After last month’s column, which outlined the importance of estate planning, you may have decided to go to your attorney and have your will prepared. Your next step is to consider who will serve as your executor. Remember, your executor will administer your estate and distribute assets to your beneficiaries, as you have directed in your will. This is an important decision because it may affect your family for many years to come, depending upon the complexity of your estate and family dynamics.
Again, this begs the question, who can serve as executor? You can choose almost anyone who is an adult and legally competent. Examples are your spouse, friends, siblings or your accountant or legal advisor. You can also name a corporate executor, such as a bank trust department.
What does an executor do? Some of the duties of an executor include:
• Collecting and providing safekeeping for the estate’s assets
• Collecting money owed to the estate
• Filing claims for pension and profit sharing plan benefits, Social Security benefits and veteran’s benefits
• Notifying creditors of the death and paying all valid debts
• Managing the estate’s assets, a job that may include overseeing an investment portfolio, collecting rents and running the deceased’s business, among other things
• Selling assets as directed by your will, or as required by state law to pay estate expenses, legacies and taxes
• Keeping detailed records of all estate transactions and submitting records to beneficiaries and/or the probate court
• Filing the decedent’s final income tax return
• Choosing a tax year for the estate
• Filing the estate’s income tax return
• Filing state death tax return and completing and filing federal estate tax return
Some desirable characteristics of an executor are:
• Honesty: your fiduciary should be someone you trust completely.
• Common sense and good judgment: because your executor will have to make discretionary decisions.
• Investment experience and expertise: your executor, whether a trust department or individual, should possess the expertise and knowledge to manage diverse investments from stock and bond portfolios to real estate or oil and gas properties.
• Awareness: does your fiduciary have a solid grasp of the legal issues that may arise during estate administration?
• Impartiality: your fiduciary may be called upon to decide which beneficiary is to receive distributions and the timing and size of the payments.
• Longevity: your executor may have to serve for several years.
• Proximity: your executor should be someone who is geographically available to serve.
• Lack of distractions: your executor should be able to perform the requisite duties without being preoccupied by other matters.
Based on the above information, you may now be asking yourself: Who is my best choice? There is no easy answer, but experience is essential. You must make that decision based on your own situation.
Thomas F. Gallagher, Jr. is a vice president and trust officer with the wealth management and insurance services division of Valley National Bank.
The products offered by the Trust department are not FDIC insured, are not deposits or other obligations of the bank, are not guaranteed by the bank and involve investment risks, including possible loss of principal.
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