Estate Planning: Choosing the Right Executor

by: Smith and Howard Wealth Management

Jane* was a strong woman who lived a simple and honest life.  She grew up in the depression, married young and raised her five children practically on her own.  With 12 great grandchildren and 11 grandchildren, she considered her family her most valuable possession.

A few months before she would have turned 100, Jane passed away.  Several months before she passed, her oldest son Bob found out she had named him executor of her estate.  Initially, he was honored that she chose him to take on such an important role.

Although Jane had a simple will and relatively few assets, Bob was unprepared for the emotional and physical toll required to take care of her affairs.  He faced many challenges, including denying loved ones the things they thought his mother wanted them to have. Her legally binding will contradicted their expectations and created tension and distrust between Bob and his siblings – despite the clear instructions her will specified.

Another challenge for Bob was the fact that he lived two states away. Traveling back and forth to file necessary paperwork with the court created additional demands on his time.

But probably the most difficult aspect of all was that at a time when he needed to grieve his mother’s passing, the overwhelming demands of being her executor prevented it.

A Family Member May Not Be the Best Choice

A common misperception about executors is that they must be a relative, but this is not the case, and as illustrated in our (not uncommon) story, the role brings with it many responsibilities – responsibilities that often weigh heavier on a family member.

The fact is, an executor can be anyone – a friend, accountant, financial advisor or someone serving in the role professionally. Often the spouse is named, which may be a wise choice since this person is often well-versed in the family’s affairs. However, you should also be aware that since the spouse is also often the heirs’ parent, it may be difficult for him or her to tell the kids, “no.” In this case it may be wise to also appoint a co-executor who will find it easier to ensure asset distribution follows the deceased’s wishes.

You may after all determine that a family member is the right choice to execute your will, but it’s important to be aware of the tasks this person will be responsible for and to make a knowledgeable choice.

Criteria for Selection

The process of executing the wishes in your will is involved and may require interaction with tax and legal professionals. The executor needs to be reliable, intelligent and able to take responsibility for:

  • Filing paperwork with the county where the decedent lived in order to open the estate
  • Accurately taking inventory of the estate’s assets, including all bank and brokerage accounts, personal effects, antiques and other valuables
  • Ensuring that all debts owed by the estate are paid and that any funds due are collected
  • Determining what taxes are owed and filing the final income tax return and possibly an estate tax return
  • Closing the estate, which requires providing proof to the court that the executor has notified all creditors and settled all liabilities
  • Distributing assets. This includes meeting with heirs and beneficiaries to carefully explain the process – and doing this competently and sensitively enough to prevent the will being contested.

This person may need to be able to make a significant time commitment to the estate and ensure assets are distributed in a timely manner. The job will be less taxing for someone who lives in-state and won’t need to travel far to serve as executor.

If no one among your family, friends or professional associations is a good fit for the role, Smith and Howard Wealth Management (SHWM) can find a professional executor. If you already have an executor, we advise also naming a successor executor in case of any unforeseen circumstance that may prevent your named executor from performing his or her duties. In either case, SHWM would not serve as executor or successor executor, but can serve to appoint an experienced individual who will.

What You Can Do to Make Probating Your Will Easier

Regardless of who you choose to execute your will, there’s plenty you can do to make their job less difficult. Begin by communicating with the individual you’ve chosen before you draft your will.  If they refuse, then you’ll avoid the added expense of changing your will.   Once you’ve executed your will, have a frank discussion with your family members about who you have selected and the reasons behind your choice.

It also helps to keep an accurate balance sheet. If this is something you keep in your head, you’re putting your executor at a big disadvantage. In the uncovering assets phase of the process, an accurate balance sheet and list of accounts can save not just many hours of sleuthing – but assets being lost altogether. A client named Mark could have used this sort of documentation. He served as executor of his mother’s estate, and she had served as executor of Mark’s father’s estate years before. After both his parents’ estates were closed and assets distributed, Mark discovered an unlisted asset of his father’s worth nearly $100,000. The process for claiming the funds would require re-opening his father’s estate, which would first require re-opening his mother’s, since she was beneficiary. To illustrate just how demanding this process is in terms of time and effort, Mark has chosen not to claim the funds.

Finally, one of the greatest gifts you can give the loved ones who will be the heirs and beneficiaries of your estate is a “Love Letter”, which you can download in PDF format here. It’s not a legal document but a form offered by SHWM that includes the input of many who have been called upon to administer the affairs of deceased loved ones. It communicates all the key details about your estate and your final wishes. In addition to helping prevent lost assets like Mark’s father’s, the form allows your executor to be as prepared as possible for the job. And most importantly, it can help reduce the stress on your loved ones during a time of shock, grief and sorrow.

This article was contributed by Stephanie Roberts, Senior Client Service Specialist, Jeff Brandon Sr. Wealth Planner and Michael Mueller, Wealth Planner. We would be happy to answer any questions you have about choosing an executor – or to explore with you your best estate planning options. You can reach Stephanie here, Jeff here and Michael here, or  by calling them at 404-874-6244.

* Names have been changed.