Many people instinctively turn to a close family member to serve as the executor of their estate. It’s understandable given the incredible amount of trust that is conveyed with the honor. What often gets overlooked is the complexity of the challenge, the required commitment of time, and the significant emotional and personal toll that the duty can exact.
The settlement of your estate could potentially take 18 months or longer to complete, with your executor needing to undertake an extensive array of highly technical responsibilities that include:
- Adhering to the stated terms of your will and any trust documents;
- Identifying, collecting and valuing all assets of your estate;
- Identifying and paying your outstanding liabilities, debts and expenses;
- Developing an unbiased, impartial plan for the distribution of estate assets;
- Preparing and filing income, estate, gift and generation skipping tax returns; and
- Submitting all necessary court-mandated filings.
Along with a multitude of important decisions about taxes, investments and distributions that need to be carefully documented, your executor must also assume personal liability for any errors or omissions that may occur. But often the most difficult challenge revolves around balancing the competing interests of beneficiaries who may be close friends or relatives.
A surviving spouse or child may be your preferred choice—someone you can trust to carry out your wishes and who knows where all your assets are located. But make sure that they are well-organized, suited to the responsibility and possessing a reasonable understanding of financial assets and the estate settlement process. In addition, you’ll want to select an individual who is young enough and healthy enough that they will likely outlive you.
Between a rock and a hard place
Perhaps most importantly, your named executor needs to be adept at conflict resolution, especially in situations where there may be long-standing family tensions. Keep in mind that your executor will be required to balance the competing interests of your beneficiaries and may even have to deny specific requests. Often, it’s not the large assets such as brokerage and retirement accounts that are difficult to distribute, but rather the little assets (e.g., an oil painting or vase, heirloom sterling silver, etc.) that create the biggest squabbles and even lead to potential litigation.
In order to alleviate these sorts of potential headaches, you may want to consider naming a corporate fiduciary as a co-executor of your estate to provide counsel and support to the loved one you select as executor. Corporate fiduciaries such as SunTrust possess the financial and legal expertise necessary to manage even the most complex estate settlement challenges. By serving as valuable unbiased third parties to help mediate any disputes among beneficiaries, they can calm the family waters during an already stressful time.
Lastly, as with your beneficiary designations on your various accounts, you should revisit your choice of executor every few years to determine the continued suitability of the individual. Perhaps he or she has moved across country or overseas, has become estranged from your family through a divorce or falling-out or is simply no longer capable of fulfilling the duties due to a physical or mental impairment. The thoughtful selection of a capable estate executor just might be one of the most important legacies you leave your family.