You have put it off long enough and finally made the decision to sit down with your attorney and establish a will. You have probably given a lot of thought as to who will get what and how to best provide for your survivors. One of the questions you will be asked is, “who do you want to serve as the executor of your estate?” Off of the top of your head, you may say, “my spouse, or maybe my oldest child. They’re both intelligent, well-educated, and have a grasp of my finances.” As noble as it is to have such confidence in those close to you, selecting individuals to manage your estate could possibly do your loved ones more harm than good.
The duties of an executor can be complex
The duties of your executor will vary, depending upon the jurisdiction in which you reside and the complexity of your estate. These duties may include, but are not limited to:
- Handling probate matters
- Locating and filing the will, codicils and any other important papers with the appropriate Register of Wills Office
- Meeting with heirs and advisors
- Defending the will against possible objections
- Gathering assets
- Locating and securing all known assets
- Searching for unknown assets
- Obtaining qualified appraisals and valuations
- Opening a bank account
- Handling claims and debts
- Filing medical and life insurance claims
- Notifying the Social Security Administration and others about your death
- Raising enough cash in the estate to meet its needs
- Notifying creditors and paying all valid debts
- Satisfying tax obligations – state and federal income, gift, estate, intangible personal property, and real estate taxes
- Preparing an estate inventory
- Preparing accounts, including a detailed statement of all income and disbursements
- Conducting an Ancillary Administration (if necessary)
- Distributing the estate’s assets, including payment of legacies and funding trusts
These duties could very easily become a full-time job for the individual you select to be your executor.
Now consider the following thoughts:
- Does the individual live hundreds of miles away from where you reside?
- Would traveling back and forth to handle the administration process become burdensome?
- Will your spouse, or the individual you appoint, have the time and energy to devote to such a task?
- How is his/her health? Who would take over if he or she became sick or died? Consider that the burden of managing an estate could drag on for years
- Will the individual be so grief-stricken over your demise that he or she will not be able to make important decisions in a proper and timely fashion?
- Do you own a business? If so, your executor may be responsible for running it along with the tasks and obligations of administering your estate
- Are there relatives you purposely left out of your will who may challenge your wishes and cause your executor relentless legal problems?
- Does the person you named truly understand the full extent of his or her duties?
Also note that your executor will have legal obligations. For example, a mistake often made by executors is disbursing money to beneficiaries too soon. The possible result is that there will not be enough funds to pay taxes. The IRS may hold the executor personally responsible for tax liabilities if the executor failed to exercise due care in determining if such obligations existed before distribution of the estate’s assets.
Are these the types of responsibilities you want to leave to a family member or friend? If the answer is “No,” you may want to consider naming a loved one in an advisory capacity and using a corporate executor instead.
A corporate executor can provide a level of expertise that will help make the estate settlement a smooth process for all concerned.
Services of a corporate executor include:
- Reviewing of your will, codicils, contracts, trusts, and leases
- Identifying and locating your legal heirs
- Ensuring that sufficient funds are available to meet expenses and taxes
- Preparing and filing various inventories, accounting, and tax returns
- Tax planning for the estate and heirs
- Distributing periodic statements
- Obtaining necessary receipts, releases, and clearances
- Preparing court petitions
- Locating and arranging for professional appraisals of assets
- Helping heirs to evaluate the advantages and disadvantages of disclaiming
- Managing assets, including securities, real estate, and closely held businesses
- Distributing the assets to the beneficiaries in a timely manner
The use of a corporate executor provides additional benefits for your family, as it will act fairly and impartially when confronted by beneficiaries, family members, and others seeking special treatment. Your loved ones will be relieved of the burden of making difficult decisions, thus avoiding family hostility. And, a corporate executor does not get sick, become incapacitated, tire of doing the job, or die. Beneficiaries will be assured of an uninterrupted administration of your estate.
In addition, a corporate executor’s knowledge of the laws and regulations will provide for an orderly transition. And if a problem does arise, a corporate executor has the financial strength and resources to protect the beneficiaries.
Finally, while a corporate executor does charge a fee for these services, these fees do cover investment advice, accounting services, and administration. And they can be far less than the cost, in terms of time and money, resulting from errors caused by an inexperienced, well-meaning individual.
This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.
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