Most people think they should name their next of kin as executor of their estate. But that’s not always the best choice.
What Does an Executor Do?
The executor assumes responsibility for settling your estate after your death.
It’s not easy. The role requires a significant time commitment and there are many potential headaches that may need to be addressed. In most cases, it takes at least two years to settle an estate.
Sound stressful? It can be.
The executor’s job ends after they have paid all your expenses, distributed all assets and filed final taxes.
Have you thought about who you will name to be the executor of your estate? I hope so!
What to Consider When Choosing an Executor
Consider naming someone who has good judgment and can multi-task. If he or she is knowledgeable about taxes and accounting, even better. Interpersonal skills also matter since, in some cases, the executor is responsible for resolving family disputes.
Above all, appoint someone who is responsible and pays meticulous attention to detail. He or she should be financially stable and have a history of making good money decisions.
If you feel that your children or close friends are not the best fit for this job, that’s okay. You can always name an attorney or accountant as executor. If you go that route, however, a small percentage of your estate’s total value will be collected as the fee.
Make Sure They Want the Job
It’s also important that your executor agrees to fulfill the role. Never name anyone without first getting their approval. Consider naming a back-up or co-executor in case your appointed executor decides he or she is not up to the task.
Pick Someone Younger
Consider the age and health of the person you are choosing as executor. You’ll want to pick someone who is likely to outlive you by a significant number of years. Many experts recommend appointing at least one younger successor executor. Some financial planners tell their clients to avoid appointing children as equal co-executors. This can help avoid sibling disagreements.
It Helps to Be Local
Your choice does not need to live close by, but it can help. State laws may restrict who you can name as executor. If you want to appoint an out-of-state executor, it may have to be a relative, depending on where you live. In some states, you may have to appoint an in-state agent as executor.
Who Can’t Be an Executor?
The probate court must approve your executor. Some people are not permitted to serve in this role. These include:
- Ex-felons, in most cases
- Non-U.S. citizens
Not Sure Who to Choose?
No one likes to think about dying. But naming an executor is one of the most important ways to prepare for the inevitable. Professional guidance can make estate planning decisions easier. Reach out for help from one of our advisors today.
Alli Thomas has worked in the financial services industry for nearly 20 years, with a focus on retirement-related investing. She began her career as a FINRA-licensed participant-services call-center associate at Vanguard, and then moved to Principal Financial Group, where she worked closely with employers, assisting with retirement plan set-up and design, selecting appropriate plan investment offerings, and maximizing employee participation through targeted education campaigns and enrollment meetings. Alli has also worked as a qualified 401(k)administrator and registered investment advisor for several small investment firms. She now writes about all things investment- and finance-related, leveraging her extensive experience and passion for retirement planning to help investors make well-informed financial decisions.