Your estate plan isn’t complete until you appoint someone to carry out your wishes. Your choice of executor (sometimes called a personal representative) is important. Before selecting an obvious choice, such as a spouse or child, consider the time involved, the scope of duties, and the burden the role may impose.
Carrying out your wishes when you're gone
A will gives you the ability to nominate your executor, along with how your assets will be managed and distributed.
Under the supervision of the probate court, your executor manages and distributes the estate according to your will or, in the absence of a will, according to state laws of intestacy. In executing your will, you nominate your choice or choices for executor. Although only the court can officially appoint the individuals named to that role, it will generally respect the wishes expressed in your will unless there is a compelling reason not to. If you don’t have a will, the court will consider any petitions for appointment as executor of the estate and will appoint an executor from those petitions.
Their many responsibilities and tasks
Your executor is responsible for paying the expenses of your estate and the debts you leave behind. Their responsibilities may include, but are not limited to:
- gathering and assembling documentation, such as death certificates, insurance policies, bank, brokerage and pension plan statements, real estate deeds, trust documents, credit card, mortgage and other loan statements, and user names and passwords for digital accounts.
- creating lists of impacted family members and other potential heirs.
- assisting with funeral arrangements.
- making sure that your survivors’ immediate financial needs are being met.
- notifying all banks, brokerage companies, and creditors of your death.
- petition to open probate estate and file will with the court.
- overseeing the ongoing operation of your business.
- filing 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 approximately one year, but it can take longer and become time consuming.
Should you choose a family member as executor?
People will often choose a spouse as executor, and a surviving spouse may appoint one of their children to serve in this role.
But this can lead to potential conflicts. For example, children from your previous marriage could view your current spouse as biased. If your children don’t get along, appointing one as executor could cause resentments.
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.
If you can’t find someone in the immediate family who has the necessary qualities, appoint a third party, such as a close friend who is willing to take on this role. You generally have the ability to nominate multiple executors to serve at the same time, though this should also be considered carefully.
Be sure that a potential executor is competent and willing to serve
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. Generally, the executor will be entitled to reimbursement from the estate for these expenses.
Furthermore, an executor will be liable for their 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, they may not be able to continue in the future. That's why it's important to always name a successor executor in your will. This is someone who will take on the role if your original executor is no longer able to do so.
While the person you ask to be your executor may consider it an honor, it’s important that they fully understand what they’re getting into. To that end, you may want to show the list of potential responsibilities and tasks above. You should also ask them the following questions to gauge their suitability for this role:
- Do you feel that you have the competency and objectivity to serve in this role?
- Do you feel comfortable dealing with members of my family, and working closely with my attorney, CPA and financial advisor?
- Are you willing to carry out all duties assigned to you by the probate court?
- Are you willing to make a time commitment of potentially a year or more to fully settle my estate?
Appointing an Agent for the Executor
While your executor will work with your attorney, accountant, banker and financial advisor to settle your estate, they may not have the time or knowledge needed to carry out a large number of tasks.
That’s why in your will you may want to specify an Agent for the Executor. The agent may be an individual, such as an attorney, or a firm such as a bank or corporate trustee.
Typically, the agent will do most of the heavy lifting involved in settling your estate, including recordkeeping, filing tax returns and preparing financial reports for probate court.
The agent will be paid from assets in your estate before the remaining money is distributed to your heirs.
While an agent can make an executor’s life a lot easier, the executor is still legally responsible for making sure the agent carries out their assigned tasks correctly and efficiently and charges reasonable fees. That’s why you want to choose an executor who will take this responsibility seriously.
For more advice on choosing an executor, consider speaking with an attorney or professional estate planner. If you work with a financial advisor, they may be able to refer you to professionals they've worked with in the past.
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 with a lawyer or accountant before you make any estate-related decisions.
Joelle Spear is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. She can be reached at 508.598.1082 or email@example.com.
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