Full and partial dentures • Repairs • Relines • Rebases Invermere B.C. • 1-250-999-9191 Donald MacDonald – Denturist Winter session begins January 7 th (Ages walking to adult) Register online or by phone. 250-270-0273 info@glacierpeaksgymnastics.com 100 Capilo Way, Invermere B.C. GlacierPeaksGymnastics.com
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