What’s An Executor
When you write a will, you need someone to execute it. In simpler terms, you need someone to make sure everyone honors your final wishes when you pass.
This person is the executor. They handle the estate administration, which includes distributing assets, tying up loose financial ends, closing bank accounts, and managing your property.
Choosing an executor is just as important (if not more) than writing the will. A will is great because it states who gets what from your estate.
But, without an executor, there’s no one overseeing the distribution of your estate, or at least no one you know.
The executor should be the person you trust most in your life as he/she will have access to your personal financial records and finances.
Choose someone that you know will be honest, timely, and helpful during your family’s time of grief. By choosing the executor you want, you will ensure proper handling of your estate.
Also, if you want peace of mind on your deathbed, choose your executor when you’re healthy and well. This way, you’ll know that you chose the person best suited for the job.
Who Can Be One?
You can choose just about anyone to be your executor (within reason). Most people choose their closest relative.
You don’t need any specific training or financial knowledge to handle the affairs, so most people choose their spouse or child.
Think about the characteristics of the people in your life when deciding. You want someone honest, caring, and who communicates well.
The executor must dole out the estate promptly, and this could mean talking to people they don’t often talk to, but they must put their differences aside for this.
Consider the following when you choose your executor:
Who are you closest to?
Your spouse is often an obvious choice, but many people choose someone younger than them, such as a child or younger sibling.
Who lives near you?
Choosing an executor located out of state could cause delays and obstacles.
If you have a property to maintain, mail to check, or if court appearances are necessary, choosing someone out of state or even across the same state could prove to be difficult.
Who will receive a majority of your estate?
Typically the person most vested in your estate will do the most work and in a timely fashion.
Watch out for favoritism
Family members can get emotional and irrational if you choose someone to be the executor just because they are the oldest or the lawyer in the family, for example.
Talk to your family about your choice and why you made it to avoid hurt feelings after you’re gone.
The executor can be a beneficiary but doesn’t have to be. It can even be a close friend (someone not financially tied to the will), or a neutral third-party if you worry about fighting within the family.
Know your state’s laws
Some states have a minimum age requirement (usually 18, but some states prefer 21). Other states have rules around the executor’s residence, requiring them to live in the same state as you.
If you don’t choose an executor, the court chooses one for you. However, it may or may not be your first choice.
They try to choose a relative (again this may not be someone you’d want appointed), but sometimes they appoint a neutral third party.
This means someone who has no relation or understanding of your life will distribute your assets.
Who Cannot be your Executor?
There are a few people who you cannot choose. They include:
- Children under the age of 18
- People who live out of state (this only applies to certain states, and there may be exceptions)
Duties Of An Executor
An executor has many duties. It’s important to understand them and even discuss them with the person you choose, so they are aware of the responsibility and can accept or decline the position.
Many wills go through the probate process unless they are extremely simple. Probate can take a few weeks or a few years depending on the estate’s complexity.
The executor must be willing and able to make court appearances and carry out court orders.
To get the probate process started, the executor must:
Submit the will
This starts the probate process. The executor submits the will and your death certificate to the courts. They must do this usually within a few days, but no more than a few months after you pass.
All wills get filed, even if probate isn’t necessary – the court decides this.
After submitting the will, the executor must attend a court hearing. This is when the judge decides if the estate goes through probate.
This is also the time that any interested parties who want to contest the will can open a lawsuit.
Once filed, the executor must notify anyone and everyone with an interest in the estate. This includes obvious family members and people named in the will.
But it also includes all the other necessary parties, including creditors, banks, and insurance companies. Don’t forget about the Social Security Administration, post office, and Medicare too.
Open an estate bank account
The executor has a lot of financial responsibilities and not just giving money away. He/she must also handle all financial liabilities.
The first order of business after filing the will should be to open an estate bank account.
When you file the will and death certificate, you’ll receive a letter of testamentary which declares you the executor and gives you certain rights, including opening an estate bank account.
The estate bank account is in your name, but with the title Executor, Estate of X (your relative’s name). This is how you sign all checks and credit card slips when managing the estate.
Pay debts and taxes
The executor must satisfy all debts before distributing any proceeds. All money to settle your debts comes from your estate, not the executor’s.
The only exception is if the executor co-signed any debt with you.
The executor must also file your final tax return. If the estate is large enough, there may be estate taxes too, which the executor must pay from the estate.
Gather and manage assets
The executor is responsible for gathering all assets. This takes time. Some are obvious, like the house or car. Others may take a little digging, like a life insurance policy or retirement accounts.
The executor must keep an inventory of all assets and cannot distribute anything until the will is through probate and he/she satisfies all debts.
The executor must manage/maintain all assets, including staying current on any debts tied to them, such as a mortgage or car payment.
If the house or car drains the estate too much, the executor may get permission to sell the assets and put the cash into the estate.
The only assets that don’t go through this process are any ‘payable on death accounts,’ such as bank accounts which transfer directly to the beneficiary as directed.
Once the executor handles all debts and liabilities, he/she can distribute the assets.
They should exercise caution though as the executor can be responsible for any missing assets or miscalculations.
What Executors Can’t Do
Executors can’t do anything illegal or that goes against your final wishes. All executors have a fiduciary responsibility to act in your best interests.
This includes not:
- Signing or altering the will
- Stopping beneficiaries from contesting the will
- Holding onto funds owed to beneficiaries
- Using the estate funds as he/she wishes and not following your instructions
- Refusing to exercise caution when handling your estate
- Spending estate money frivolously
Responsibility To Beneficiaries
Executors must put beneficiaries first.
They do this by protecting the estate assets, acting impartial, and keeping solid financial paperwork so they can track or prove any financial transactions made with the estate’s funds.
The executor must protect the estate and follow the probate rules to the letter.
Executors must act promptly, recognize any conflicts of interest right away, and get legal advice if they are unsure how to proceed.
Do executors get paid?
Most executors receive payment from the estate. If you don’t explicitly state the amount the executor should receive, state law prevails.
The payment comes directly from the estate and counts as taxable income, whereas inheritance funds aren’t taxable.
Does the executor of a will have the final say?
Yes and no. The executor must act in the best interest of the estate and follow your directions to the letter.
An executor can take his case to court, though, and if done right, the court will consider the executor’s decision, especially if it doesn’t harm the beneficiaries.
Can an executor cheat beneficiaries?
No, the executor has the fiduciary responsibility to act in the best interest of the beneficiaries.
He/she cannot sell assets for less than their worth and/or try to stop beneficiaries from filing a lawsuit.
Can you withdraw money from an estate account?
Executors can only withdraw funds from an estate account once they have approval from probate and if the withdrawal meets what you stated.
Before the estate goes to probate, the executor cannot distribute any assets or make any changes.
What if no one wants to be the executor of an estate
If you are unable to name an executor before you pass or the executor you choose doesn’t want the job (or can’t fill it), the probate court will name an executor.
They try to keep it within the family, but sometimes appoint a neutral third party.
Does an executor have to be named in a will?
If you want a say in who executes your will, yes you must name him/her in your will. If you don’t, the court will appoint the executor for you.
Choosing the executor is a big decision. Talk to the person you have in mind, and make sure he/she is up to the task.
Never assume as it’s a large responsibility that requires time, some travel, and a lot of financial and sometimes emotional decisions.