When you’re writing a will or creating an estate plan, one of the issues to decide is who will be executor of the estate. This person is sometimes called a personal representative or an administrator. You can choose an individual or a professional estate administrator, such as a bank or trust company.
The basic requirements are that the person be at least 18 years old and of sound mind (meaning simply that they have not been judged incapacitated by a court). Beyond those rules, the executor needs to be someone who is willing and able to handle the business of an estate in probate:
- Collecting and accounting for all assets
- Raising cash for the estate’s immediate needs
- Paying for funeral expenses, the decedent’s debts and probate expenses
- Preparing state and federal income tax returns for the estate
- Preparing federal estate tax returns, along with any estate or inheritance taxes owed in other states
- Making certain tax elections that affect the estate or beneficiaries
- Distributing the remaining assets as directed by the will or estate plan
What 5 qualities would an ideal executor have?
Here are five qualities you may want to consider when choosing an executor:
Integrity. Your executor, whether an individual or an organization, needs to be trustworthy above all else. They will have full access to the estate’s assets and will pay themselves with estate assets.
Impartiality. The executor may be called upon to make unpopular decisions affecting the beneficiaries, such as tax elections that have a financial impact on estate assets. Can your proposed executor make these decisions fairly without unduly favoring some beneficiaries over others?
Knowledge of financial matters. You will have noticed that probating an estate involves handling money, investing assets, raising cash, paying debts and fees, and more. There’s also insuring the assets, obtaining appraisals and selling valuable property, such as real estate.
Financial accountability. No one wants to think of it, but there are situations in which an executor makes a serious, costly mistake. What if your executor chooses the wrong tax election and ends up costing the estate and beneficiaries a substantial amount of money? An ideal executor would have the resources to cover the losses.
Knowledge of tax matters. Although Delaware doesn’t have an estate or inheritance tax, there are still plenty of tax matters involved in Delaware probate. For example, the decedent’s final income tax return and any previously unfiled returns must be prepared and filed. Estates above $11.4 million (for individuals) or $22.8 million (married couples) in 2019 may also owe federal estate taxes. The executor can hire someone to handle any tax issues you don’t understand, but they should be able to oversee the preparation of these taxes.
Your estate planning attorney can help you weigh your alternatives as you choose an executor.