What Is An Executor? Duties And Roles In Estate Planning

Look into estate planning for just a few minutes and you are bound to run into the term "executor." The duties of an executor or executrix, more formally known as a "personal representative," boil down to being someone you can trust to enact your final wishes upon your death. For more specific details, consider the following subsections.

Managing and Protecting Estate Assets

Since it is in the position's interest to ensure that those assets remain in their best condition until the time comes for them to be divvied up among your beneficiaries. This could extend to things like seeing that a car collection is properly stored away, keeping your summer home up to your dictated standards, and itemizing all of your assets for proper accounting of value.

Paying Debts and Taxes

As an executor is tasked with securing and maintaining your assets from the outside world, the position is also charged with navigating probate so that assets clear any taxes owed to the government and debts owed to other parties.

Distributing Assets to Beneficiaries

Beyond likely reading your will to the loved ones and beneficiaries, one of the more recognized roles of an executor is overseeing the handover of assets to their beneficiaries. This could be as simple as handing a stated amount of money to your cousin or as involved as seeing that all the paperwork attached to a house is given to its new owner.

Closing the Estate

Once the matters of an estate are done, meaning that all debts have been cleared and all assets distributed, the executor's job is done as is your estate.

How to Select the Right Executor

Considering how important and close this role can be, most people choose a dear friend or relative for the position because they know you and what you cared about. Note that because an executor has the right to resign and might even fail to do their job, you might consider a second candidate or co-executor.

The ideal executor candidate is someone with the following qualities:

  • The time and interest to manage all of your estate's red tape

  • Can deal with heirs and creditors in a calm, level manner

  • Is financially competent and not bogged down with their own financial chaos

  • Is well organized and can confidently multitask

  • Has experience navigating law and finance. If your ideal candidate lacks this aspect, they could work with a qualified lawyer or attorney for guidance.

Legal Requirements for Executors

While every state has its quirks to executorship, there are some common requirements throughout the country. For example, the candidate cannot be legally incapacitated; you cannot appoint your comatose wife as your executrix.

Age and Residency Requirements

The candidate must be a resident of the United States and legal age, usually age 18 or 21, for the state your estate is based.

Conflict of Interest Considerations

Your executor should act in the best interest of the estate and its beneficiaries. If there is a severe enough conflict of interest, such as in the below examples, the court may remove the executor from their position.

  • The executor is a creditor of your estate, leaving beneficiaries questioning their impartiality with your estate.

  • The executor is buying your estate's assets. Because the executor should act in the estate's best interests, this conflicts with the need to buy assets as cheaply as possible.

  • The executor hires in-house for something involving the estate. Business owners seek the greatest price while an executor should see that work is done as cost-concerned as possible.

  • The executor generally acts in their best interest instead of your estate's and its beneficiaries.

Common Challenges Faced by Executors

Some of the most frequent troubles an executor may encounter can include disputes with a co-executor, argumentative heirs and beneficiaries, navigating probate court, keeping records that are accurate, and out-of-pocket expenses for keeping your estate intact.

How to Prepare Your Executor

It is one thing to tell someone you want them as your executor and another to explain what such a role involves. You want the executor to act confidently and to give them everything they could need to enact your wishes.

Creating a Comprehensive Estate Plan

Make sure to have a long conversation with the person about what you want, covering every aspect of your estate.

Providing Access to Necessary Documents

Make sure that everything is established so that the executor can access the will, valuables, and other vital papers. The executor should know everything needed to handle your estate at every place that it deals with, including all relevant passwords, keys, and contact details of owed parties and heirs.

Communicating Your Wishes Clearly

The executor should be able to parse any ambiguity or potential argument that may arise from reading the will. If they admit that they cannot dedicate the necessary time and energy to go over the entire document and fully understand it, you need a new executor.

Executor Compensation and Expenses

A person should be sufficiently paid for the effort and dedication they put into a task and executors are no different.

Standard Compensation Practices

Some states allow you to dictate how much your executor will be paid, including that there should either not be any compensation or that payment should be a flat fee. Some people even leave a bequest because, unlike fees, those are not taxed income. A probate court will tend to uphold a will's directions when handling payment; if nothing is mentioned within the will, it abides by state law.

Reimbursable Expenses

Even if they have waived a fee or your will says they cannot receive compensation, an executor can still be reimbursed for certain expenses.

  • The cost of the funeral or any debts that were owed prior to opening the estate.

  • Travel costs, postage, and office supplies needed to manage the estate.

  • Mortgage payments, utilities, and any other expenses they had to cover when the estate could not.

  • Fees for attorneys and other professionals who were advanced or paid before the estate's resources were available.

Expenses are generally reimbursed while managing the estate.

Frequently Asked Questions

Can an executor also be a beneficiary?

Yes. An executor may be listed as a beneficiary but the roles of beneficiary and executor are separate; an executor cannot benefit beyond their fee and compensation for estate maintenance.

Is an executor the same as a trustee?

No. Executors manage estates. Trustees manage estate assets for the sake of beneficiaries.