A professional executor or a family member?

Published 2:54 pm Friday, January 28, 2011

No matter how carefully you design your estate plan, a key element relating to its proper implementation is your choice of executor. That often involves evaluating whether you have a family member capable of fulfilling the task, and, if not, your choice of a professional to act as executor.

A case can be made for either choice, but the final decision is yours.

Factors to consider include assessing the size and complexity of your estate. If it is substantial and complex—perhaps including real property in different states or a business, you may decide you need a professional executor. Most often attorneys, financial advisers, accountants or trust companies have the knowledge and expertise to handle such situations.

Another possible advantage in choosing a professional—especially one already familiar with you and your family—is that he or she is likely to be emotionally detached enough to make the hard-headed, practical choices that are sometimes required. Such choices can, and sometimes do, lead to family conflicts.

Staying in the family

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On the other hand, if your estate is relatively uncomplicated, you may decide your spouse, a sibling, an adult child, domestic partner or close friend is the ideal person to serve as executor, since those closest to you probably understand your situation the best.

You still have choices to make, however. Who would be most competent to handle financial matters? You want someone who is trustworthy and not a procrastinator. Someone who is responsible and at ease working with professionals such as attorneys or accountants, and with whom you can communicate truthfully and openly about your wishes.

Certainly the ability to cope with the workload should also be considered, because handling even a relatively uncomplicated estate can be an exhausting chore. You would also want someone capable of handling the fallout when decisions have to be made that may not be popular with every member of the family.

The co-executor question

Some decide to name co-executors, but studies have shown this can be a formula for dysfunction, even inside apparently cohesive families. Appointing two adult children may seem to be a good idea, but practical problems can arise if, for example, both must sign key court filings and documents while residing in different states. Experts say it is irrational to believe that co-executors are likely to forge a sense of family harmony.

On the other hand, you might consider appointing a family member and a professional as co-executors, a hybrid solution designed to give you the best of both worlds. The family member would naturally understand family issues on an intimate basis and the professional would be familiar with all the steps required to settle an estate.

Your executor should

• Know the location of your will and know how to file it with the proper court;

• Be able to inventory and take control of your estate’s assets;

• Be aware of all your beneficiaries and know how to locate them;

• Have the ability to pay creditor claims and to appear in court, if necessary;

• Know how to file final tax returns and pay required personal and estate taxes;

• Guard against identity theft that could happen if a deceased’s accounts are not closed and that his or her identification is properly protected;

• Possess the diplomatic skills to reduce any family tension.

Whatever you decide, remember that this is a job and that reasonable compensation is in order. Even dedicated family members can find themselves overwhelmed by the hours required to work through the details of your estate, so estates often arrange to pay hourly for the work.

If you take the professional route, you should know the fees or hourly rates up front and build those into your estate plan.

If you’d like to discuss issues surrounding your choice of an executor, please give me a call.