When creating your estate plan, one of the most crucial decisions is appointing an executor. The executor is responsible for carrying out your wishes after you pass away, ensuring your estate is handled in accordance with your will and applicable laws. It’s a significant responsibility that requires careful consideration.
Typically, you should seek to avoid probate, and thus, the need for an executor. However, some individuals choose to let their estate go through probate. We recommend avoiding probate if possible through a trust, trustee, and beneficiary designations, however, if you do end up in probate, you should understand the role of the executor. WIth that: Let’s explore what the role of an executor entails and the duties they must fulfill.
1. What Is an Executor?
An executor is a person or institution named in your will who is tasked with managing your estate after your death. Their primary responsibility is to ensure that your assets are distributed according to the terms of your will and that your debts and taxes are paid.
- Key responsibilities include:
- Administering your estate as per your will
- Managing financial matters, including paying off debts and taxes
- Distributing assets to your beneficiaries
2. Key Duties of an Executor
The role of an executor involves a wide range of tasks that must be handled promptly and efficiently. Here are the primary duties of an executor:
- Filing the Will with the Court: After your death, the executor must submit the will to probate court to begin the legal process of administering the estate.
- Locating and Managing Assets: The executor is responsible for identifying and securing your assets. This may include real estate, bank accounts, investments, and personal property.
- Paying Debts and Taxes: The executor must use estate funds to pay any outstanding debts, such as medical bills or loans, and file your final income tax return. Estate taxes may also be required if the estate exceeds certain thresholds.
- Distributing Assets: Once debts and taxes are paid, the executor distributes the remaining assets to your beneficiaries as outlined in your will.
- Communicating with Beneficiaries: Throughout the process, the executor must keep beneficiaries informed about the status of the estate and the timeline for distributing assets.
3. Executor’s Legal and Financial Responsibilities
Serving as an executor involves legal and financial responsibilities. The executor must act in the best interest of the estate and its beneficiaries, ensuring that all legal requirements are met.
- Fiduciary Duty: Executors are held to a high standard of fiduciary responsibility. This means they must act in good faith and avoid any conflicts of interest that could harm the estate or its beneficiaries.
- Managing Financial Accounts: Executors may need to open estate bank accounts to manage the funds, pay bills, and receive proceeds from the sale of assets.
- Handling Disputes: If disputes arise among beneficiaries or creditors, the executor must navigate these issues, often with legal guidance, to ensure the estate is administered smoothly.
4. Common Challenges Faced by Executors
The role of an executor can be complex and time-consuming. Many executors, especially those unfamiliar with estate law, face significant challenges during the process. Here are a few common difficulties:
- Family Disputes: Disagreements between beneficiaries can slow down the process or lead to legal battles. An executor must remain neutral and focused on the estate’s best interests.
- Time Commitment: Administering an estate can take months or even years, depending on the complexity of the assets and any legal challenges that arise.
5. Who Should You Choose as Your Executor?
Choosing an executor is an important decision that requires careful thought. Consider the following factors when deciding who should serve in this role:
- Trustworthiness: Your executor should be someone you trust to carry out your wishes honestly and responsibly.
- Financial Competence: Executors must handle financial matters, including paying bills, filing taxes, and distributing assets. Consider whether the person you choose is comfortable managing money.
- Emotional Stability: Dealing with the loss of a loved one can be emotionally taxing. Choose someone who can handle these responsibilities while managing their own grief.
- Availability: Being an executor requires time and effort. Make sure your chosen executor is available and willing to take on this commitment.
- Professional Support: If the estate is complex, or the executor lacks experience, you can appoint a professional executor, such as a bank or trust company, or allow the executor to hire professionals for guidance.
6. Can an Executor Be Compensated?
In most cases, executors are entitled to compensation for their services. Executors do not have to seek reimbursement, but they are allowed to generally as a matter of state law. Executors are often paid a percentage of the estate’s value, though the rate varies by state.
- Executor compensation generally includes:
- A percentage of the estate’s value
- Hourly rates or flat fees for their time and effort
- Reimbursement for out-of-pocket expenses incurred during estate administration
7. Updating Your Executor
As life circumstances change, you may want to update the person you’ve named as executor. For example, your executor may move out of state, become ill, or no longer be the best fit for your estate’s needs. Regularly reviewing your estate plan ensures that your chosen executor is still the best person for the job.
Conclusion: Making the Right Choice
Choosing an executor is a vital part of estate planning that ensures your wishes are carried out after your death. At Modern Law, we can help you navigate this decision and create a comprehensive estate plan that protects your assets and your loved ones. Contact us at 417-200-2500 or visit our offices in Joplin or Springfield, Missouri to start your estate planning process today.
Written by Jacob Adamson
Jacob Adamson, a seasoned estate planning attorney, provides expert legal guidance to families and individuals looking to protect their assets and ensure a smooth estate administration.