Would you quit your client to be his executor?

Would you quit your client to be his executor?

Would you quit your client to be his executor? Playing executor to a client’s estate is typically prohibited for the financial advisor, but how about switching up your role, asks one BC advisor.

 “Often the advisor is the best candidate in certain situations. So, what do you do?” commented Ken MacCoy of Rite Partner Financial Services in Chilliwack, BC, on the WP website.  

“…immediately remove yourself as the servicing advisor PRIOR TO accepting the appointment as trustee or executor. If you're no longer the advisor, there can't be a conflict of interest,” he suggested.

MacCoy is speaking from experience, as he once did so himself.  A client that MacCoy had been servicing for about a decade, passed away in 2011. Her children, who lived a great distance away from Chilliwack, in Northern BC, requested he become executor of the estate on their behalf. He decided to boycott his role as servicing agent for life policies, and take on the role as executor, avoiding a conflict of interest.

“They both asked me to do it ... because of the proximity and because I knew their mother really well. We had been good friends,” MacCoy told WP in an interview. “It cost me time from my business, but I saved both children lots of money. When all was said and done, everybody was pleased.”

Deemed a conflict of interest by IIROC under its Dealer Member Rule 43 , members are prohibited from acting as a power of attorney, trustee or executor. Doing so is considered “inappropriate conduct, a conflict of interest and a violation of the general business conduct standards,” unless the person is 'related' under the Canada’s income tax act by blood relationship, marriage, common-law or adoption. The MFDA takes a similar stance under MFDA rules 1.1.2 and 2.5.1.
 
Though MacCoy is neither a member of IIROC or MFDA, he agrees with this cautionary approach, saying that both sides should not be played at the same time. (continued.)


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4 Comments
  • Cameron 2014-02-12 3:17:56 PM
    So did he DSC on the insurance side, and also collect executor fees?
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  • Myron Neufeld 2014-02-12 4:47:39 PM
    From our experience 2.5 years is about the norm. A critical issue with this is recognition as the 'personal representative' the buck stops with the executor regardless of agreements and contracts. If you are going to take on the executor role, do what the lawyers are doing when acting...insist that the estate purchase an executor liability insurance policy to protect yourself as executor in the case things don't go as planned....regardless of what you think you might know about the estate and the relationships you might have with the family. We decline about 23% of all applications for executor liability insurance because they come in 9-10 months after the executor assumes the role and after they are confronted with unhappy beneficiaries, creditors or even aggressive charities (the house is on fire!)
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  • Ken MacCoy, CHS 2014-02-12 8:06:32 PM
    Myron, thought I recognized your name. I agree 100% with your comments. If I'd been aware of the ERAssure plan prior to being appointed as Executor, I would have insisted on the coverage. To ensure no problems, the beneficiaries were involved in all aspects of the decision making and required to sign off before we proceeded. While a length process, it virtually guaranteed success. End result, all were happy. Ken
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