Have you been asked to be the executor of a will? Or are you preparing your own estate plan and selecting an executor for your will? Before making either of these decisions, I think it is important to understand the responsibilities and risks involved.
An executor is the person named in a will to carry out the wishes of the deceased. They are responsible for taking the will through the probate process. Upon the decedent’s death, the executor pays any debts and taxes owed by the estate and makes distributions to the named beneficiaries.
An executor is not the same as a trustee. As the name indicates, a trustee oversees a trust. Once the estate has gone through probate and everything has been distributed, a trustee then manages any trusts that are beneficiaries of the estate. A trustee takes over after the executor fulfills their role, and it not uncommon for the executor to also fulfill the roll as the trustee.
Not only does the executor pay all the bills, calculate and pay the estate’s taxes, and complete all of the administrative work that accompanies a death, they could be held legally liable for certain mistakes. For example, if the executor mismanages the estate and any errors result in losses, the beneficiaries could sue the executor personally. It doesn’t have to be purposeful mismanagement; even an inadvertent omission that causes financial damage to a beneficiary could be grounds for a lawsuit.
Being the executor of a will is an important job. It’s typically unpaid, done out of love (or obligation), and a responsibility I recommend you consider very seriously before accepting. If you do decide to shoulder the responsibility of being an executor, I suggest you hire an estate planning attorney to help. I’ve seen many instances of family members turning on executors.
I believe an estate plan is an important component of a comprehensive retirement planning strategy. If you are over 50 and would like to discuss estate planning options as part of an overall retirement planning strategy, schedule a free, no-obligation consultation with one of our Retirement Planners today.