In my last post, I talked about the basic concepts regarding wills. In this post, I’ll run through what an executor is, what the executor’s role is, how to choose an executor and how to work with an executor.
What is an executor?
An executor is the person or entity (when a corporate executor is used) that is responsible for settling the estate when someone passes away. In the past, the term executrix was used to refer to a female who was appointed to administer the estate. Today it is common for the term executor to be used regardless of the person’s gender.
The executor is either named in the will of the deceased, or named later by legal process if the person had no will. In cases where there is no will, the executor is sometimes called the “administrator”.
Many people think of an executor as being one individual, but there can be more than one executor. You can appoint co-executors — two or more people — to manage their estate. It’s a big job requiring organization, good judgement, and management skills. Using more than one person shares the work load and brings different skills to the table.
It’s also possible to use a professional as an executor. Lawyers and accountants are often used. Companies that offer complete executor services may be employed as well. Trust companies or agencies licensed to provide estate planning and estate management are common choices.
Executor fees
When using a professional executor, their compensation is normally stated clearly in the will when or is “incorporated by reference” into the will by identifying that a professional services firm will be hired.
When a family member or friend is appointed, there may not be anything specifically mentioned in the will about compensation. The executor is, however, entitled to some form of payment for their duties. In most jurisdictions there will be guidelines for what amount an executor is entitled to, either by statute or by common law.
While compensation may be legally permitted even when nothing is written in the will, it’s still a good idea for the executor to know what the legal guidelines are, and obtain consent for any suggested remuneration. Consent can be obtained either directly from the beneficiaries or through a court approval.
That said, an executor does not have to take any payment. An executor may be a beneficiary of the estate and feel well paid by virtue of that. They may also perform the job out of a sense of duty or obligation and won’t want any form of payment.
Executor’s role
In the simplest terms, the executors job is to carry out how the estate is to be distributed as expressed in the will. Assets are to be distributed to beneficiaries. Debts, taxes, and expenses are to be paid. Donations may be made by the executor to charities or other organizations as stipulated in the will. That’s the job in a nutshell.
However, the role of the executor is tremendously important and in many cases considerably more complex than what I just described. It’s virtually impossible to identify every potential detail an executor might have to attend to. However, I’ve put together a reasonable list of executor tasks on our Resources page you can print and keep as a guideline.
The key duties of an executor are:
The duty to act as a fiduciary. This means you’ve been put into a position of trust on behalf of the deceased to manage the assets of the estate in accordance to all laws and in the best interests of the beneficiaries. This also means that as an executor, you are held to a high standard from a legal point of view. You can be held personally liable by the beneficiaries in the event of any loss of value of the estate while you’re executing your duties. You also have to be careful about having any conflicts of interest with any of the decisions you make.
The duty to administer the estate prudently. This includes to protect, maintain and maximize the value of and the income from the estate’s assets, ensuring the estate’s debts and taxes are paid off, and making sure any expenses created by administering the estate are paid.
The duty to distribute assets to the stated beneficiaries in accordance to the will’s directives when all of the debts and taxes have been paid.
The duty to have a full and proper accounting of the estate’s assets and liabilities.
The duty to complete all of the tasks in a timely manner.
That list is a pretty tall order for any individual. It’s worth noting, an executor does have the right to obtain help. Most, at the very least, will use a lawyer and an accountant for part of the work. But an executor can also hire other professionals, such as a trust company, as an “agent for executor”. Doing so passes a lot of the details over to a team of experts. This will cost the estate money, but it also eliminates the chance of costly errors. When using an agent, the executor still retains the ultimate decision making power and responsibility of the executor’s role.
How to choose an executor
As you’ve just read, being an executor is an important job. You’ll want to think about whom you will select. You’ll also want to talk to the person you have in mind. Don’t just spring it on them. Ask them if they will accept the role.
You can appoint a professional executor — your lawyer, an accountant or a trust company. Even if they work for you, you still need to ask them to be your executor. They will charge a fee to doing the work, but they’ll fully disclose the fees and you know the job will be done in accordance to the laws, prudently, and in a timely a fashion.
If you ask a family member or a friend, here are the qualities I’d be looking for:
Trustworthiness – first and foremost, your executor needs to be someone you literally would trust with your children. The executor will likely have a significant role working with the surviving spouse or guardian to ensure the well being of any minor children.
Capable – this person should be competent at handling money and legal documents. They should communicate well with the surviving spouse, the beneficiaries, and of course the lawyers, accountants, financial institutions, real estate agents, business partners and any other people who may be involved in settling the estate.
Available – the executor you choose should be available to do the work, both in terms of the time it will take and also living close enough to attend to the many details. You may have a friend or family member who is capable and completely trustworthy. But, if they live on the other side of the country consider choosing someone else.
Accessible – they should be the type of person who will be accessible to the surviving spouse and beneficiaries. They should also be the kind of person that will be open to obtaining and using help from others rather than stubbornly trying to do it all themselves.
One last consideration is family dynamics. If the family gets along amicably, there may not be any friction with the executor. If this is not the case, you’ll need an executor who will be able to navigate the volatility that family in-fighting can bring.
How to work with an executor
Assuming you’re not the executor yourself, if you’re the surviving spouse or a beneficiary you’ll need to work with the executor, not against them. It is essential to have good communication and remember communication is a two-way street. The executor is going to need information from you at various points of the process. Provide that information in a thorough and timely manner. While the executor is required to keep you up to date, constant contacting them regarding the status of the estate are not helpful. Direct your questions to him or her at logical intervals or on an agreed upon schedule.
There are many tasks on the executor’s list of duties that family members and friends can help out with. Assisting with making the funeral arrangements, getting financial records together, handling mail, are just a few. If the executor asks for help, do so if you can. It will only speed things up.
In general, try to maintain a civil and courteous relationship with the executor. Yes, they may have accepted the role, but they may have done so out of a feeling of duty rather than really wanting the job or even knowing how much work is entailed. They may very well be doing the best they can.
Problems with executors
While rare, there are times when an incompetent executor becomes a real problem. Or there are times when an executor is looking after their own interests rather than the estate’s. There are legal mechanisms in place that can be used to remove and replace executors. This is a completely separate topic that I’ll try to address in a future post.
Important Disclaimer: Estate law varies considerably depending on what country you live in. Within countries, individual states or provinces can have important legal differences too. The information provided here is general in nature and for informational purposes only. Please consult a professional that is licensed in the jurisdiction of your residency prior to making any estate plans or changes.
