Choosing the Right Executor* for Your Estate

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ExecutorMost people know that having a will is important and that someone should be in charge of managing it upon death. However, few individuals understand just how important who you choose as your executor really is. Picking the “right” executor* is crucial – this will mean that loved ones receive their inheritance on a timely basis, eliminate any of the family drama that often comes with this type of life event, and will ensure that your assets are distributed according to your wishes, without hesitation.

First, it is meaningful to know what happens to your estate after you pass away, and your executor’s involvement in these matters:

 Your estate is opened. Your executor will file paperwork with the county where he/she is stating they are the executor and will be representing the estate. They should also notify creditors and other relevant parties of your death and their right to make a claim against your estate for any debts owed. Investopedia.com says, “Some probate* courts will require that certified letters are sent to potential creditors. Others simply require that a notice be published in a local newspaper. In any case, it is up to the executor (with some help from the court) to identify those creditors and to properly notify them,” because notification errors could lead to lawsuits from any number of individuals – beneficiaries, heirs, creditors, etc. Therefore, your executor should, at the very least, be a mature individual who is capable of following these policies and notifying the appropriate parties.

“Probate” is the process conducted by a court that determines the validity of the deceased’s will. The process helps identify and locate beneficiaries and supervises the distribution of assets.

Collecting assets. It is also the executor’s job to take an accurate inventory of the deceased’s assets, which includes a list of all bank, brokerage, and retirement accounts, real estate owned by the deceased, and personal effects such as collections, antiques, or other valuables that must be tabulated for the probate court to review. This can be a very time consuming task, which can include a lot of research and heir involvement. Remember, this is expected to be accurate and complete so that heirs can receive their inheritance on a timely basis.

Managing the estate. The executor is in charge of using the estate’s funds to pay any outstanding bills of the deceased, and of collecting any money that is due to the deceased, which will then be passed to beneficiaries according to the provisions of the will. In addition, if the deceased owned a business, the executor may have to buy or sell some assets, make payroll distributions, or otherwise run the enterprise or find someone to do so until it is passed on to heirs (all based on specifics of the will). A business-savvy executor is also a great idea, as they will be capable of handling anything that is involved on these fronts.

Dealing with taxes. The executor must find an attorney or accountant to calculate any estate taxes that are due (or do it themselves if they are capable), and file the appropriate tax return to make the payment. They should also file a final income tax return for the deceased for any income earned during the final year of the deceased’s life, and to receive any refunds due to the deceased. Again, the executor should be an intelligent, disciplined individual who will appreciate the implications of his or her duties.

Closing the estate. The executor has to prove to the probate court that he or she has adequately notified all potential creditors of the deceased’s death, that he or she has paid all bills and taxes that were due, and must show any released from the state that all liabilities have been settled. They should also provide a complete accounting of any income earned or disbursements made by the estate after the death of the deceased.

Distributing assets. Once all debts have been settled, it is up to the executor to distribute assets to heirs per provisions of the deceased’s will. This may sound like an easy task, but there may be jealous family members who feel they were cheated, or other discrepancies between relatives that must be thoughtfully and respectfully explained as being the deceased’s exact wishes. Therefore, it is ideal for the executor to be a “people person,” or someone who is capable of keeping their cool while dealing with any sort of hostility that may arise.

Choosing the right person. Oftentimes, individuals will choose a family member or close friend to act as an executor and to administrate their wills upon death, but because of the intricacies that are involved with this responsibility, the most competent individual (not necessarily the closest in relation) should be chosen. Executors are allowed to hire help to complete parts of this process, so it is OK if they aren’t experienced with all aspects of closing an estate. If you don’t have a family member or friend who could complete these duties in a satisfactory manner, you can hire professionals to help. While the fees associated with hiring an executor are often costly, it may be worth it to ensure that all parts of your will are carried out appropriately.

If you have any questions about choosing an executor or about planning your own estate, please don’t hesitate to call. We are happy to help!

*In the state of Arizona an “executor” is known as a “personal representative”.


Source:
http://www.investopedia.com/articles/pf/07/executor.asp#axzz28cuLOAlL

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