Your estate plan isn’t complete until you appoint someone to carry out your wishes, and your choice of executor is important. Under the supervision of the probate court, an executor manages and distributes the estate according to the decedent’s will or, in the absence of a will, according to state laws of intestacy. If there is no will, the court appoints an executor.
Before selecting an obvious choice, such as a spouse or child, consider the time involved in assuming either role, the scope of duties, and the burden that both roles may impose.
1. Does the person have the time and qualifications to serve as executor?
A will gives you the ability to control who serves as your executor, as well as how your assets will be managed and distributed. An executor is responsible for paying the expenses of your estate and the debts you leave behind. He or she may have to oversee the running of your business, arrange for the care of your dependents, and prudently invest your assets. An executor must also file tax returns and probate court reports. If you own property in several states, your executor will have to deal with additional probate court systems. Settling an estate typically takes less than one year, but there is a chance that it will take longer and become much more time consuming.
Ideally, the individual you choose as executor will be responsible, competent, organized, and trustworthy. An executor doesn’t have to be an attorney but should be someone known for getting things done.
2. Is this person capable of resolving conflicts fairly?
When deciding on an executor, keep in mind the potential conflicts of interest that could disrupt family harmony. For example, a spouse is a common choice, but children from a previous marriage could view a current spouse as biased. Also, when choosing one sibling over another, consider their relationship and history. Your heirs should regard your choice as someone who has common sense and is fair. These attributes go a long way when managing family dynamics and handling squabbles that can erupt during the settlement of your estate.
3. Is this person willing to take on the role?
Settling an estate is time consuming. In addition, in some cases, the executor may incur out-of-pocket costs, such as the cost of a surety bond. Further, an executor will be liable for his or her actions, and there can be repercussions for failing to act properly. Even if your choice is willing and able to take on the job today, he or she may not be able to continue in the future. Always name a successor executor in your will.
If the answer to any of these questions is “No”
You may want to designate a third party, such a bank, trust company or a professional estate planner or elder law attorney to serve as executor. You may also want to designate such a professional as an alternate executor in case the person you originally named is unwilling or unable to take on the responsibility.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Michael Flaherty is a financial advisor located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 508.598.1082 or at firstname.lastname@example.org
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