Only 40% of all Americans died with a valid will. The remaining 60% died either without ever having created a will or not having a legally enforceable one, , according to author Theodore Hughes. But even more surprisingly, almost 100% of the people who created wills or failed to do so but remarkably little thought into who they designated as an executor(s) of their estate. A large number of them choose trusted friends or family members to be the executors — in most cases, this is a mistake. A smaller number chose a bank or an attorney to serve as the executor — another mistake, in most cases.
The number of people who die without having seriously chosen a qualified executor or having completed a valid will should be 0%. Yet it’s probably closer to 100%. We hope to change that in about five minutes. Because it will take no more than five minutes to learn why you want to choose a competent and knowledgeable professional to serve as the executor of your estate. And another three minutes will assure that you also learn how to make sure that the executor faithfully and inexpensively executes your final wishes.
Choosing an Executor
The executor’s role is to identify assemble and manage the decedent probate assets assets. However, the executor must also handle all of the decedent’s debts and notify all creditors of the death as well as locate and notify all persons whom the will names as beneficiary and any heirs at law whether they are designated in the will or not. Additionally he or she must make sure that all state federal and estate taxes are paid. So this person must be organized, a good researcher and capable of generating complex spreadsheets. And it must be someone who you and your family can trust.
In choosing an executor, you want to interview your executor candidates and when you do, you want to ask:
- What is the importance of the letter of instruction as part of any estate planning? (answer: it’s essential)
- Do your require a durable power of attorney if you are going to serve as executor? (answer: yes).
- Why do I need a living will? (answer: it avoids confusion, costs, and conflict. It is an essential document for both the family and your physicians)
- Will you help us with the cost details of the funeral? (answer: they should, especially if the estate is footing the costs of the funeral)
- What will you charge for your service? (answer: for LESS than what the law designates as a reasonable payment)
Some will encourage you to name a third-party executor like a bank, trust company or a professional who has experience dealing with estates. Some organizations, such as the National Association of Estate Planners and Councils (naepc.org) and the National Academy of Elder Law Attorneys (naela.org) having listings of such professionals. However, before you go that route, we encourage you to explore a different option, namely, appoint an Estate TEAM. This team could be co-executors or it could be a review panel of trusted friends and family to whom the executor provides updates and consultations, but isn’t necessarily obligated to take direction.
That’s right — the best team to create is some family members and some friends, aided by a professional executor who will work with the team to make sure that your family and other important persons in your life feel that they are part of the process. The trick is in finding a specific professional who will work with your team of co-executors and who will play a comprehensive role in estate planning as well as post-death activities without charging an arm and a leg. You can find such a person at this website.
Corporate trustees, such as those who work at banks or financial services, is problematic as you will not get a specific PERSON (because of corporate employee turnover/promotion) and you’ll likely pay far more than necessary for the executor services. And since they’re businesses, sometimes corporate trustees are more inflexible because of increased liability and the fact that they must answer to shareholders. They won’t be as focused on resolving conflicts as much as protecting their corporate interests and getting as much money from the estate for as little work as possible.
Ensuring that the Executor Does What You Direct In Your Will
How to take estate assets and preempt them from the probate process, the saving the estate time, money, and complications. Think food: joint ownership comma pay on death bank accounts Totten trust accounts comma transfer on death Securities registration for stocks and bonds, custodial accounts comma transfer on death deed of Real Estate, Enhanced Life Estate Deed, revocable living trust, your revocable living trust, Incorporation, gifting assets.
Notwithstanding your best efforts to minimize or avoid probate, usually some kind of probate process is necessary. One of the greater complications in Probate is finding a skilled probate lawyer who offers reasonable fees. Executor can help you find and work with the lawyer to expedite the probate process as well as make a decision as to where and when to commence probate.
The executor is imbued with the responsibility of initiating and overseeing the probate process on behalf of the estate. This Guild executor will know how to utilize the uniform probate code to initiate an unsupervised administration of the estate, where appropriate.
How Executors Are Paid
An executor is entitled to a fee for services. In most states, this fee is set by law as either reasonable compensation or as a percentage of the value of the state’s assets. In all cases, the fee is subject to court approval. As a general rule, you should avoid paying an executor on an hourly basis, unless there are some specific things that are required and that fall outside the normal scope of executor functions. If you choose the Team approach, as suggested above, then the will should provide for some modest stipend or honorarium to be paid to any team members who aren’t beneficiaries of the estate.
The estate is protected against executor negligence or malfeasance through it the purchase of a surety bond which reimburses the estate for any losses. The cost of the bond is also payable from the estate funds. These protections, combined with the oversight by the Estate Team, lays the foundation for a very effective estate management plan.
Additional Role for Your Executor – Funeral-related costs
Conventionally, an executor normally has no direct role or responsibility for arranging funerals or burial events. We think that’s a mistake. A knowledgeable professional executor can be hugely helpful to the family in helping them avoid traps and sidestep costly funeral expenses. In fact, the funeral-related savings achieved by an executor can go a long way towards paying for much of his costs.
Make no mistake about it: funeral-related expenses are typically 6-figure costs. We are talking tens of thousands of dollars. At the time of loss, the family is facing grief as well as total iexperience in funeral-related issues. The executor can help the family:
- Resist pressure by the nursing home, hospital or funeral homes to commit to costly body storage or burial arrangements;
- Assist in the completion and filing of a death certificate;
- Help with organ and body donations available under the Uniform Anatomical Gift Act;
- Arrange for an autopsy where required, and
- Assuring that the deceased wishes are honored;
- Give input about the desired ritual or memorial service.
Some of the necessary decisions the family will be called upon to make involve whether a funeral ritual should be a public or private matter, handling body disposal either with direct disposal firms, memorial societies or funeral homes. Pricing of funerals is often a complex and costly endeavor that eats away at the decedent’s estate. Other unexpected funeral-related costs include transportation charges, death certificate copies, crematorium or cemetery arrangements, and obituary notices. So having the executor — who serves as the guardian of the estate — involved in some of these decisions will not only assist the family but also protect the estate.
In addition to costs, there are also cost-offsets to consider. Families often fail to take advantage of death benefits that may offset some of these costs. Social Security and Veterans Administration burial benefits are usually available to families, but alright often overlooked. Similarly, obscure life insurance policies may exist to help defray burial costs. Moreover, many families have found it useful to have the executor deal directly with the funeral director to ensure that any costs charged to the estate are reasonable. Where agreement can be reached, the executor may petition the state’s regulatory bodies that oversee funeral homes.
As explained above, any estate with assets above $50,000 that are likely to go through a probate process, should avail themselves of a professional executor assisted with an Estate Team. This team could be co-executors or it could be a review panel of trusted friends and family to whom the executor provides updates and consultations, but isn’t necessarily obligated to take direction. The trick is in finding a specific professional who will work with your team of co-executors and who will play a comprehensive role in estate planning as well as post-death activities without charging an arm and a leg. You can find such a person at this website. Or you can ask other friends who have gone through an estate planning process. But, by all means, don’t be one of the 60% of families with no will and please don’t be one of the 40% who have created a will that really doesn’t serve their needs.