Choosing an executor for your estate can be a challenging assignment; after all, who do you trust most to distribute your assets among relatives and other beneficiaries? Experts say people considering their executor options should be educated about the exact duties this person has during the estate administration process.
Executors only step into their roles after your death. In the immediate aftermath of your death, family members may be overwhelmed with emotion, so your executor must be able to stay cool under pressure and stress. Executors make decisions about state and federal tax requirements at the time of your death, and they also determine whether action should be taken on any pending estate lawsuits.
This critical team member must also complete a great deal of paperwork, including date of death value forms for banks and validation forms for personal assets. Although the executor may not complete all duties personally, this person oversees a team that deals with outstanding insurance claims, safe deposit box inventory and 401(k) plans, among others.
Perhaps most importantly, the executor is responsible for filing tax returns, particularly those relating to inheritance tax. These documents can sometimes be confusing, because inheritances can be considered taxable for estate and income purposes.
People in the process of drafting their estate plan should find an executor with financial savvy, dedication to detail and commitment to the accurate completion of all required documents. This person could be a family member or business associate. Some people even choose to leave their financial planners in charge of their estates, according to experts. Clients are encouraged to choose an executor who has technical savvy about estate administration and postmortem planning.
You can assist your executor by making sure that all of your financial concerns are resolved early. That is, you should consider specific details relating to your estate plan before your executor ever has to step in. Speak with your executor throughout the estate planning process, to ensure that this person is able to appropriately carry out your wishes.
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