The ABCs of Picking the Right Executor for Your Estate Plan



Congratulations, you’ve decided to finally create your estate plan.  But you may be stumped about whom to name as your executor.

While many of us have clarity on who our beneficiaries will be, we often are at a loss as to who should step into the pivotal role of executor of our estate.

Not to worry, it’s not as complex as you may initially think.  Choosing the right executor can be as easy as ABC.

What is an Executor?

An executor is the person responsible for gathering all your assets upon your death, paying off your debts as appropriate, and distributing your assets per your wishes.  An executor is a fiduciary, meaning that they have a legal duty to act in the best interest of the beneficiaries of the estate.

Don’t confuse an executor with a successor trustee.  If you only have a will that lays out your wishes for your estate, the person responsible for gathering and distributing your assets is called the executor.  This person is named in your will and can serve with or without bond.

Depending on the value of your estate and the laws of your state, it is very likely that the executor will serve under court supervision as wills are commonly handled via the probate process.

A successor trustee is the person named in your trust who will gather and distribute your assets. A trust is typically administered outside of court supervision and transfers of assets occur relatively quickly compared to the probate process. It’s important to not confuse these terms!

A is for Availability

Your choice for executor must, first and foremost, be available. This means they must be able, willing, and local(ish). Ability to serve as an executor means your choice for this role must have the capacity to serve. This means both legal capacity as well as personal capacity. Try not to choose a contemporary of yours. Instead, pick someone who is younger than you by at least a decade.

Also, if your most trusted friend is your first choice but they have a complicated family situation, their own medical issues, or a tremendously stressful and challenging job, they are likely not the right choice.

Find someone who is willing to serve in the role. Someone who refuses to discuss death as being ‘too morbid’ is not going to be a good fit for this role. Your executor has to deal with myriad financial and legal issues fairly quickly after your death and an inability to deal with this reality will not be helpful for your beneficiaries.

Finally, pick someone who is local(ish). The ideal choice is someone who is close by and is in frequent contact with you. If this is not at all possible, then find someone who is flexible enough to fly in when needed. With the proliferation of national banks and the easy availability of document storage in the cloud, many items can be handled remotely. But don’t forget that an executor may very likely have to appear in the local superior court for probate purposes.

B is for Background

Your executor should have the appropriate background to handle your estate. By background, I don’t mean the same personal, educational, or family background as you. Your executor should have a high level of comfort in dealing with your assets. For example, if you own multiple properties and your preferred executor has never bought or sold a house, you likely should consider a different choice for this role.

Executors have to deal with attorneys, finance professionals, realtors and accountants. Choose someone who is not intimidated by these professionals and can communicate with them clearly and concisely.

I once had to work with an executor who didn’t understand the probate process, was too disorganized to marshall the estate’s assets, and had never looked at a financial statement in their entire life. Needless to say, this executor was not an ideal choice.

Finally, find someone who can deal with insistent or even unpleasant beneficiaries. While everyone thinks all their beneficiaries will get along smoothly when the time comes, it’s unfortunately common for beneficiaries to be insistent, uncompromising, and adamant that what they want to do and how they want to do it is legally acceptable (even when it absolutely is not). Your executor will need to able to stand up to this pressure and potential conflict and be able to resolve these issues without becoming emotionally involved.

C is for Conscientious

While it may seem obvious, your executor should be conscientious about following your wishes, regardless of whether they agree with your decisions. In your will, you can choose to leave your estate to anyone you wish. You don’t need a reason to leave out your family. Your will, the way it is written as of the date of your death, memorializes your wishes. Your executor is legally duty bound to follow those wishes, no matter their concerns.

For example, in one recent case, a decedent had left a large sum of money to a child who had obvious issues with money management. The executor had to distribute money to the child regardless of their well-founded belief that the money would be spent unwisely.

Your executor must also follow any unpopular decisions you memorialize in your will.  If you decide to disinherit family members or leave friends or family nominal amounts (often contrary to what these friends or family members were expecting), the executor has to follow your directions. It may even lead to harassing phone calls or even threats of litigation. Your executor must stand firm in following the terms of your will. In short, your executor needs a strong back bone.

Common Mistakes and Misconceptions

  1. Only children or family members can serve as executors.

Not only are you not required to appoint your child or family member, it is often best not to appoint your child. The most common instance where appointing one of your children as executor is problematic arises when one of your children is living with you. As housing becomes a bigger challenge for younger generations, it’s frequently common to find children living rent free with their parents.

Once the parents pass away, the children who aren’t living in the house typically want to sell the home. The child living in the house is routinely opposed to this turn of events. Conflict and bad feelings inevitably arise between the children. In cases with an adult child living in the home, we advise our clients to appoint a corporate trustee or include language for the beneficiaries to approve a third-party fiduciary as executor upon the client’s death.

It’s important to note that a third-party fiduciary who may be available and willing to serve as of the date you write your will may not be in business or practicing at the time of your death. Therefore, it’s best to include the enabling language and let your beneficiaries decide which third party fiduciary best fits their needs upon your passing. All third-party fiduciaries should, of course, be licensed and bonded.

  1. Co-Executors Are The Best Way To Avoid Conflict

Without a compelling reason, you should shy away from appointing two people to serve as co-executors. The logistics of co-executors means that each executor must sign every document and must be involved in every decision regarding the estate. The probate process is, by definition, a lengthy one in every state. By adding the complexity of two executors, the entire process is further delayed and complicated.

For example, I recently had a client who insisted that naming only one child as executor instead of both children as co-executors would be seen as favoring the child named as executor. I explained in detail the amount of work involved in serving as executor and the logistical issues with co-executors, especially given that both children lived far away from each other. Ultimately, the client picked one child as the first preference and the other child as a second preference.

  1. Executors Should Not Be Paid

Executors can and should be paid.  Executors must complete a significant amount of work when serving, with the court process adding time and complexity to their duties. Many states allow for executor compensation via their probate laws.

Your will should allow for reasonable compensation for your executor instead of a specified amount. This approach allows the court to approve an amount that is in line with current practices at the time your executor serves.

  1. The Drafting Attorney Is The Best Choice For Executor

Do not name the attorney who drafted your will as the executor of your will. While an attorney may be a good choice for your situation, the drafting attorney has a significant conflict of interest if they are named as executor. Attorney misconduct in this situation is common and easily avoided. An attorney may still be a good choice for your executor, just not the drafting attorney!

In conclusion, following the ABCs of choosing the right executor can help to make administration of your estate much more efficient and devoid of conflict. And if you have a trust, the ABCs apply to your choice of successor trustee as well.

 

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