An executor is the person whom you name to handle the settlement of your estate after you die. The executor’s role is to manage your estate in court after your death in the state where you resided.
You can choose anyone you want to be your executor – generally, individuals choose a spouse or close family member. A bank, estate planning attorney, or professional trustee at a trust company may also serve as the executor. No matter who you choose, they must be honest, fair, financially responsible, and prioritize your interests over their own.
We recommend choosing multiple backups in case the main executor is unable or unwilling to fulfill their responsibilities. If there is no will or willing executor, the court will appoint a professional administrator to handle your estate.
How does someone become an executor?
When your will goes through probate, the court ensures that the person you choose meets your state’s legal criteria. Once the court approves (and usually the court does), then their role is official, and your executor can get to work.
The executor has many responsibilities. Here are some, but not all, of the executor’s tasks:
- Making an inventory of all assets and liabilities
- Giving notice to creditors: credit card companies, banks, mortgage companies, etc.
- Filing a final personal tax return and filing the estate tax return
- Paying any debts and taxes
- Distributing assets according to the directions in the will and in compliance with state law
- Preparing and submitting a detailed report to the court of how the estate was settled
Help your executor by organizing and keeping important financial and personal documents easily accessible.
Does an executor get paid?
A family member may or may not wish to be paid. However, given how much time it takes to settle an estate, you might feel it’s fair for them to be compensated. The amount varies depending on where you live, but you can leave the person between 1% to 8% of your total estate. A professional administrator will likely cost considerably more.
How do you document your estate?
Imagine the emotions a family member would experience while searching for information about someone’s belongings and debts. They would have to sift through various items to gather this knowledge. This process can be time-consuming and overwhelming. a professional administrator will likely increase cost and decrease the amount of money your loved ones receive from your estate.
First, create a list of your assets and liabilities. Additionally, include the individuals who help you with the financial aspects of your life. Recent tax returns will be helpful, as will contact information for your estate planning attorney, CPA and financial advisor. You should include retirement accounts, life insurance policies and any assets without beneficiary designations.
Reference: Twin Cities-Pioneer Press (June 25, 2022) “Your Money: What you need to know about naming an executor”