Few choices in life rarely have a single “right” decision. However, when it comes to naming an executor of your estate, there are many ways to get it wrong. Foremost, an executor holds a position of complete trust and responsibility. Many people approach this choice using the same criteria they would for naming their children’s godparents, meaning they choose from among their closest relatives or oldest friends.
However, godparents are largely ceremonial titles with few real responsibilities attached to them. They also might not be optimal people for the guardianship of one’s children, but I digress. (I wrote about selecting your children’s guardian in a previous post.)
Fully grasping the role of executor is essential before deciding who will fill it. An executor is the fiduciary who, upon your passing, is responsible for managing every aspect of your estate. Often, an executor’s duties entail a great deal of work, such as tracking down and accounting for all of your assets and liabilities, paying expenses, and submitting your will to the court of jurisdiction for acceptance in the process known as probate. An executor is responsible as well for important tax elections, tax filings, and court accountings of income and expenses. An executor may need to initiate lawsuits on behalf of an estate.
For these reasons and others to come, I recommend selecting an executor who is comfortable working with attorneys and certified public accountants (CPAs)—the latter because executors may need to obtain valuations for the estate’s real estate, financial, and business assets. In some cases, an executor may play the unenviable role of arbitrating family disputes, as ambiguity can exist in even the most well-drafted estate documents.
Generally, an executor’s responsibilities—which can last a minimum of two years and often much longer—end when all liabilities are collected, expenses are satisfied, assets of the estate are distributed (outright or by trust), and the final tax filings are accepted by the various authorities.
Due to the meticulous nature of estate administration, the primary attributes of an effective executor include a high degree of integrity, personal responsibility, and attention to detail.
As noted, experience working with financial professionals is paramount—they provide critical guidance on actions and elections that ultimately will be the executor’s responsibility. Age is important, too; your choice should balance a desire for maturity with an expectation that the person will outlive you. Having knowledge of your values and the specifics of your family’s unique situation are other influential factors.
Appointing a sole executor is not the only option—having a family member serve as co-executor is a common scenario, though this arrangement may generally require unanimity for certain decisions, which can be specified in the will. Regarding the naming of adult children, one should be mindful that when there is more than one child, siblings may resent not being appointed, whereas naming multiple children as co-executors can be cumbersome and problematic. Also, in most cases, naming a sole executor who also is a beneficiary (such as offspring) can be legally and administratively precarious.
Each family’s situation is unique, as is the work required of an executor. Based on my personal experiences as an executor, I can assure you that the time and effort required to responsibly fulfill the requisite tasks of administering an estate is always greater than it first appears. Unanticipated problems arise, and the executor has the burden of addressing them in a manner that must be fair and equitable to all beneficiaries.
Without minimizing the ceremonial importance that godparents play in the lives of our children, being chosen as an executor requires a lot more heavy lifting!
Editor’s Note: Rob Clarfeld, CPA, CFP® and Great Barrington resident, has extensive professional experience helping people achieve their financial goals. The author does not provide tax, legal, financial or investment advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, financial and investment advisors before engaging in any transaction.
