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Points To Ponder In Picking An Executor

Other than how you want to dispose of your assets, one of the most important things that you will have to decide in devising an estate plan is who your executor will be. The law requires that an executor {in some states called a personal representative) be appointed to handle an estate because someone must be responsible for collecting the estate’s assets; protecting the estate’s property; preparing the inventory of the property; paying valid claims against the estate (including taxes); representing the estate in claims against others; and distributing the assets to the beneficiaries.

Sounds like a lot of work, doesn’t it? And some of it can be complicated. However, the executor does not have to shoulder the entire burden. He or she can pay a professional out of the assets of the estate to take care of most of these functions, especially those requiring legal or financial expertise. Such an option will, of course, reduce the amount that goes to the beneficiaries. Therefore, handling an estate is often a matter of balancing expertise, convenience, cost, and other factors. There’s no consensus, even among lawyers, about who makes the best executor; it all depends upon your individual circumstances.

One approach is to appoint someone with no potential conflict of interest—that is, someone who does not benefit from the will. For this reason, many individuals avoid naming family members and business partners as their executors. This helps the estate to avoid claims by disgruntled relatives who may accuse the executor of dishonesty. Having a professional such as a lawyer handle the job can also save a spouse or other family member the hassle of dealing with estate issues while they are grieving, and the embarrassment of things such as collecting the debts that the estate is owed from friends and relatives. For a large estate, a paid professional executor is advisable.

For small estates, the fees of a paid professional executor may not be worth it. For estates under one million dollars, a spouse or a mature child is generally the best choice for an executor. However, be aware that choosing a child may create animosity among siblings.

If you decide to appoint an interested person as the sole executor and give that person discretionary power to decide who gets certain property, it makes sense to include the methodology by which those decisions should be made. The appointment of coexecutors may be another way to help deal with potential conflicts of interest.

So, what qualities should you look for in an executor? It’s important that the executor be capable of doing the job. Persistence in paying bills is a key trait of a good executor. Pick someone who has the time and inclination to deal with bureaucrats and forms.

The executor will probably have to hire a certified public accountant to deal with the final income tax return for income the deceased person accrued prior to death; the estate tax return; and the estate income tax return for income accrued after the person’s death.

The executor may have to hire an investment advisor if the estate includes stocks, particularly if the asset value has changed due to fluctuations in the market. However, no legal expertise is required to be an executor; the estate may hire a lawyer to help resolve legal issues.

Whoever you choose as executor, make sure your will provides for a backup in case the original executor is unable or unwilling to serve. If you do not, the court will assign one for you.

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