How to get it right when naming an executor and filling other key roles in your estate plan
- In addition to deciding who gets what when you die, you have key roles to fill that deserve thoughtful deliberation as part of the estate-planning process, experts say.
- In addition to choosing an executor — the person who ensures your wishes are carried out and that your estate is settled — it's wise to name decision-makers for your finances and health care if you cannot at any point prior to your death.
- Here are tips for choosing the right people to serve in these roles.
It would be normal to want to spend a minimal amount of time planning for your own death.
Yet there's a key aspect of creating an estate plan that experts say you shouldn't gloss over. For instance, choosing who would carry out the wishes outlined in your will and make important decisions on your behalf if you are incapacitated at any point before you die.
"These designations are important and should be considered very carefully, no matter the size of the estate," said Samantha Weyrauch Davis, an estate planning attorney and director with the law firm Hall Estill in Tulsa, Oklahoma.
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In basic terms, "estate" just refers to everything you own when you die: your financial accounts, real estate and possessions. An estate plan — regardless of whether your assets are massive or meager — aims to ensure your wishes are carried out at death and to provide some guardrails for other end-of-life considerations.
If you die without a will (called dying intestate), the courts in your state decide who gets your assets. The process is public and can become messy if would-be heirs disagree over what should be rightfully theirs. And if you have children but have no will or other document designating a guardian, the courts will decide who takes care of them, as well.
Here are tips to consider for choosing the executor of your estate, as well as the individuals you give powers of attorney for your finances and medical care before you die.
First, the executor
The role of executor is a big job.
This is the person in charge of everything from filing the will with the court to paying off your debts, closing accounts and making sure your remaining assets are distributed as specified in your will. (Be aware that some assets — such as retirement accounts and life insurance policies — are distributed based on the named beneficiary on the account, not what is stated in a will.)
This means, for starters, that the person needs to be trustworthy and organized. They also need to be able to juggle the job with their other life responsibilities, Davis said.
I usually recommend to clients that it's best to have one person in that role.Samantha Weyrauch DavisDirector with Hall Estill
It takes nearly 16 months on average to settle an estate, according to online software provider estateexec.com. Those worth less than $10,000 settle more quickly (11 months on average), while estates worth more than $5 million take the longest to wrap up: 42 months (3.5 years).
If you're thinking about naming co-executors, make sure they would be able to work together, Davis said. And be aware that the shared duties could make the process more complicated.
"I usually recommend to clients that it's best to have one person in that role," she said. "There would be just one signature required instead of two [on documents], which can take longer and sometimes become cumbersome."
You also should ask the person before you finalize your will if they are willing to serve as executor.
"You should discuss … your expectations," said certified financial planner Niv Persaud, founder of Transition Planning & Guidance in Atlanta. "It's a lot of responsibility, and they may turn it down."
Even if they accept, it's worth naming a contingency executor (and getting that person's OK, as well) in case the situation changes.
If you create a trust as part of your estate plan and are choosing a trustee, the same general attributes should apply. And if you struggle to identify someone in your personal life to serve as an executor or trustee, you can rely on a professional like an attorney or accountant, or a trust company (or trust department at a bank).
Married couples generally name each other as executor. In those cases, be sure to consider the backup person carefully.
Also, executors are paid a modest fee based on state law (although some individuals choose not to receive pay), Davis said. In Oklahoma, for example, the fee starts at less than 1% of assets, depending on the size of the estate.
Powers of attorney
It's worth drawing up two separate documents for powers of attorney: one for health-care decisions and the other for your finances. Many people end up naming separate individuals to serve in those roles.
For the medical side, the person with the power-of-attorney designation can make important health-care decisions when you cannot. If you create what's called a living will — which states your wishes if you are on life support or suffer from a terminal condition — this can help guide your proxy's decision-making.
As with naming an executor, you should first make sure the person would be comfortable in that position. You should also let them know your wishes in advance (i.e., do not resuscitate order), Persaud said.
For financial powers of attorney, the person should have the same general characteristics as the executor. This individual would be able to act on your behalf to handle your finances (i.e., paying bills or handling other money matters) if you cannot.
"You can also decide how broad or specific the role will be," Persaud said. "For example, [the person] could access your account to pay bills but not make investment decisions."
You generally should revisit your estate plan — even if it consists of only a will — every three to five years, said Davis of Hall Estill. If you experience a major life change before that (divorce, birth of child, major asset acquisition, etc.), it's worth reviewing sooner.
Regardless of how often you check your plan, remember that over time, individuals' life situations — i.e., health or judgment — can change. So it's wise to confirm that each person is still up for the responsibility that you're expecting them to handle.
"Make sure the people you named still make sense," Davis said.