More Than a Will: Choosing an Executor
Most business owners are aware of the importance of drafting a will to provide for the smooth administration and distribution of their estate after death. Drafting a will helps accomplish numerous personal and financial objectives, including (along with a buy-sell agreement) the orderly distribution of your business assets according to your wishes.
However, drafting a will is only the beginning. In addition, you must designate a personal representative or executor who will be responsible for the actual administration of your estate as you’ve directed in your will.
The executor’s responsibilitiesDepending on your estate, the duties and responsibilities of your executor can become quite complicated. This makes selecting your executor one of the most important decisions you must make in the planning of your estate.
The duties of an executor typically include:
- Notifying insurance companies of your death and collecting insurance proceeds, as well as notifying pension and IRA institutions and determining payout methods to beneficiaries.
- Obtaining death certificates and applying for Social Security or survivor benefits.
- Redirecting mail, advising health plans and creditors of your death, canceling credit cards and subscriptions, and requesting final statements.
- Locating, protecting and preserving all assets, which may include compiling a list of assets and determining their values as of the date of death.
- Determining debts owed and initiating payment of legitimate claims to creditors while defending improper and invalid claims against the estate.
- Filing required tax returns, including estate tax returns and fiduciary income tax returns, and paying all necessary taxes.
- Keeping accurate records of funds received and disbursed and rendering an accounting to the court or beneficiaries.
- Continuing management of your assets and making prudent investment decisions.
- Distributing assets in accordance with the provisions of your will and trusts.
Typically, your executor will work with your accountant, attorney and financial advisor to accomplish these and other tasks efficiently and as required by law. Specific executor duties are regulated and enforced at the state level.
An important choiceToo often, business owners give little thought to how capable an individual may be to fulfill the duties of executor. This can be a mistake, because these duties may overwhelm family members who are unprepared to assume them during what is already a difficult emotional time.
That’s why the choice of your executor is just as important as the process of creating your will and estate plan. Don’t just assume that your spouse, adult child or other close relative or friend will be the best candidate. Talk openly and honestly with those you’re considering about what will be expected of them, and don’t pressure them into accepting the role if they don’t feel qualified.
If you can’t identify a qualified candidate from among your family, friends or business associates, you may name a corporate executor, such as a bank trust department. Similarly, a corporate co-executor can be named to work closely with a family member or friend in the administration of your estate.
We, along with your trusted legal counsel, can help you choose a qualified executor for your estate, whether from among your family members or friends or a professional corporate executor. Please contact Jim Bowen, partner, at 330.762.9785 or by email.
Sidebar
The Role of Living Trusts
Many business owners use living trusts in conjunction with a will to ensure that their estates bypass the time-consuming and expensive probate process. A trust is a legal agreement under which assets are transferred to the trust to be managed by a trustee, who is responsible for administering the trust and managing its assets (duties similar to the executor of an estate). Unlike a will, a living trust is not a matter of public record.
For this arrangement to avoid probate and minimize legal costs effectively, however, you must ensure proper transfer of all asset titles to the trust during your lifetime. Otherwise, the trust will be unfunded at death, and your assets will be subject to probate and the ensuing lack of financial privacy.
More information:
Wealth Preservation and Management