What does an executor of a will do? Understanding the role and how to choose someone for it

Joan Bozek, Chief Fiduciary Officer | Citizens Private Wealth

Jose A Reynoso, Senior Managing Director, Head of Advanced Tax and Estate Planning and Personal Financial Planning | Citizens Private Wealth

Many people have the best of intentions when it comes to estate planning. They know it's vital to establish a will that says what they want to happen to their assets after they pass away but then get held up by the myriad decisions to be made.

However, without documents that name your executor and make your wishes clear, applicable state law together with the courts will determine where your money, investments and property will go. Your loved ones may be stuck with someone you didn't choose making decisions not just about your assets but your guardianships, business dealings and charitable giving. If someone capable isn't chosen, it could mean overpaying in taxes, improper valuations or unnecessary delays.

It can help you move forward with your estate planning to know what an executor of a will does. You can then choose someone capable and trustworthy of the responsibility and feel more confident the rest of your estate will be handled according to your wishes.

An executor is a person named in your will that manages all the money and property owned by you at the time of your death (as instructed in your will) for a finite period of time. This person is meant to act in your best interest while handling your debts and assets. The executor is, in fact, a fiduciary, much like a trustee. You should feel reassured when you name an executor to carry out your directions, rather than leave it to a court to select someone (usually an “estate administrator”).

The executor takes care of all the tasks involved in settling your estate, from starting the probate process to distributing your assets. It will require them to coordinate dealings with the court, beneficiaries and other representatives and parties. Executors are called on to handle an estate's affairs for as long as the estate is open. The time frame varies based on how quickly debts are satisfied, assets are distributed and any necessary tax filings and legal documents are completed. It is not uncommon for an estate to be open for two years or more.

The responsibilities of an executor may include:

• Starting the probate process. The executor will file the will and other paperwork with the court. It's a necessary first step so the executor can have the legal authority to be in charge of your estate.
• Identifying assets and liabilities. Early in the process, the executor will do an inventory to know what money and property there is as well as what debts are owed. They'll need to know how to find your bank accounts, investments, real estate and personal property, and they'll gather up any bills and outstanding loans to be paid.
• Managing assets and liabilities. The executor will ensure the estate's bills and taxes are paid, the property is maintained and other assets are taken care of for the duration of the process.
• Obtaining asset valuation. The executor will work with attorneys, accountants, appraisers and other professionals to determine the value of the estate's assets.
• Keeping records. At the end of the probate process, the executor will have to give the court a detailed accounting of transactions and other financial information related to the estate. It's helpful if the executor documents everything as it happens.
• Complying with laws. The executor, often with the help of an attorney, will ensure that all laws, regulations and court orders are followed during the probate process.
• Resolving disputes. If there is a disagreement among beneficiaries, the executor may need to negotiate a resolution or work with attorneys or other representatives to settle the matter.
• Distributing assets. The executor will hand over or transfer the assets to the beneficiaries as stated in the will, according to negotiations or per the court's instructions.
• Closing the estate. Once all transactions are finalized and the estate is settled, the executor will petition the court to declare the estate closed.

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A common misconception is that executors decide who gets what. Executors typically don't have this authority unless the will explicitly gives them this power. Their default role is to carry out the will's instructions, though executors have some discretion in managing the estate's affairs. They may, for example, decide how an asset will be sold. But they're generally constrained to act as stated in the will.

Depending on the demands of your estate, being an executor is generally a major responsibility that requires a great deal of time and effort. You won't want to name someone just to be honorary because several important duties must be carried out.

As you think about how to choose an executor, you may want to factor in some of these characteristics:

• Financial experience. Your executor should know how to work with financial professionals in making estate decisions.
• Attention to detail. Estate administration requires meticulous detail and a high degree of responsibility.
• Age. You'll want an executor with the maturity to manage the responsibilities. This person should also be someone you expect will outlive you.
• Understanding of your values. An executor should understand your family's unique dynamics and your values.
• Geographic location. Given the responsibilities of administering an estate, you may want to choose an executor who lives nearby. (The state domicile of the executor can be central to the decision, depending on applicable law.)

You can have more than one executor. With co-executors, each generally has equal authority in the estate's affairs. If you go this route, it helps to choose people who can get along with each other.

If decisions aren't unanimous, it could cause delays or other problems. When a disagreement can't be resolved, the court may intervene and remove one executor or all the executors and appoint a new one.

Another option if you have specific tasks in mind is to select special executors. These people have limited authority based on the directions in your will. For instance, you may want to name someone who is an expert in investing to take care of your estate's investments while all the rest is handled by someone else.

Being asked to be the executor of an estate often means you're respected and trusted to handle someone else's affairs. Before you say yes, however, it's important to be sure you're up to the task.

• Time commitment. If you are busy with work, family and other obligations, you may have trouble finding the time to manage an estate's affairs.
• Potential for conflict. Disagreements among beneficiaries and co-executors could negatively affect relationships.
• Complexity of the estate. The more assets an estate has, the more time it will take to have them assessed and sold or distributed to beneficiaries.
• Skills and expertise. Executors must be comfortable dealing with asset valuation, financial management and working with attorneys, accountants and other professionals.

Another important consideration before agreeing to be an executor is that things can change over time for you, but wills endure until they're formally changed. If you think your schedule could become too busy or you plan to move far away, you may want to reconsider committing to this future role.

Does an executor get paid?

Executors are typically paid for the work they do, although the amount varies depending on state law. They are paid from either the estate's cash reserves or from the sale of assets.

Does an executor have to show an accounting to beneficiaries?

Depending on state law, an executor may be required to provide a detailed record of an estate's assets, income, expenses paid and other information to beneficiaries unless they specifically waive the requirement.

Can an executor withhold money or property from a beneficiary?

As long as the estate's debts are settled and there is no pending claim on or litigation over the asset, an executor can't withhold money or property from a beneficiary.

What are some things an estate executor cannot do?

An executor has no power over assets before the will-maker passes away. Once they're given executor authority, they have a duty to act in the best interest of the estate, so they can't disregard or change the will. They can't use the estate's assets for their personal gain nor can they sell the assets for less than fair market value unless all the beneficiaries agree to it. An executor also can't refuse to communicate with any beneficiaries or stop them from contesting the will.

The responsibilities of an executor vary and depend largely on the complexity of your particular estate. In many situations, the time and effort required to oversee an estate are more than you or the executor might expect. That's why it's important to choose someone who has the experience, maturity and capacity to take on those responsibilities and any related challenges that may arise.

Selecting an executor is a key first step in planning your legacy, but there are other things to consider. Alongside your legal and tax professionals, Citizens Private Wealth can provide expert guidance and support while you're creating an estate plan that protects your assets.

Request a call from a Citizens Private Wealth Advisor to help you prepare for the road ahead.

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