Who Should Be My Executor?

Who Should Be My Executor? by Tom Sciacca{Read in 8 minutes} Choosing the Executor of your Estate is an important decision that can sometimes be difficult. Some people feel that the person they wish to handle their affairs may not be qualified. Others feel that there are too many qualified individuals and they don’t know how to choose among them. Or sometimes clients feel that there is nobody with whom they feel comfortable serving as the Executor and they’re looking for a suggestion. What are some of the issues here?

First it’s important to understand that the client can choose anyone that they wish, with some minor exceptions, to serve as the Executor of their Estate. The only major exclusions in New York are:

– The person must be at least 18 years of age at the time that they serve;

– The person must have capacity and be competent at the time that they serve;

– They can never have been convicted of any felonies, regardless of how severe or how old; and

– They must be either a US citizen or a permanent resident (they have a green card).

In order to select the best Executor, it’s important to understand what it is that an Executor does. First and foremost, the Executor will offer your Will for probate. This means that it is the Executor’s job to formally ask the Court to approve the Will and appoint them as the Executor. Your Executor will need to work with an attorney of his or her own choosing to assist with this process, or in some cases, they may be able to do it without the assistance of an attorney.

In most situations your Executor is also in charge of:

– Making your final arrangements, like whether you’re buried or cremated;

– Handling certain ministerial tasks, like clearing out your apartment;

– Collecting your assets in order to pay your bills. (If your Executor is not familiar with where you do your banking, or where you have your retirement or brokerage accounts, it’s important that you either discuss it with your Executor or leave a list for him or her to follow.); and

– Making distributions of any remaining assets after payment of debts, expenses, and taxes (to your beneficiaries).

Who are some common choices as the Executor?

Spouses very often name each other as the Executor. However, if their marriage is not a first marriage, it is not uncommon for the spouse to name two Co-Executors, where the surviving spouse and a child from the former relationship are serving together. This allows both of them to have input into the administration of the Estate and make decisions together. However, it’s important that these two people get along and can maintain a professional working relationship—otherwise the Estate could wind up in litigation.

Another very common choice is for parents who have adult children to name their adult children. This is because the children may be very familiar with the client’s affairs and are the most logical choice to do things like arrange funerals and clean out a house. If the client has multiple children, the client may choose all the children to serve as the Executors, or they can name two or more of them to serve as Co-Executors.

Again, it’s essential here that all of the children get along. I have been involved in some messy estate litigations where a parent has named both of their adult children as Co-Executors. The adult children had not spoken in years, and the client felt that naming both of her children would finally force them to get along and love each other. Needless to say, that did not happen. That client would have been better served by naming someone else, such as a sibling or a nephew/niece or even a trusted accountant/attorney to serve as the Executor. It would have saved a lot of aggravation and hurt feelings, not to mention legal fees.

It’s also not uncommon for clients to name close friends as their Executors. Why might this happen? Perhaps the client has a very close friend who is located much more closely than any blood relative. Or they may also have a close friend who they consider to be so close that they are family or “family-of-choice.”

Is it okay to name my beneficiary as my Executor?

YES. This is actually the most common arrangement. When you think about it from a logical standpoint, it is the beneficiary who has the most significant stake in getting the Estate administered properly, quickly, and in the most cost-effective manner possible. For example, let’s say that I name my adult daughter as the Executor of my estate, and she is also the main beneficiary. That means that she’s going to be the one making sure things get done quickly so that she can receive her inheritance as soon as possible. She may choose to hire an attorney that is less expensive and she may try to take on some tasks herself—such as collecting assets and negotiating debts—instead of delegating them to an attorney who would bill by the hour to perform those services.

Finally, the Executor is entitled to a percentage of your estate as salary (called a commission) for their services as Executor. If the beneficiary is the same person as the Executor, the beneficiary can waive that salary. Why might she do this? The beneficiary’s salary, called a commission, is subject to income tax liability, because it’s compensation for services rendered—whereas just inheriting the funds of the Estate as the beneficiary is usually income tax-free.

Does my Executor need to be nearby? Do I need to name a New Yorker?

No, not necessarily. I’ve had clients name Executors who resided in other states or even other countries (again, as long as they are US citizens or permanent residents residing abroad) and it worked very well. It required a couple of trips to New York, one of which they would have likely made anyway to attend the funeral, but it’s more important that the client pick someone for their merits rather than just picking the person who is closest in proximity.

What about naming an accountant or attorney?

You may choose to name a professional, such as your accountant or your attorney, to serve as your Executor. The benefit of doing this is that this professional may already be familiar with your assets and your estate plan and may have a lot of experience serving as Executors in the past. What’s the downside of doing this? That accountant may charge professional fees in addition to their commission for serving as Executor. That’s because the accountant may hire her own firm to do the tax accounting work and receive a benefit beyond the commission; the attorney may hire his own firm to do the legal work involving probating the Will with the same results.

When clients ask me to serve as the Executor, I am always very flattered that they’ve asked, but I usually try to talk them out of it, pointing to the fact that they can name anyone they wish as the Executor, and sometimes it may not be in their best financial interest to name me (or any other attorney who prepares Wills) as their Executor. But if the client insists, I’m often willing to do it, either as a primary or as an alternate Executor.

In conclusion, it’s very important that a client writing a will give great consideration to whom they choose as their primary and alternate Executors with reference to the issues described above. For more information on these topics, please contact me or the attorney of your own choosing.

Thomas Sciacca

 

Thomas Sciacca

www.sciaccalaw.com
Tom@SciaccaLaw.com
(212) 495-0317