5 Things to Know About Executors

Key Takeaways

  • This is a great honor, but also a big job
  • Your duties as executor may be in conflict with the family’s wishes
  • Organizational skills are very important 

1. What is an executor?

An executor is a personal representative who acts on your behalf after you die. You nominate or designate an executor in your will in order to settle your estate. An executor’s responsibilities typically last from nine months to three years or more. Executors are entitled to a fee from the estate for services rendered. If the executor is a financial advisor, attorney, accountant or other professional, he or she typically charges a fee. But, family members serving as executors usually waive the fee. In general, state laws require that the person who manages your affairs is an adult U.S. citizen. Additionally, an executor cannot be a convicted felon.

2. What are the duties of an executor?

An executor acts in a fiduciary capacity. This means that he or she must exercise a high degree of care at all times. Additionally, an executor is under court supervision, subject to its control and approval. In addition, an executor is personally responsible for ensuring that all the proper tax returns are filed and that any estate taxes due are paid. Finally, an executor is accountable to the court and to the beneficiaries upon completion of his or her duties. The functions of an executor are varied, but generally include:

  • Locating and probating the will.
  • Creating an inventory of the assets and collecting and selling them (if necessary).
  • Paying legitimate creditor claims.
  • Paying any taxes owed by the estate.
  • Distributing any remaining assets to beneficiaries. 

3. How is an executor selected?

An executor should be someone you trust, who has a close relationship with your family, who has a basic understanding of tax laws, and who has a keen sense of business (especially if you are a business owner).

Typically, spouses are named executors. Other choices include older children, siblings, or parents. Friends, attorneys, and bank or trust officers are also common choices. You can name multiple executors to oversee different aspects of your affairs. However, having co-executors may increase paperwork requirements and slow the probate process. Attributes for a good executor include:

  • Ability to serve.
  • Willingness to serve.
  • Competency.
  • Trustworthiness.
  • Appreciation of your family’s needs.
  • Knowledge and experience.

4. Family member versus professional

When choosing an executor, you can name an individual or a professional (e.g., an attorney or a bank trust department) to handle your affairs.

The advantage of having a family member or close friend serve as the executor is that they have intimate knowledge of your affairs and will take a personal interest in the settlement of your estate and the well-being of your beneficiaries. However, a close friend or family member may not be the best choice.  Serving as an executor is a time consuming and stressful task. Some of the executor’s duties are very demanding such as: preparing and filing tax returns, obtaining appraisals, and making an accurate accounting. Executors often have the authority to hire outside professionals to help with these tasks.

By naming a professional to manage your affairs, you gain some permanence and objectivity. A professional who makes money from managing estates will have the investment expertise as well as the legal, tax, accounting, and computer abilities to do the job well and efficiently. You also gain some impartiality by having a professional manage your affairs. However, by nominating a professional, you lose that personal touch from a friend or a relative who is not managing other estates. 

5. What if you don’t leave a will?

If you leave no will, or do not name an executor in your will, or if your executor refuses or fails to serve, then the probate court will appoint an administrator (or curator). If this happens, you have no say about who will manage your final affairs. An administrator performs many of the same functions as an executor but, has much less power and authority.

Contact us any time (610.695.8070)  if you or someone close to you needs help sorting through these complex issues.

 

About Mark Rioboli

Mark A. Rioboli, CFP®, CFS is Director of Wealth Management for Independence Advisors, bringing over 25 years of experience in the wealth management industry. Have a question for Mark? CLICK HERE TO ASK MARK

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