Estate Planning 101: Executors
An executor is used to help administer an estate.
Estate planning is defined by Black’s Law Dictionary as “Instructions for estate asset disbursement to heirs at the owner/author’s death. Includes drawing up a will, setting up trusts, and gifting property.”
When it comes to disbursement, plans often rely on an executor.
What does an executor do?
An executor is responsible for the administration of the estate. It is helpful to have a basic understanding of the responsibilities of an executor when making your decision. Some of the more common responsibilities tied to this position include:
- Assets. The executor is required to gather the assets of the estate. This includes bank accounts, retirement accounts, life insurance policies, stocks, bonds, pieces of real estate and other tangible property. The executor should also prepare an inventory of the assets. It is the executor’s duty to ensure these items are kept safe while arrangements for distribution are completed.
- Liabilities. The executor is also required to pay off the estate’s liabilities. This includes taxes, bills and other debts. This can be done by using existing funds or by raising money through the sale of assets owned by the estate. A recent article in The Wall Street Journal notes that an executor can be liable for certain debts if they are not handled properly. For example, an executor that pays off credit card bills and exhausts the estate’s assets without paying off a tax obligation could be liable for the tax bill.
- Distribution. Once all liabilities are paid, the executor can move forward with the instructions for distribution of the estate to beneficiaries.
These are the more common responsibilities of an executor. Additional powers can be granted within the will. Examples can include a requirement that the executor hire legal assistance to guide the estate through the process or to take advantage of any available tax savings.
How do I choose an executor?
Choosing an executor can be difficult. The American Bar Association, a national organization of legal professionals, notes that finding someone to take the position of executor should be viewed as a job interview. Instead of focusing on familial ties, it may be wise to find someone or an institution that has good financial acuity. It is helpful to have the skill set needed to manage bills and insurance policies.
Individuals, an institution or mixture of each can be chosen as executors. The options are broad, but if choosing an individual, the executor must be a citizen of the United States and cannot be a minor or convicted felon.
Do I need an attorney?
Putting together or revising an estate plan can be a complicated process. These plans can make use of a number of legal tools to help better ensure your wishes are met. As a result, it is wise to contact an experienced estate planning lawyer.