How to Choose the Right Executor
By the age of 55, about 45% of people in the United States have created a will. That number rises to 81% for people over the age of 72. Of course, people with more assets are more willing to create a will and keep it updated.
Part of creating a will is choosing an executor to manage it when you pass away. This person should be someone you trust completely, as they will communicate with your family and make sure everyone gets what you left behind.
Here's your guide on how to choose the best executor for your will.
Executor Responsibilities
The executor checklist involves various tasks, such as:
- Filing the will
- Managing and securing assets
- Paying debts and taxes
- Distributing assets to the beneficiaries
- Handling other legal and financial matters
Any person chosen for this role should understand these responsibilities. If they feel they are unable to handle the role, then it may be better to pass it on to someone more qualified.
Filing the Will
After the will's writer has passed, the executor must file their will with the probate court. This begins the process of settling the estate and initiates the legal proceedings required for asset distribution.
The court will address the will if there are any problems or inconsistencies. Any property listed on the will that was not owned by the person at the time of their death is generally disregarded.
Managing Assets
Executors are responsible for taking inventory of the deceased's assets and monitoring their property. That includes their investments and personal belongings, some of which they may leave to their beneficiaries.
Part of their job is protecting these assets, such as by maintaining insurance of safeguarding valuable items.
Paying Debts and Taxes
It is possible for a person to die with outstanding debts. These debts do not go away with the deceased. Instead, they may pass down to family members if they have shared legal responsibility, such as with a co-signer or joint account holder.
In most cases, debts are paid out of the money or property left in the estate. The executor is responsible for paying off these debts as well as filing the final income tax return for the deceased.
Distributing Assets
One of the most important roles of an executor is distributing the remaining assets to beneficiaries named in the will. They must follow the terms laid out in the document and address any concerns by friends and family members.
Executors cannot alter any decisions made in the will. They must maintain the trust the deceased placed in them.
Handling Legal and Financial Matters
The executor is responsible for finalizing any legal or financial matters. They might sell property to pay debts or distribute assets as instructed.
If there are any disputes among heirs, the executor must handle them. They can hire professionals like attorneys or accountants to assist with complicated matters.
Executor vs Trustee
Executor and trustee are two terms that are often used interchangeably. However, they do not represent the same role in estate planning.
An executor's responsibilities do not begin until after the death of the person who created the will. Once the will goes into effect, they settle the estate through the probate process.
A trustee manages a trust. Trusts are usually set up during a person's life and continue to function after their death. The trustee oversees the management of the trust's assets and distributes them as instructed.
The trustee selection guide would look similar to an executor selection guide. They serve similar roles and should both be people the creator trusts implicitly.
Qualities to Look for in an Executor
When looking for an executor, consider their specific qualities to assess whether or not they can handle the role effectively.
An ideal executor should have:
- Trustworthiness
- Organizational skills
- Financial and legal acumen
- The ability to handle stress
- Decent availability
- Impartiality to beneficiaries
You do not want to choose someone based solely on your relationship. Family members may not always make good choices, and they could favor certain relatives over others.
If your estate is complex, naming a single executor could put too much pressure on them. Co-executors can share the responsibilities, or you can hire a professional advisor.
Avoid anyone with a conflict of interest, and provide them compensation as part of your will.
A good choice for an executor is someone who already holds the Power of Attorney. This is most often a friend or family member who is currently handling either or both their financial and healthcare decisions.
It's also fairly common for a person to serve as both an executor and a trustee. However, they should understand the differences between the two roles. They also shouldn't mix up the assets.
Estate Planning Tips
The first tip for easier estate planning is to consider a professional executor. Not everyone has a person in their life who they can trust with important financial matters. It's okay to rely on a bank or trust company for their expertise and impartiality.
Communicate your expectations with your chosen executor. Discuss the role in advance so they know their responsibilities and want to take on the role.
Update your will regularly to best represent your current circumstances and assets. A failure to update your will could cause problems during probate and make it drag on while professionals sort them out.
It's best if your executor lives nearby so they can better manage your estate. This is especially true if your estate includes real estate and valuable physical assets.
Find the Right Executor
The perfect executor for your will depends on the assets you leave behind as well as the details in said will. Simple asset distribution is easy enough, but things become more complicated when you take into account investments and debt consolidation.
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