Choosing an Executor
While most of this EstateExec Guide is geared towards helping estate executors fulfill their duties, the executor process actually starts much earlier, with the selection of the person who will ultimately be responsible for settling the estate. Depending on the location of the estate, this person may be referred to as as an "executor", optionally an "executrix" if female, or as a "personal representative". To keep things simple, we just use the generic "executor" term here.
The selection of an executor has important ramifications for the estate owner, since the executor will have significant control over the estate owner's legacy, and will be responsible for ensuring that the estate owner's final obligations are fulfilled, as well as ensuring that the estate owner's assets are distributed in accordance with his or her wishes. This selection also has important ramifications for the executor, since serving as an executor requires significant effort and introduces an element of legal and financial exposure.
There are a number of factors to consider when choosing an executor:
- Primary Considerations: The executor role requires an ability to organize, to act responsibly, to follow schedules, and to understand financial matters (at least to a certain degree). Of course, an executor need not be an expert in all things, or even fulfill all responsibilities personally. Most executors end up hiring various professionals to help with certain aspects of the estate, including lawyers, accountants, real estate agents, cleaning services, and so forth. The really important thing is that the executor be able to manage the process successfully, and to do so in a fair and ethical manner.
- Health: You should also consider the executor's health (and expected future health). Be sure to update your will if your chosen executor becomes incapable of the job, or even passes away.
- Finances: A less important consideration is the executor's credit rating. If an executor bond is required for the estate (depends on your will and particulars of the estate), it may be harder or more expensive for the executor to obtain the bond.
- Location: You might also consider location. All else being equal, an executor who lives close to your residence and physical possessions will have an easier time of administering the estate than someone who lives hundreds of miles away. Some states require out-of-state executors to obtain an in-state agent, but this is usually not a big deal.
- Communication Skills: The executor process can be difficult and take time. Heirs and other interested parties may become anxious during the process if they don't know what is happening, so it can be very helpful if the executor can communicate well and keep everyone calm and satisfied (see Family Conflict).
- Criminal Record: Finally, keep in mind that convicted felons cannot usually serve as executors.
In the end, it's common for an estate owner to choose one of his or her adult children to serve as executor, or to choose a sibling. People just starting out in life often choose a parent or an aunt or uncle.
Agreement to Serve
If you are the estate owner, you should talk to your desired executor in advance, making sure he or she knows what the role entails. Serving as an executor is not an easy job, and on average requires more than 500 hours of effort over a 16-month period: notifying government agencies, cleaning out residences, paying off debts, filing taxes, distributing assets to heirs, and more (see Basic Executor Duties). It also exposes the executor to legal and financial risks, since failing to act in accordance with the law can bring stiff penalties, even including jail time in extreme cases (see Fiduciary Duty).
As part of this conversation, you may want to point prospective executors to information about the role so they can learn more on their own (see What is an Executor?).
Once an executor agrees to serve, you should modify your will to explicitly name him or her as your executor. You may choose to give the executor a copy of this will, or simply inform him or her where to find it when the time comes. You should also provide your executor with a high-level overview of the estate, along with instructions for gaining access to estate particulars once you have passed away. See In Advance for more suggestions.
Be aware that naming someone your executor does not force them to serve, even if they previously agreed to do so. When the time comes, an executor can decide to reject an appointment, or even renounce the position midway through the settlement process. Common reasons for deciding not to serve include lack of time, an executor's struggles with their own health or other issues, unexpected estate complexity, or even a falling out with the original estate owner since the drafting of the will.
Consequently, it makes sense to name an alternate executor, and possibly even an alternate to the alternate. That way if the first executor is unable to, or chooses not to serve, there's still someone to handle your affairs that you trusted and whom you thought could handle the responsibilities.
If your will doesn't name an executor, or the named executor can't or won't serve, then any named alternate will be appointed. If you run out of alternates, then the local probate judge will assign someone to serve as your executor: likely a close relative, but potentially a legal professional. Someone is going to have to act as the executor of your estate, and it makes sense to have the person be someone you trust, who will honor your wishes fully, and who will minimize any family conflict engendered by the process.
People sometimes name more than one person to serve as co-executors. This can make sense if you want to go the extra mile to ensure transparency and fairness, if you want to treat children equally and not give the appearance of favoring one child over another, if certain aspects of your estate would benefit from service or expertise that different executors can supply, or if the estate is so large that you want to spread the executor burden around. It's also a variant on ensuring an alternate executor in case problems arise concerning executor availability.
There are downsides to naming multiple executors, however. Courts and various financial institutions often require all co-executors to sign documents, which can be a logistical burden, and can sometimes be a real problem if not all executors agree on a certain course of action. And depending on the state, assigning multiple executors may increase the overall combined executor fee, reducing the size of the estate that will eventually be distributed to the other heirs.
Having a professional serve as your executor can bring certain advantages: a professional knows the process and can thus more easily ensure all applicable rules and regulations are being followed, and all things considered, can probably be trusted to act according to the fairest and highest ethical standards.
On the other hand, a generic legal professional won't care as much about your legacy or your heirs as a close friend or family member, won't know you well enough to understand how you might have wanted certain decisions or conflicts resolved, and will be costly: an average bill for a typical estate will be in the thousands, if not tens of thousands, of dollars.
If you do decide to name a professional as your executor, you should be sure to do at least a little due diligence if naming a licensed attorney as your executor, and a little more if naming someone who serves in this capacity for a living, but is not a licensed attorney.
Whether or not an executor is a professional, an executor is normally compensated for his or her services. If you don't specify compensation in the will, then state law will determine the amount to be paid. Since these laws very widely by state, and in many cases are complex or vague, you may want to decide a fee approach in advance. However, the reason state laws are so complex or vague is that estate settlement can vary in a myriad ways, and it's hard to precisely understand in advance how difficult everything will be. Your best approach might be simply to state that you want your executor to be compensated according to default state law, along with any modifications you wish to make (such as an additional $10K fee, for example). See Executor Compensation for more details.
See Executor Timeline for more information about the executor role.