When you pass away, it will be up to your executor or personal representative to handle all the paperwork after your death and the distribution of your assets.
Fed Week’s recent article entitled “Considerations when Picking an Executor for Your Estate” suggest that one possibility is to name an independent party as your estate’s executor.
An executor or personal representative of an estate is a person or entity that’s appointed to administer the last will and testament of a deceased person. The executor’s main duty is to carry out the instructions to manage the affairs and wishes of the deceased.
The executor is appointed either by the testator of the will (the person who makes the will) or by a court, in the event where there’s no prior appointment in a will.
However, a bank trust department or even an independent trust company might serve as an executor.
While your family may not like paying fees to an executor, if you name a surviving relative as executor, he or she may face enormous pressure from heirs with competing claims.
It’s not unheard of for family disputes to occur.
It’s also important to point out that an executor assumes a fiduciary responsibility that may be better left to an institution. The executor of the estate is required to complete an estate tax return, pay any estate tax due and distribute the estate’s assets.
If that tax return is later audited and more tax is due, the executor is legally responsible. The other heirs may not be ready to give some of their money back to pay the tax. You can, therefore, see that there is at least one point of contention that could grow into a conflict.
However, if you name an institution, you shift that liability away from a family member.
If you don’t expect any tax or family problems with your estate, you can simply name a family member as executor. You can perhaps name an adult child, because a surviving spouse may be too overwhelmed to deal with everything.
However, a grown son or daughter who is conscientious and lives close might be a good choice.
In any case, your will should designate a backup executor.
Reference: Fed Week (May 3, 2022) “Considerations when Picking an Executor for Your Estate”