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Choosing the Right Executor Part 1: Key Characteristics to Consider
Published Date : July 26, 2018
One critical component of a solid estate plan is the named successor trustee(s) and executor(s). This is the person (or people) who will safe-guard and carry out your wishes at death. Every situation is different and there is no one-size-fits-all solution, however there are some universal considerations that may help you organize your search for the best candidate. Part One of this series will walk you through the key characteristics to incorporate into the selection process.
There are many factors to consider but here are six key qualities and characteristics to look for in a successor trustee and executor:
- Financial and Tax Knowledge and Understanding – A good candidate exhibits responsibility with their own finances and with their everyday behavior. Look for someone who has familiarity with financial matters such as basic accounting, paying bills, investing, and understanding of how estate taxes work. The estate administration process can be complex and drawn out, so they should also display qualities such as patience and attention to detail.
- Availability and Age – The estate administration process can take quite a while to complete, usually up to a year after death. When establishing or amending an estate plan, you must first consider your own age when thinking through successor trustee and executor candidates. Understandably, you want someone who will be there if the unexpected happens to you, so you want someone who will be available if they are called upon. With friends, this could reduce your candidate pool as they may all be similar age to you. With family, this might mean choosing someone in a younger generation.
- Ethical, Dependable and Impartial – It is always a comfort knowing that whomever in charge knows what they are doing, does it in an efficient manner, and will do always the right thing. Depending on the size of the estate, there might be millions of dollars under the control of the successor trustee / executor. You want them to administer the estate exactly as you intended, with the best interests of the heirs / beneficiaries at heart.
- Cost – Most estate plans are written to include “reasonable compensation” for the successor trustee, but typically, that is the only guidance you will find. Often, people feel uncomfortable being compensated for helping a family member or close friend during a difficult time. If an executor chooses not to be paid, that’s perfectly fine. If the estate administration process becomes unusually arduous, the trustee can pay him/herself (from the trust assets) a “reasonable” level of compensation. In the situations where an estate is subject to probate, each state has different statutory rules for executor compensation – usually a percentage of the total estate size.
- Sensitivity with Deeply Personal Information – The administration of an estate involves not just financial assets, but all assets, including personal property left in your home. If there are specifics about your life that you may not want shared among family members and friends, you should hesitate in naming someone in your life today to handle everything when you are gone.
- Understanding of Family Dynamics – Your successor trustee will be guiding and helping your loved ones through a very stressful and difficult time. If your family dynamics are particularly colorful, the named successor trustee should be someone (or an entity) that can facilitate the communication with your family to reduce the likelihood of arguments breaking out, or worse, an heir contesting the estate distribution.
The above list of qualities and characteristics are some of the most important attributes to consider, but it should not be considered an exhaustive list. Since every person’s financial situation is unique, so is the list of qualifications for the right candidate. Ultimately, the most important rule to remember is being comfortable and having trust in your final choice.
In Part Two of this series, we explore the various options for executors and successor trustees.
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