Thoughts on Selecting an Executor

This is the second post in a series on what to think about when determining who you want to designate in your will to serve as executor of your estate.

First of all, you should consider that selecting a beneficiary as your executor might lead to a conflict of interest if there is more than one beneficiary.  If the executor seeks compensation for his work, which they are often entitled to, the other beneficiaries might object or raise concerns about the amount sought because they think the executor is trying to get more than his fair share of the estate.  Similar suspicions among beneficiaries occur more often than one might expect.  And the executor might also be faced with issues requiring her to choose between awarding assets to herself or to another beneficiary. This situation is often best avoided from the beginning by selecting an executor who is not a beneficiary, if possible.

In addition, if your assets include a business, you should be cautious about selecting an executor who is also a partner in your business. Once again, this situation can create conflicts of interest because the executor/business partner may have motivation to continue running the business, while it may be in your beneficiaries’ best interest to sell it.

probate_court_doorIf your assets are primarily marketable securities, you do not need to be quite so concerned with your executor’s business or financial knowledge. However, if you own a wide range of complex assets, you should select an individual with experience in those types of assets. If you don’t have a friend or family member with the necessary expertise, consider hiring an accountant or similar type of professional to act as your executor for a fee, or hiring a corporate executor.

Finally, some people believe that if it is possible, you should consider selecting someone who knows your beneficiaries and can carry on a healthy working relationship with them. This may help avoid conflicts with the beneficiaries and contentious lawsuits over how the estate should be distributed.  Other people believe an outside party with no connection to the beneficiaries may appear to be more impartial and thus, raise fewer concerns among the beneficiaries.  In any case, you need to consider these issues when deciding who you will designate as your executor.

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What Type of Person Should I Look for in an Executor?

First, it is important to understand what an executor does.  I will explain in more detail what the executor does in another post, but for the time being you should understand that this is the person who will be appointed to wrap up your affairs upon your death.  In other words, they will attempt to locate and gather together all of your assets, pay your debts, and then distribute what is left in accordance with your will.  Depending upon the size and make-up of your estate, and the directions provided in your will, this can be a relatively simple process or a very lengthy, time-consuming, difficult and expensive process.

Generally, you want someone you trust to follow your directions as set out in your will, someone who understands your desires and objectives, and probably someone who is good in handling finances.  Most individuals tend to choose family members or other close friends or relatives to act as their executor. But sometimes the most competent person should be chosen, even if that might not necessarily be a close family member.

ponderingThe executor doesn’t need to be a CPA and they don’t need to personally do each task.  But they should know enough to know when they need to hire help.    Executors are like the boss of the process, but they are allowed to hire others to help with various aspects of the process– whether it is to hire an appraiser, an accountant, an investment advisor or an attorney.

The bottom line is that most people assume that being an executor is an easy task that can be accomplished by anyone, but because the probate process is so involved and may entail interaction with tax and legal professionals, only an intelligent, dependable person  should be named as executor.  If a person’s estate is large and complex enough, they may choose to designate a bank or trust company (often called a “corporate executor”) to handle the estate.  While there is a fee for this service, you are assured that the job is being handled by professionals familiar with the processes.

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Helping Your Loved Ones When You Die

Many decisions will need to be made rather quickly once you die.  You can ease the burden on your family if you take some preparatory steps before you pass.  Some of those decisions are described in a 2012 article by two Houston area attorneys, Wesley E. Wright  and Molly Dear Abshire, in  the Senior Living Section of the Houston Chronicle. That article is reprinted below.

funeral roseLegal decisions that follow the death of loved ones are complicated.  The period of time immediately following the loss of an important person in your life, like a parent, spouse, sibling or child, can leave you vulnerable to stress, misguided advice, or high-pressure sales tactics that lead to rushed decisions.

Hasty choices may leave a person in a poor financial condition and could potentially impact the life of a survivor for years to come.  So it’s important to be proactive when considering post-death decisions.

Donating the deceased’s body is one such consideration. Any adult living in Texas, who is of sound mind, may choose to donate their body by Will or other written instrument to be used for the advancement of medical science.  Family members in the following priority may give all or part of the decedent’s body if there is not actual notice of contrary indications by the decedent.

  1. Decedent’s spouse
  2. Decedent’s adult child
  3. Either of the decedent’s parents
  4. Decedent’s adult sibling
  5. Guardian of the person of the decedent at the time of death

Such gifts may be made after or immediately before death.  In order for the gift to be valid, it must be made by a document signed by the person or by telegraphic, recorded telephonic, or video or audio recording.  Donation of a body may also be specified prior to death on a donor card, driver’s license or personal identification certificate for gifts of the eyes, tissues or organs.  For more information about these kinds of donations, contact the Living Bank at www.livingbank.org.

Making advance plans for a memorial service or funeral, also referred to as a “pre-need funeral contract,” is an essential part of post-death planning and will lessen the stress of handling these arrangements during the grieving process, especially if the pre-need arrangements are paid for in advance.  Personal preferences may be made in writing and a copy given to family members, friends or an attorney to keep in a safe and accessible place.  Veterans or their family members should inform their funeral director if they want military honors.  Veterans and their immediate family members are entitled to burial in a VA National Cemetery.  For additional information about military honors, visit www.militaryfuneralhonors.osd.mil.

Another important post-death consideration is paperwork.  The more organized your estate documents are, the easier it will be for a surviving loved one to find the documentation necessary to carry out your wishes.  If these documents are kept in a safe deposit box, be sure to identify the appropriate person on the account card of the financial institution where the box is held.  Documents to have prepared and organized are a Will, list of all financial institutions and account numbers, life insurance policies, Social Security card, tax returns, deeds, and other information related to the decedent’s assets and income.

Obtaining several certified copies of the death certificate is prudent, as each financial institution holding the decedent’s accounts, life insurance company, employer death benefits, government agency and immediate family need an original.

Awareness of post-death decisions can lessen the burden on surviving loved ones, which is reason enough to start making or reviewing your plans today.

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One More Reason to Have a Will

will-depends

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Your Funeral – How Much Say Will You Have?

151019_EM_CostofFuneralPlanning your funeral can save your loved ones extra stress in a time of grief. But there are several things to consider: Do you want to be buried in a cemetery?  If so, which one and where?  Do you want to be entombed in a mausoleum?  Or do you want to be cremated?  If so, who should care for or place your remains and where do you want them?  In a home or Columbarium?  Or should your remains be spread about?  Almost anything is possible with some forethought.

You can choose the funeral home long before you need it and even pay for all or part of the services in advance. If you choose this route, make sure the services are guaranteed at the contracted price. Some contracts call for additional “final expense funding.” This means that should prices increase, your loved ones will be left paying the difference.

Also ask about these issues:

  • If you change your mind, can you get all or part of your money back?
  • Will your money earn interest? If so, how much? Who gets it?
  • What happens if the funeral home goes out of business?

Another option is to buy a life insurance policy that can be used for funeral expenses.  You need to think carefully about who you make the beneficiary of such a policy.  Even a loved one who has financial problems may have better places to spend a windfall than on your funeral.

Whatever you choose to do, make copies of all documents, giving files to appropriate family members and your executor.  Some clients keep these documents in their safe deposit box, but I usually discourage that for the same reason I discourage placing funeral directions in your Will.  The reason – many times a person’s funeral is long past before the Will is located or brought out for review.  By that time it is too late to comply with many of those directions.

If you would like to learn more about various possibilities for appointing someone to handle your arrangements and your remains and documenting your wishes, contact a qualified estate planning attorney.

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