One of the most important decisions you’ll make when preparing a will is selecting someone to serve as executor.
An executor helps manage your affairs and distributes assets after you’re gone. Selecting a reliable executor ensures your loved ones will receive their inheritance in a timely manner while choosing the wrong one can lead to a number of problems including lengthy delays, tax problems and even a contested will.
What does an executor do?
To understand how critical this decision is, it’s helpful to first consider what happens to your estate when you die.
The first thing that happens is the executor files paperwork with the court to open your estate and begin the process of probate. Once the court determines that the will is legally valid, the executor administers the estate and remains in charge until it is legally closed.
Some of the most important duties of an executor include:
- Compiling an inventory of everything in the estate
- Paying outstanding bills, including taxes, using the estate’s funds
- Filing final income tax returns
- Terminating credit cards and notifying banks and government agencies of the death
- Making court appearances for the estate
- Distributing assets to the will’s beneficiaries
Who should I choose?
Most people usually select a family member or close friend when selecting an executor. However, because of the tremendous responsibility they must undertake, it is crucial to pick whoever is most competent.
Whoever you pick, make sure you receive their approval first. Then review with them your important financial details and make sure they know where you keep important documents.
The person you select needs to be honest, reliable, organized, and a good communicator.
Furthermore, if you own a business then make sure the executor is business-savvy because they may have to temporarily run the business until it is passed on to the heirs.
It’s also wise to select alternative executors. Whoever you choose, even if they agree to be your executor during your life, can decline the responsibility. If they do so and you haven’t chosen an alternative, the court will appoint an executor.
Although most people select a friend or family member, it is also possible to choose a third party, such as a bank, trust company or professional who has experience working with estates. If you select a third party there will be an executor fee that will come out of your estate. These vary by state but are typically between one and five percent depending on the size of your estate.
There are also a few restrictions about who you can select as an executor.
You need to consider the location of where your executor lives. If they live a long way from where the will is going to be carried out, it could be difficult for them to adequately fulfill their duties.
Some states also have special requirements regarding out-of-state executors, so you will want to check your state’s laws before making a decision.
Executors also must be at least 18 years old and cannot have any felonies on their record.
To learn more about selecting an executor for your will, contact Cordell Planning Partners.