When you sit down to plan your estate, you’re inevitably confronted with several difficult questions. What are your final wishes for your funeral? How should your doctor and family define your incapacity? Who will look after your kids if you should die before they reach adulthood? Among these difficult questions is that of choosing the executor of your estate.
Administering an estate upon a loved one’s death can be a long, rigorous process. Executors have many responsibilities, among them collecting assets and information on beneficiaries, assessing the amount of debts and other claims against the estate and paying them accordingly, managing the assets of the estate, meeting tax liabilities of the estate, and finally, delivering what we all know to be their ultimate duty—distributing the estate to beneficiaries in a manner that is consistent with the deceased’s will.
Taking care of all of these areas of the estate, as well as working through each task within them, often takes several months, even up to a year or longer. Depending on the nature and value of the decedent’s estate, there may be decisions to be made and deadlines to be met that can have severe tax consequences. Not to mention the paperwork and deadlines involved in the probate process.
Thus, it is often advisable to appoint an executor with either a legal or financial background. However, that is not always an option, and many people appoint a spouse or other family member that does not have that type of experience. As long as you appoint someone with good judgment and the time to deal with the administration, your executor can always obtain the assistance of an estate attorney, accountant and financial advisor.
We also recommend naming successor executors in the event that your first choice is not able to serve. If you fail to appoint an executor, or your chosen executor is unable to serve, then the court will appoint one for you according to the priority given under North Carolina law. This can often result in family conflict, and may not be who you would want to handle your estate.
And while it’s good to have multiple people in mind to serve as your executor, we generally advise clients NOT to name co-executors, especially if the potential co-executors live far apart. Having multiple executors may sound better in theory than in practice because both will have to sign multiple legal documents and have their signatures notarized, which can be a hassle and result in delays and inefficiency. Moreover, if there is a disagreement about a decision to be made, there is not one person with final authority to make the decision. Sometimes two heads are better than one, but with an estate, having one executor, receiving expert advice from legal and financial professionals, can minimize paperwork, save time, and allow for the estate to be administered in an efficient manner.
Finally, it’s important to note that being an executor, in most states, doesn’t have to be an exercise in volunteerism. Executors may receive compensation for the many hours they must commit to administering an estate. Even if the executor is a beneficiary of the estate, he or she may take compensation (which is taxable) for executing the duties of the administration process.
As part of our estate planning process, we will help you think through your options when naming an executor. There are many hard questions to answer during the process, and we will make sure that you make informed, educated decisions now that will make your eventual estate administration a much smoother event. Contact us to learn more.