When thinking about estate planning, choosing an executor — the person you appoint to administer your estate and fulfill your final wishes — should be among your top priorities.
Choosing the right executor can make the difference between timely, effective management and smooth dispersal of your assets, and a protracted and possibly embattled probate process.
When considering whom to appoint as your executor, ask yourself if the person you have in mind will be both willing and able to fulfill the following duties:
- File court papers to authenticate the will and to initiate the probate process.
- Conduct an inventory of all your assets.
- Pay for bills, taxes, funeral costs, and other expenses out of your estate’s funds.
- Attend to after-death tasks like notifying the post office, Social Security administration, and your financial institutions of your demise, as well as canceling your credit cards.
- Prepare and file your final income tax returns.
- Distribute assets to the beneficiaries designated in your will.
Functioning as an executor of an estate is generally a significant and often time-consuming responsibility, so the ideal candidate should be in good physical and emotional health (if nothing else, they’ll need to outlive you). He or she should be someone who has proven to be responsible, honest, fair, and well-organized.
Though most people appoint a family member as their executor, a trusted friend can also act on your behalf. If there’s no family member or friend whom you feel comfortable naming as executor to your estate, you can also appoint a third party executor, such as a trust company or financial services professional. While family members and friends often serve as executors for free, third party executors will need to be paid out of your estate, with fees typically ranging from 1 to 5 percent.
If your executor lives in another state, be sure to consult your state’s law concerning estate administration. Some states stipulate that out-of-state executors be a family member or a beneficiary, some require a bond to safeguard your heirs against mismanagement, and some only allow the appointment of a third party agent who is located within the same state as your estate.
Lastly, though it might seem to go without saying, be sure to have a conversation with the person you’re thinking about appointing in order to determine how they would feel about functioning as your executor. Research conducted by the financial services industry has shown that executors are often surprised when they are named to this position and not always happily so.
Once you have reached an agreement with the person you want to appoint about serving as your executor, have not just one, but multiple conversations to review your finances and personal wishes in detail. The more detailed these conversations, the better.
Remember too to provide your executor with instructions about where they can find and how they can access your personal records, financial information, and any other important documentation after your passing.
If you’re involved in estate planning, Ashar Group can be a part of that process. We are a nationally licensed, independent resource for financial professionals and fiduciaries, helping them unlock the value of existing life insurance assets for their clients who no longer need or want their life insurance policy. We do not sell insurance or offer financial planning services. We’re here to help your clients confidently take the next step toward a secure future.