If someone named you as is or her executor, you would likely feel honoured, and for good reason. That person is nominating you as his or her personal representative, to put yourself in their place and to use your judgment when they have departed this mortal coil.
However, it is likely not a job to get excited about. Being an executor involves a lot of responsibility, and it will likely be very time consuming or even frustrating.
An executor can even be held personally liable for things like distributing assets to beneficiaries before taxes or other debts have been paid. However, most modern wills absolve executors for actions taken in good faith and with proper care.
Speaking of beneficiaries, an executor might also have to cope with impatient or unreasonable beneficiaries, or even family in-fighting.
When you are selecting a person to act as your executor, keep these things in mind. Sometimes this is a job best left to a professional executor, like a trust company, which has the expertise and experience, as well as the ability to act as an impartial third party. Always think about your second choice, as well, since you are smart to name a contingent (back-up) executor, in case yours is unable or unwilling to act.
In thinking about who to name as your executor, think about some of these factors:
• The nature and complexity of your assets and affairs;
• The size of your estate, and whether or not the benefits of good tax, legal and other decisions could offset professional fees;
• The ability of the executor to understand the issues and devote the time required, both in duration and potential intensity;
• Whether or not family members are reasonably expected to get along;
• Blended family situations, second marriages and other fairness-related or awkward issues;
• Characteristics of a potential executor, in things like age, skill, where they live, experience, attention to detail.
Common choices for executor (“executrix” if female) include the surviving spouse, which makes a lot of sense, especially if receiving the entire estate. A co-executor might be a good idea if the person named is older, potentially infirm, inexperienced or more comfortable with help. The Will may grant this executor the right to hire professionals, including a trust company, to provide such help.
If adult children will inherit the estate, one or more of them may be the right choice. The obvious consideration is who to choose and who, if any, to leave out.
If your children have a history of disharmony or lingering resentments, they are probably a bad choice, and an objective professional may be better.
A lawyer, accountant or other professional advisor, especially one who has familiarity with your affairs, may be worth considering. However, many such professionals will decline the appointment, choosing instead to provide their advice and service to the executor, rather than being the executor.
If your affairs are complicated, then a business associate might be considered, but think carefully about potential conflicts of interest, and the needs of your family.
A trust company may be your right choice. if there are to be long term trusts established under the Will (which could be for young children), if blended families are involved or other potentially divisive issues, having a third party may be the way to keep your family together after you are gone.
Once your choice is made, be sure your executor knows they have the job and have had a chance to ask you the questions they need to ask. Also think about.
Prepare a complete inventory of all assets – like bank and investment accounts, life insurance policies, real estate, group insurance and pension benefits, safety deposit box, out-of-country accounts or properties - everything you own - and the locations. This is also a great organizational tool for you.
Make sure the location of your original Will is known to your executor. Ideally, go over the Will with the executor, to clarify any ambiguities.
If your Will leaves things to the executor’s discretion, then prepare a letter or have a talk with that person to explain your thinking and feelings about those issues.
By all means honour a person by naming them as your executor, but give them every tool to do for you a fabulous job.
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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.
Please consult legal, tax, insurance and investment experts for advice on your unique situation.
David Christianson, BA, CFP, R.F.P., TEP, CIM is a Certified Financial Planner and senior advisor with Christianson Wealth Advisors, a Vice President with National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.