Personal Finance: Tips for choosing your executor or trustee

When selecting your executor/trustee there are a number of qualities to keep in mind.

  • Mar. 2, 2013 11:00 a.m.

Being an executor/trustee of a family member’s estate is not easy. It can be overwhelming in terms of the amount of detail required to complete the task, and the emotional support needed during a time of grieving.

When selecting your executor/trustee, keep in mind the following qualities: availability, reliability, capability, responsibility and emotional understanding. Not to mention stamina. Energy, clarity and organizational ability are also crucial.

Points to consider

Availability: Think about where your executor lives and the level of responsibility needed. Your executor should be located near your hometown so that the duties can be performed efficiently and without undue expense or inconvenience. If you think the responsibility will be too much for one person, consider naming co-executors – two or three people who can shoulder the burden of duties.

Reliability: Your executor should be reliable. Depending upon the complexity of your estate, your executor will require astute business judgment, negotiation skills, decision-making skills and honesty. The choice should not be based on affection, friendship or family ties. Also, consider whether the person will be healthy enough to start and complete the many tasks required to settle your estate in a timely manner.

Capability: Your executor need not know everything about financial or legal matters. It’s crucial, however, that your executor be resourceful and not afraid to seek guidance from legal or financial or real estate experts. You may think that George “who knows everything” may be the perfect executor, but will he be? It is prudent to have an executor who realizes that expert advice is worth the fee charged.

Responsibility: This quality dovetails with capability. Your executor will be making financial and legal decisions that will affect your beneficiaries. She can also be held liable for investing in unsuitable assets, failing to pay your unpaid tax bill, and more. Choose someone with good time management skills so she can meet the many deadlines. Common sense is another useful attribute.

Emotional Understanding: Your heirs, family and friends will be in an emotional state of upheaval. Your executor should be someone your heirs can turn to for support and understanding, balancing logic (financial, legal, property matters) with emotional empathy and sympathy. Your executor will also have to be finely tuned to each beneficiary’s needs. One may just want “the facts” – what has been done, what needs to be done, etc, while another may want your executor to listen to stories and how much she misses you. An executor needs a calculator in one hand and tissue in the other. Will your executor alienate your beneficiaries? Or will she be too kind and be subject to manipulation?

Once you have decided upon an executor, it is a common courtesy to ask permission before actually naming that person as your executor in your Will. It is also a good business and public relations decision. Someone who has been asked in advance is less likely to refuse to act when required.

Once you have made a decision and the person(s) agrees, have a conversation about your wishes. This will allow your executor to ask you questions about what’s important to you and how you want your estate handled.

Appointing a trust company as your executor/trustee has some advantages. The staff is reliable and experienced in these matters. If there is any question of family dispute over your estate then a trust company is a good choice.

Consider naming a friend or family member and a trust company as co-executors. You can have the best of both worlds: a trust company to handle the legal and financial matters and a family member to be the emotional beacon for the heirs.

 

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