Estate planning: Appointing an executor: who will you choose

When appointing an executor for your estate, the person who first comes to mind won’t necessarily become your final choice. That’s because you must consider several factors when making this important decision. On the personal side, typical choices for an executor could be a spouse, child, sibling or close friend. On the professional side, common choices include an individual’s lawyer or accountant, or a corporate executor, such as a trust company. Any two (or more) of these choices can be named as co-executors. Read: Live longer, retire longer: Avoid these 5 mistakes Spouse as an executor Naming a spouse is a common practice and can be a prudent choice when the estate is uncomplicated and virtually all estate assets are distributed to the spouse. But if the estate involves complexities, such as business ownership, the spouse could face a stressful period managing the estate. Troubles could also develop if the spouse and children are major beneficiaries and disagreements arise over estate settlement—the executor could bear the brunt of the conflict. Also, if you appoint an executor who’s close to your age, whether it be a spouse or anyone else in your life, it’s wise to plan on an alternate executor in case your first choice predeceases you. Naming a child Another common choice is naming an adult child. It’s an easy decision if you’re certain the child is capable of administering your estate, and you have only one child. If you have two or more children, this choice deserves careful consideration. You can name co-executors to treat your children equally and have duties shared, but this arrangement comes with hitches. Any disagreements among co-executors may cause delays and test their relationship. Also, meeting together and co-signing documents at the lawyer’s and accountant’s office and bank may be difficult if they live in different cities. Appointing only one of the children can streamline estate settlement, but the potential problem still exists of other siblings disagreeing with the executor’s decisions. If you feel certain this route won’t cause discord among siblings, naming one or more children as executor can be ideal. But keep in mind, there are too many instances of arguments over estate decisions causing friction between siblings, even to the point of estrangement. Someone close to you You may want to appoint a friend, sibling or other relative because the person is someone you’re close with. But there are other factors to consider. Is the person capable? Your executor should be highly organized, diligent and able to relate with your lawyer and accountant. Does the individual live nearby? Many duties require in-person meetings, and travel would present a hardship. Does she or he have the time? An executor’s duties can include making life insurance claims, uncovering and paying bills and debts, taking care of investment accounts, valuing and selling the house and other assets, obtaining probate, overseeing personal and estate tax returns, keeping beneficiaries informed and distributing estate assets. And there are many other time-consuming duties that can stretch for many months, a year, even two years or more. When to consider a corporate executor You may want to choose a corporate executor when you face a problem choosing a friend or family member. Perhaps, you don’t have an individual who’s capable or interested. Or you feel that you’d be placing a burden on someone close to you. Maybe you’re worried that naming your spouse or a child will potentially cause discord among family members. If the estate is complex, a corporate executor may be necessary. Examples of complexity include owning a business, owning foreign property or income property, or having one or more trusts. One way to strike a balance is by appointing a corporate executor to completely administer your estate, or make a corporate executor and a friend or family member co-executors that work together to carry out your final wishes. It’s important to set time aside to evaluate the right person for your needs and circumstance when choosing an executor. And if you do have second thoughts about your first choice, we advise speaking to someone neutral like a financial advisor, who can provide insight into the different nuances that come with such an important decision. We know for many people the executor decision can be challenging, so if you want to discuss your options, speak to us. John Soutsos is a portfolio manager with IPC Securities Corporation and can be reached here: jsoutsos@ipcsecurities.com

Estate planning: Appointing an executor: who will you choose

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