Choosing
an Executor
Creating an estate plan requires you to put on your
decision-making cap. You’ll obviously need
to make decisions about the distribution of your
assets. You will also need to spend some time choosing
the person (or institution) to be in charge of
your assets after you’re gone: the executor of your will.
The law requires an executor because someone must be responsible for:
- collecting the assets of the estate,
- protecting
the estate property,
- preparing an inventory of
the property,
- paying valid claims against the estate
(including taxes),
- representing the estate in claims
against others, and
- distributing the estate property
to the beneficiaries
These last two functions may require liquidating
assets; that is, selling items like stocks, bonds,
and other valuable assets in order to have enough
cash to pay taxes, creditors, or beneficiaries.
The
Workhorse Executor
A will can impose additional duties on the executor that are not required by
law. These might include requiring the executor to develop post-death tax strategies,
to choose which specific property goes to which beneficiaries, and even to decide
how to invest funds.
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In most states, you can name anyone you please
as your executor, as long as he or she is over eighteen
and not a convicted felon. There’s no consensus,
even among lawyers, about who makes the best executor;
it all depends upon your individual circumstances.
It often makes sense to choose someone who is a major
beneficiary under the will, because he or she is
likely to do a conscientious job of managing your
affairs. Many people name their spouse or adult child
as an executor. However, appointing your spouse as
an executor can cause problems if he or she is incapacitated
by grief, illness, or disability, or has sole responsibility
for any minor children. Executors may be faced with
some duties that may be particularly unpleasant for
family members, including the job of retrieving money
or property you lent to other relatives or friends.
If you think the role of executor would be too much
of a burden on your spouse or adult child, you may
wish to appoint a professional executor, even though
it means paying a fee.
The quality most desirable in an executor is perseverance
in dealing with bills (especially the hospital, Medicare,
and ambulance and doctor charges incurred in a last
illness). These often require a lot of paperwork,
up-front payment, and subsequent reimbursement from
insurance companies. Choose someone who has the time
and inclination to deal with bureaucrats and forms.
Also, the executor may have to cope with relatives
who may be wondering why it’s taking so long
to receive their inheritance or why their bequests
are smaller than expected.
In most estates, no significant legal expertise is
required to serve as executor; the issues are all
financial. The executor will generally work with
a lawyer to probate the will. Your will can direct
that your executor use a lawyer’s services
for court appearances, filings, and other technical
matters requiring legal expertise. The lawyer handles
all the court appearances and filings while the executor
provides information and input. Estate fees paid
to the lawyer may be set by law (some states specify
an hourly rate, some a fee based on a percentage
of the estate).
If you run a business or are self-employed, consider
making your executor or co-executor someone knowledgeable
in your field. Sometimes the specialized knowledge
of accounting or tax laws applicable to your area
of business is easier for a colleague than for your
spouse or other relative to master.
It’s often advisable to use a lawyer or a bank
as an executor for larger estates. A complicated
estate that involves temporarily running a business
often demands an institutional fiduciary, such as
a bank, that can call on the advice of lawyers, tax
experts, accountants, investment counselors, even
business administrators. It’s impartial and
immortal. You might also consider hiring your lawyer
as executor if you anticipate a will contest or know
that the estate is going to require a lot of legal
work.
Think carefully about the identity of the executor
when you draft your will and talk to your lawyer
about what your estate might require. You should
also talk to your proposed executor to ensure he
or she is willing to do the job.
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