Things to Consider When Picking the Executor of Your Will
An executor administers a deceased person’s estate, i.e., the person’s net worth at the time of death. Choose an executor you trust to carry out your directives honestly and fairly.
Even a small estate may require an executor. You can name your executor in your will, but the court can designate one if you don’t. Understanding the executor’s responsibilities can help you choose a suitable one.
What are they responsible for? You entrust an executor to carry out many duties, including examining your will and trust documents, notifying beneficiaries, financial institutions, and government agencies about your death. They will also be responsible for managing your property until distributed, paying creditor claims and funeral costs, working with an attorney and/or accountant, offering the will for probate (if necessary), filing tax returns, distributing assets, maintaining complete and accurate records, and filing a final accounting with the court. The executor you name may refuse the job; in which case the court may choose an alternate.
Limits on an executor’s actions. Your executor is your estate’s fiduciary, meaning they are required to always act in the estate’s best interests. The fiduciary requirement rules out double-dealing by the executor for their own benefit, especially when they are also a beneficiary. A court may have to intervene to address any actual or potential conflict of interest. Executor misconduct includes failing to follow your instructions, failing to submit your will to the probate court, distributing money contrary to your wishes, grossly mishandling the estate’s assets, and failing to distribute all assets without a good justification.
Complications of naming co-executors. You might want to name two or more co-executors for several reasons, including recognizing their complementary skill sets. However, co-executors must act unanimously, and the court may have to intervene if serious disagreements arise. Disputes may erupt based on different perceptions, ideas, and values. Accordingly, it would be best if you vetted potential co-executors to ensure they can work harmoniously. It also makes sense to lay out how to handle disagreements before going to court. Remember, each co-executor is legally responsible for the other’s actions. Named co-executors should formally renounce the job if they don’t want it.
Paying the executor. You shouldn’t expect executors to assume the job for free, especially when it requires significant effort. Typically, the executor is entitled to collect fees commensurate with the work they perform and the responsibilities they undertake. The probate estate always pays the executor’s fees, which may take the form of a percentage of your estate, an hourly rate, or a flat charge. You may specify executor payments in your will, but the state court may intercede if you fail to do so. An executor’s fees are taxable income, leading some to waive payment.
Get your estate in order. It’s difficult for an executor to carry out your wishes if you don’t leave behind a will, living trust, or an estate plan. I invite you to contact me to review how this will affect your overall financial plan. We can also explore strategies to minimize the impact of taxes on your estate.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
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This material was prepared for Chris Larkin and does not necessarily represent the views of the presenting party or their affiliates. This information has been derived from sources believed to be accurate. Please note—investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.