Choosing an executor is a seemingly basic but sometimes overlooked decision in creating a last will. There is a difference between a good executor and a bad one. A few extra minutes of thought to appoint a good executor can avoid a host of problems down the line.
An “executor" in an appointed person or business who then accepts the role after the passing of the decedent. A court nominated person can be called an “executor" or a “guardian of estate". The executor completes all paperwork and reports, pays debts out of the deceased person’s assets, sells assets as needed or instructed, distributes assets to beneficiaries, and wraps up any legal matters after a passing.
When combined with an iron clad will, your estate will resolve with a minimalized chance of conflicts, save money in probate and lawyers fees, and get your assets to the people who need them the most in a few months instead of years inside probate.
In all cases your executor must be 18 years old when the duties of executor arise, and must be mentally competent. Let’s discuss some of the skills most desirable to an executor, and a few options.
Executors should have a well-rounded experience and comfort level managing assets and a comfort level with basic finances, taxes and the upkeep of property. Often, some basic skills are lacking in some individuals, and should be avoided if better alternatives are available. Not every skill is required of any executor, but the more skilled the executor is, the less chance the executor will mess up. At the very least, the executor of a modest estate will not have to spend money from the estate hiring someone to provide for every single need.
An executor should have some ability to pay bills, keep ledgers, inventory property, and be able to pay or understand income and property taxes. A surprising number of individuals do not pay their own bills. Often one person in a marriage takes control of the finances over another, so it’s a good idea to find out before naming the wrong person as executor.
Personality is even more valuable than skill. Skill is good, but in a pinch an executor lacking in knowledge can hire professionals to do what needs to be done. An executor cannot hire a personality to take over his/her duties. No matter how peaceful you think your family would be in distributing your belongings, its best to assume the worst. Feuds happen over money all the time, and commonly over inheritance.
People change when they're dealing with inheritances, and not just the ones you’d expect. Family members get emotional, their feelings get hurt, they blame others for their loss, and many become outright greedy when an estate of several hundred thousand dollars is up for grabs.
Executors who cannot be persuaded easily or can stand up to bullying are invaluable. Every other skill can be either learned, or can be hired out to someone with knowledge – personality cannot be taught so easily.
If you can afford it, an attorney (or better yet an attorney limited to probate) can perform as an executor extremely efficiently. Probate attorneys already do just about everything an executor needs to do. Attorneys can carry out payment of debts and distributions much more quickly and efficiently than non-attorneys.
Attorneys are bound by their state’s duties of loyalty, confidentiality, and duty to avoid conflicts of interest – creating an automatic check-and-balance so long as you do not sign a waiver. Beneficiaries can always sue an attorney, so it’s in the attorney’s best interest to do his job on the straight and narrow.
Attorneys can come in a variety of personalities, and some attorneys are more difficult to get along with than others; and some attorneys are bad attorneys. So if you do want to go the attorney route, try to get a referral from a friend or relative who knows or has hired the attorney before.
Another benefit to an attorney is their station and the authority they command.. As an authority in the law, they can usually avoid conflicts at the outset by explaining the law to disgruntled heirs, and use their authority to dissuade potential probate suits.
Lastly, hiring an attorney as an executor may not include the probate fees, so know what your contract is with the attorney before you make a decision. Is probate included? Is the fee hourly or a flat fee? What happens if the attorney dies before you or decides not to perform the duties? When do you pay the attorney – up front or out of the estate?
Finally, make sure the attorney you pick does not have any conflicts of interest with anyone in your family or people standing to inherit anything from you. Even with a waiver, an attorney with a conflict may feel pressure to ease his loyalty to you and your beneficiaries at large, and provide favoritism towards his other client.
Spouses are a common and often solid first choice since almost no very little work needs to be done in the great majority of cases. In community property states, absent an agreement to the contrary, most property will be community property, and will pass to the surviving spouse with no tax consequences.
States like Washington give a spouse an absolute right to act as executor over community property. The right supersedes the dead spouse’s last will. However, the decedent can still name a different executor for any non-community property.
Since every state can be different you should talk to an attorney and get a tutorial on the property laws in your state to determine how much property will not go to a surviving spouse. In non-community property states, the spouse may still receive most or all of the separate property.
In more sophisticated circumstances like those with a significant amount of assets, those with a community property agreement, a large amount of separate property, a mixed family (children from multiple partners) or beneficiaries of a trust, additional work is often required, and unloading the burden to someone other than a grieving spouse is best.
If you are in a community property state, and a significant portion of your assets are separate, it may be a better idea in some circumstances to choose someone else to handle your separate property. However, if your spouse is well versed in property and money management, then a spouse should be sufficient.
Family members are easy choices but for the sake of maintaining family social dynamics, alternatives may be better. It may be beneficial to decouple the burden of being an executor from the family altogether.
Family fights over inheritances happen across the country by the hundreds. Almost every person I talk to is convinced that their family will “figure it out". The numbers don’t lie, probate remains a very lucrative area of law for attorneys because families fight over inheritances.
Using a family member who is forced to stand in the middle of an inheritance fight and help to choose winners and losers puts the individual in a precarious position. Neutral individuals who will not have to deal with family after the estate is settled, like friends or attorneys, are in a better position to do the job, do it right, and without fear of long-term problems.
During the emotional time after a death, rationality can give way to hurt feelings very quickly. Money changes people. For that reason alone, I typically suggest a third party, who is not heavily tied to the family to carry out the duties as executor. Coupled with an iron clad will, relatives might get their feelings hurt, but it’s you they have to be angry at, not each other. As sad as it is, being the martyr after your death probably the most selfless.
Outside of attorneys, friends are typically the best choice for executors if they have the necessary skills or will be outgoing enough to find professionals who can provide for any skill lacking. In addition, it’s a good idea to choose a friend who is distanced from your family or knows enough about your family to put up with bickering and fighting if your heirs get aggressive.
Friends are often distanced from family squabbles. Their loyalty remains with the departed – not necessarily to the family. Less importantly, but something to note, an executor cannot receive any gifts by intestate succession (the default rules for distributing an estate if a Last Will is thrown out).
Some religious leaders do act as executors from time to time. Each source is free to make up their own policy on whether they participate as executors. Some clergy members only provide this service to poorer individuals who have little or no family, or in cases where the church is a significant beneficiary. A clergy can be an excellent choice, since church receptionists and secretaries have some skill in bookkeeping and money management – plus some technology helpful in settling an estate.
Many parents often want to make the guardian of their children the executor of their estate. Bad move. There are a number of horror story cases where guardians with access to the parent’s assets either abscond with the money altogether or spend the money inappropriately on vacations and luxuries. Most seem particular Mexico and the Caribbean.
Instead, try to make sure that no matter who your guardian is, someone else is in charge of your assets at all times until the money is distributed. Commonly trusts are a great way to make sure that the money is only going to the guardians little by little, and for the right things.
Take a few minutes to think about the job of an executor and who would do well in the job. The thought process shouldn’t take too long, but you don’t want to make a flippant decision without knowing the qualities and ramifications of choosing an executor.