The Seven Attributes of an Excellent Estate Executor
Choosing the right executor for your or your client’s estate can be the difference between things going according to the decedent’s wishes and the estate being ransacked and depleted.
By Joanie Sompayrac, JD, CPA, CGMA |
Digital Exclusive - 2021
In 1789, Benjamin Franklin wrote in a letter to 18th century French physicist Jean-Baptiste Leroy, “[I]n this world nothing can be said to be certain, except death and taxes.” In the wake of 2020, most people can likely relate to that feeling of uncertainty—as well as the looming certainty of both death and taxes. However, an excellent and effective executor of your estate can help give you peace of mind on at least one of those matters.
Whether you are a practitioner who helps clients with estate planning or someone who needs to plan your own estate (and if you have a home, insurance, and a retirement plan, you have an estate!), one of the most important questions to consider is: Who will be the executor? Estate planning professionals seldom offer clients much guidance as to who they should select as their executor. In many cases, clients will select a spouse, child, friend, or neighbor. Most states have a residency requirement that mandates the executor be a legal resident of the state in which the estate is being probated.
Be advised, however, that your choice of an executor for an estate is extremely important and should not be made based on a close relationship or state residency alone. First, if there are conflicts among family members, the integrity and expertise of the executor will be critical. Potential beneficiaries will be looking for the executor to make any mistake that will enable them to successfully sue the estate. Secondly, an executor who doesn’t understand their duties may fail to secure the assets of the estate in a timely manner after the death of the decedent. As a result of the delay, the assets of the estate could be depleted as friends or relatives of the decedent get access to the property and begin pilfering assets before it has been secured. Death can truly bring out the best and the worst in people.
Here are seven attributes you should look for in an executor:
#1: Financial security and separation:
This is more important than you may realize, especially if you or your clients could have a large estate. I executed the estate of a family friend who chose not to allow anyone in his own family to do it as he was worried they might steal from him. I engaged an attorney colleague to oversee everything, providing an extra internal control just in case a family member worried that any theft might have occurred. My friend knew that I didn’t have a financial incentive to steal, and that I did have the CPA Code of Ethics and a heavy dose of Catholic guilt from 12 years of Catholic schooling to prevent me! Ensuring that the executor is financially secure and doesn’t stand to benefit from mismanaging the estate reduces the risk of any impropriety.
There are often many moving parts to being an executor, and they can grow in complexity depending upon how large the estate is, how organized (or not) the decedent was, how easy it is to find records, how many records there are to locate, and other factors. A responsible executor is likely to be more diligent in searching thoroughly for records, communicating with all appropriate parties, meeting all deadlines, and securing all necessary legal documents.
#3 Good judgment:
One may think that demonstrating good judgment is the same as being responsible, but when it comes to executing an estate, being responsible applies more to diligence and staying on top of the necessary tasks. Demonstrating good judgment, on the other hand, relates more to how the executor deals with all the beneficiaries and others who make demands upon the estate. Exercising good judgment when it comes to prioritizing claims and working to preserve the assets of the estate should be a priority for the executor.
#4 Relative youth and good health:
This requirement may seem insensitive, but it is really a logical consideration: Your executor must outlive you in order to be effective. I chose an executor 32 years my junior and extremely healthy as he is statistically very likely to outlive me. My husband, who is four years older than I and has several serious health conditions, would not be a good choice for my executor (even though he is a CPA).
#5 Organization and attention to detail:
As noted above, there are a lot of moving parts to any estate. If the estate is large, has property in multiple states, beneficiaries who are in conflict, or there are potential legal questions about ownership of property or beneficiary rights under state law, it becomes even more critical that the executor is capable of tracking of every expense incurred and every asset in the estate.
#6 Time and a flexible schedule:
Many people fail to grasp how much time it can consume to serve as an executor, assuming it means signing some papers or being there for the ceremonial reading of the will. Often it means waiting in probate court for letters testamentary so the executor can transact business on behalf of the estate; driving all over town to find the decedent’s safe deposit box; sitting in a bank to set up the estate’s checking account; cleaning out the decedent’s house for an estate sale before selling the house; tracking down all the decedent’s property (better hope the decedent didn’t buy a time-share); paying bills; filling out forms; dealing with the insurance companies, utility companies, and other companies who need to know the decedent died; and communicating with beneficiaries.
#7 Effective communication skills:
Usually people and organizations who stand to benefit from someone’s estate have an idea that they are going to be a beneficiary, and executors will need to communicate with these beneficiaries throughout the probate process. The longer the probate process, the more important effective communication will be. When beneficiaries stop receiving communications from the executors, they often begin to feel worried or suspicious. These feelings are unnecessary and unhelpful, and an executor should offer regular updates to beneficiaries to make the process easier for everyone.
Ultimately, the choice of an executor belongs to the person creating the estate plan. Sometimes a mother will choose her favorite son as the executor even if you know he doesn’t meet any of the above criteria. This is her choice—just make sure you have advised her in writing that she should consider the above. If responsible beneficiaries attempt to question you via a legal challenge after her death, you can show that you tried to warn her. But those of us who seek out an executor who demonstrates these seven attributes can rest easy, knowing our estate will be in good hands after we are gone.
Joanie Sompayrac, JD, CPA, CGMA, is the Judith Finley Stone Alliance Professor of Accounting in the Rollins College of Business at the University of Tennessee at Chattanooga. She has years of experience in estate planning and is the past president of the Accounting and Financial Women’s Alliance.