In my series on getting your estate plan in order (no matter what your age), I’ve talked so far about what to do if something happens while you are still alive and encouraged you to think through how to dispose of your assets after your death.
Today’s question: Who do I choose to be the executor of my estate?
Answer: your enemy.
Investopedia.com defines an executor as “An individual appointed to administrate the estate of a deceased person. The executor’s main duty is to carry out the instructions and wishes of the deceased. The executor is appointed either by the testator of the will (the individual who makes the will) or by a court, in cases where there was no prior appointment.”
While I joke about appointing an enemy as your executor, being an executor is a difficult, mostly thankless job, often compounded by grief at the loss of a friend or loved one.
How do you choose this person? Many people choose a close family member, and spouses often appoint one another (with contingency plans in case they do not survive one another).
I have not been able to find a consensus on who makes the best executor. Some people think choosing a family member is the best route, as they have “skin in the game,” while others worry that family members will be too grief-stricken or else too greedy to act impartially.
Others suggest naming someone, like your lawyer, who is not a beneficiary of your estate, arguing that someone who is not an heir will have no incentive to divide assets unequally. The will can include directions for paying a fee to someone acting in this capacity.
Still others suggest naming co-executors, one who is a family member, and one who has legal, financial, or business expertise. While this may work out, you should also make sure that co-executors will be able to work well together. Both people will have to sign lots of papers, and the greater the number of executors, the more difficult it will be to accomplish basic tasks, especially if they live in different cities.
Here are the basic duties of an executor:
- Filing papers to open your estate and beginning the process of settling it (the court process is called probate)
- Collecting an inventory of your assets
- Notifying creditors and paying outstanding bills; settling debts (sometimes by selling assets)
- Filing and paying estate taxes, as well as an accounting for the court
- Distributing assets to heirs and beneficiaries and making sure the terms of your will are carried out; transferring legacies and gifts
- Representing your estate in claims by others against it. This includes dealing with jealous, greedy, or difficult family members, and ensuring the court accepts your will as valid.
- Closing your house
What kind of person might you be looking for? Someone who is financially responsible, stable, honest, and trustworthy. The executor may need to be diplomatic if they are dealing with unhappy relatives, and they will certainly need to be patient as tying up an estate is a long bureaucratic process which involves a lot of paperwork, phone calls, and number-crunching.
Now that I’ve made you afraid to appoint anyone you know as your executor, I have one more piece of bad news: you are going to need more than one person, as you should name a backup, or successor, executor in case your first choice is unable to serve in this capacity.
For example, say you are 26 and having your will drafted. You may choose one or both of your parents as executor(s), but you might choose a sibling as a successor executor since your parents are several decades older than yourself. At age 26, you are drafting your will as a worst-case-scenario measure, and your parents could likely serve as executors now. In future wills, you might move to someone younger, as the likelihood of you outliving your executor(s) increases.
By now you can probably tell that though it seems like an honor to name someone as your executor, it may feel more like a punishment to them by the time they work through settling your estate. Sometimes the process can take years, so for the executor’s sake (and sanity), try to put your affairs in order. Keep clear records of your finances, and make it easy for someone to step into your shoes and follow your wishes. Tell your executor where to find important documents they will need (like your will), and leave instructions for how to access other records.
Talk to your family about what they can expect and what you want, put it all down in legal documents, and after your death your family will not be plagued by lingering doubts and legal tangles.
Photo used under Zero Creative Commons license.