As part of your financial planning, you will want to have a solid estate plan in place in order to ensure that your assets are distributed to your beneficiaries as you intended. Part of estate planning is choosing the person or entity that will be responsible for executing your estate plan. This party, referred to as the executor, will be responsible for ensuring your assets are distributed in accordance with your will. Therefore, it is important to be sure you know what characteristics to look for when choosing an executor.
The most important characteristic an executor must possess is responsibility. This means that, even though you are personally close to your best friend, if he or she has a history of not following through on commitments then you should consider choosing somebody else as your executor. On the other hand, if you do not have any responsible family members or friends you can choose a professional such as an attorney, accountant, bank or trust company.
Strong financial position
It is preferable for your chosen executor to be a person or entity in good financial standing. The reason for this is that many courts require the executor to be bonded, which means a bonding company must agree to pay the beneficiaries if an executor decides to take off with the estate’s funds and assets. If your chosen executor is not in good financial standing due to overwhelming debt and liens, he or she may have a hard time finding a bonding company willing to accept the risk of extending a bond to your executor.
Executing an estate can usually be accomplished regardless of where the executor is located. However, there may be certain instances that the executor will want or need to personally inspect your property and assets. Therefore, you may want to give preference to potential candidates within your locale.
Patience and emotional health
Navigating the probate process can be quite challenging. This means you will need to choose an executor who will be able to psychologically and emotionally handle the demanding process of distributing your assets. The executor may have to deal with significant hassle within the court system and financial institutions. Hiring various types of professionals and services will likely be required as well. Therefore, somebody with a high level of patience and emotional stability is preferable to deal with these obstacles.
There are not that many legal requirements for somebody to serve as an executor for an estate, however there are certain characteristics which can disqualify a person to be your executor. Obviously, children younger than 18 years of age are not able to act as the executor of your estate. Generally, felons are disqualified from being an estate’s executor. Some states have rules on out-of-state executors that require them to also be primary beneficiaries. Therefore, make sure to research the relevant regulations in your state.
Creating the estate plan
Of course, you will not be able to just simply tell your executor that he or she has been chosen. You will need to make sure all of the proper legal documents are in place in order to ensure your chosen executor will be legally allowed to administer your estate’s assets as you wish in accordance with your will. Due to the complex nature of these legal documents, it is a good idea to consult a legal or financial professional to help you through the process.
While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.