It’s a lot to ask for; which is why naming the right executor is one of the most important (and challenging) elements of your estate plan.
Select the right person, and your assets will be passed on smoothly and efficiently. Select the wrong person, and you could be leaving behind a legacy of financial hassles, family conflict, and legal problems for your heirs.
How do you ensure you’ve made the right choice? Consider these 12 things when reviewing candidates to fill the role.
1. Write a will
First things first: you can’t have an executor if don’t have a will. And you’d be surprised how many people don’t. If you haven’t yet written one, or if your will doesn’t make provisions for significant assets, make it a top priority to get one.
2. Age and health
Pick someone who’s in good health and is younger than you. An executor who dies or becomes mentally infirm while administrating your estate will be of little help to your heirs. This is a particularly important issue if your estate includes instructions regarding children under the age of 18.
3. Do they want the job?
Being an executor is time consuming. And you can’t expect everyone to have the patience for the job. Better to have a candid discussion with your prospective choice and ask whether they’re OK with taking on the responsibility than simply thrust the job upon someone who feels obliged to say yes—and may not serve you properly as a result.
4. Let them know your wishes
Portfolio manager, legal representative, controller, and bookkeeper—whoever you pick will wear many hats. Mind-reader will not be one of them. Don’t assume he or she will intuitively understand the reasons why you’re leaving what to whom. Instead, have a conversation with your choice and make your intentions clear.
5. Relevant expertise
It’s equally important your choice be financially savvy—the more complex your estate, the more important that quality is. Ideally, your choice should have considerable experience managing assets or financial affairs. Business owners, executives, accountants, bankers, financial advisors, and corporate lawyers are your best choices.
6. The closer the better
The closer your executor’s physical proximity to your assets, the better. Estate taxes and administration procedures are handled differently depending on the jurisdiction and those procedures could have important implications on your estate. That’s not
to say U.S. and international executors are unworkable. But it will mean more work—and a couple of plane trips—for your prospective choice.
7. How many do you need?
Individual circumstances warrant different solutions. But most professionals believe two is better than one, and four is too many.
8. All in the family…or not
Some people believe family members make the best executors, because they understand you and your estate intentions better than a stranger. Others believe this leads to conflict among heirs. One family member (who knows you and your wishes) and one trusted advisor (either a friend or a corporate executor who brings financial savvy and experience) seems the most workable solution.
9. Personal dynamics
Relationships count. While it’s not your executor’s job to be a family counsellor to your feuding children, neither should they be the cause of further conflict. If you think someone will be a source of friction, make another choice. Or at least name a co-executor
who can provide an objective opinion when things get heated.
10. When to call in a professional
If your estate is large and complex; if an operating business will form a portion of your bequest; or if relationships between heirs are strained, it’s a good idea. Several of the big banks offer professional executor services through the trust companies they own and there are smaller, independent shops as well.
11. Review your choice periodically
It happens: your executor moves, or dies, or becomes infirm and otherwise incapable of handling your affairs. So it’s a good idea to have a backup choice—or two. And review your first choice every year to ensure he or she will be competent to take care of business.
12. Keep it simple and organized
Have a formal statement of wishes that clarifies your intentions. Also make sure your executor has a copy of your latest will, along with a list of assets and important financial documents. Having the information close at hand will make asset transfer easier,
which is, of course, the ultimate goal of any well constructed estate plan.
Before Your Executor Accepts the Job:
Being an executor is an honour—and a serious responsibility. Make sure your executor knows what they’re getting into. As the legal representative of an estate, executors must manage and dispose of estate assets, file tax returns, and complete other paperwork. Failure to fulfill these duties in a timely or responsible fashion could result in financial liability. Your choice should be aware of the time commitment before they sign on for the job.