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Don’t forget location, location, location when choosing the right executor for your estate

by Legacy Plan
August 25, 2023

One of the most vital decisions in the estate planning process is selecting an executor (also called a personal representative) – the person who will ensure that your final wishes, as documented in your last will and testament, are executed as you intended. Your choice of an executor can influence the speed, efficiency and cost of the probate process. A critical factor that often is overlooked is the place of residence of the executor, especially in relation to the testator (the person who creates the will).

Serving as an executor is a position of trust and responsibility. The role can be demanding, requiring both time and expertise to navigate the complexities of estate settlement. Anyone appointed as an executor should be aware of the tasks ahead and, if needed, should seek legal counsel to ensure they fulfill their duties correctly and efficiently.

What is an executor?

An executor or personal representative is an individual or institution appointed in a person's will to manage the affairs of their estate after their death. The primary responsibility of the executor is to ensure that the deceased's last wishes, as documented in the will, are fulfilled and to settle the decedent's affairs in accordance with legal requirements.

What does an executor of a will do?

two people at a desk going over a will

The duties and responsibilities of an executor can be varied and numerous. They encompass both administrative and legal tasks and can differ based on the size and complexity of the estate, the specifics of the will and local jurisdictional laws.

The first task is to locate the decedent's will and familiarize themselves with its contents. The executor typically needs to submit the will to the probate court to have it authenticated and obtain the legal authority to act on behalf of the estate. The executor must identify, locate and appraise the decedent's assets, including real estate, bank accounts, investments, personal property and more. It's also crucial for the executor to inform beneficiaries, creditors and other relevant entities of the decedent's death.

Until the estate is settled, the executor is responsible for managing and preserving assets, which may involve tasks such as safeguarding property, overseeing investments or continuing a business.

Before distributing assets to beneficiaries, the executor must ensure all outstanding debts, expenses and taxes related to the estate are paid. This can include funeral expenses, medical bills, credit card debts and any taxes owed by the deceased or the estate. Once debts and taxes have been settled, the executor will distribute the remaining assets to beneficiaries as specified in the will.

Throughout the probate process, the executor should keep thorough records of all transactions and actions related to the estate. Once all responsibilities have been fulfilled, the executor will submit a final account to the probate court detailing all financial transactions related to the estate. After obtaining approval from the court and beneficiaries, the executor's role is concluded.

The executor acts as a fiduciary, which means they must act in the best interests of the estate and its beneficiaries. This role requires honesty, transparency and impartiality. An executor can be held legally liable for intentional mismanagement or negligence in their duties.

Can an executor decide who gets what?

An executor does not have the arbitrary power to decide who gets what from the deceased's estate. Their role is primarily administrative, and they are bound by the instructions laid out in the will. If the will is clear in its instructions, the executor is obligated to follow those directives. They don't have the authority to alter the beneficiaries or the share of the assets mentioned in the will. If the deceased did not leave a will, or if the will is deemed invalid for some reason, then the estate is considered "intestate." In this case, the distribution of assets is governed by the intestacy laws of the jurisdiction where the deceased lived. These laws provide a specific order of inheritance, usually starting with the surviving spouse and children, and then expanding to other relatives. Even in this scenario, the executor (often called an "administrator" in cases of intestacy) cannot decide on their own who gets what. They must follow the legal guidelines.

There are, however, limited situations where an executor might have some discretion, but these are usually explicitly outlined in the will. For example, a will might establish a trust for the testator's children and give the executor discretion in determining how funds are used for the children's education, health, maintenance and support. Even in these situations, the executor is typically required to act in the best interests of the beneficiaries.

If an executor acts against the directives in the will or mismanages estate assets, they can be held legally accountable. Beneficiaries can petition the court to have the executor removed or even sue the executor for breach of fiduciary duty.

In essence, an executor's role is to faithfully carry out the wishes of the deceased as expressed in the will and to administer the estate within the bounds of the law. They do not have the freedom to decide who gets what based on personal biases or opinions. Proper legal guidance and transparency in actions can help ensure that an executor fulfills their duties appropriately and without conflict.

Why does the residency of the executor matter?

A local executor can potentially save time, reduce costs and simplify the estate administration process. Testators should weigh the benefits of appointing a nearby executor against the trust and confidence they have in an out-of-state individual. If an out-of-state executor is chosen, it's wise to be aware of potential challenges and consider strategies to mitigate them.

For instance, some states mandate that the executor resides in the same state as the testator. This requirement ensures easy accessibility and accountability during the probate process.

When drawing up a will or considering estate planning, the choice of executor is crucial. Often, individuals default to picking a trusted family member or friend without giving significant thought to the potential complications of residency. The place of residence of an executor can play a significant role in the ease and cost of the estate administration process.

Some states have laws that require an executor to reside in the same state as the testator (the person who made the will). If an out-of-state individual is named as the executor, they might be barred from serving unless specific conditions are met. Some states require that an out-of-state executor hire an in-state attorney to ensure the executor doesn’t unknowingly violate local regulations.

Also, some states require a non-resident executor to appoint an in-state agent. This person acts as a local contact point and can receive legal documents or court communications on behalf of the executor. It ensures that there's always a way for the court or interested parties to reach the executor.

Even if an out-of-state executor is allowed, some jurisdictions may require them to purchase a bond, which acts as a form of insurance for the estate against possible mismanagement. The bond fees can add to the cost of probate, which is estimated to consume 3-8% of the value of the estate.

There also are practical considerations in selecting an executor, who will need access to the deceased's property, financial institutions, advisors and other assets. Being close to these assets facilitates smoother management, evaluation and distribution. Probate proceedings can require multiple court appearances. An out-of-state executor may find it burdensome to travel frequently. Also, having familiarity or easy access to local professionals, such as attorneys, accountants and appraisers, can be advantageous in efficiently navigating the probate process.

Then there are travel costs to keep in mind. An out-of-state executor will likely incur travel expenses to attend hearings or meet with beneficiaries, which could be claimed from the estate, thus reducing the amount available for beneficiaries.

As mentioned, bond fees can be a significant expense. Furthermore, the actual cost of the bond might depend on the credit score of the executor, potentially increasing costs. This bond acts as insurance of sorts, protecting the estate's beneficiaries against potential malfeasance or mismanagement by the executor.

Having an out-of-state executor also can take additional time and reduce the efficiency of the estate settlement process. Geographical distance can introduce delays in decision-making, accessing assets or attending to urgent matters related to the estate. Plus, an out-of-state executor might not have a network of local professionals (like attorneys, appraisers or accountants), which can be essential during probate.

What are the advantages of having a local executor?

wooden block building in a circle with a wooden map pin in the middle

Choosing an executor who resides near the testator, or at least in the same state, offers several benefits. One is accessibility. Local executors can promptly attend to estate matters without significant travel. Another is local knowledge and familiarity with local rules, regulations and professionals that can facilitate the probate process.

Who should be executor of a will?

First and foremost, the person selected as executor of a will must be trustworthy, ensuring your wishes are respected and enacted upon. They should have strong organizational skills, because managing an estate requires dealing with paperwork, financial details and legal processes.

Commitment is another key quality. The probate process can be lengthy, and dedication to seeing the process through is essential. Communication skills also are vital. An executor will need to carefully and prudently share information and discuss estate settlement issues with beneficiaries, professionals and perhaps even creditors. Effective communication can help avoid misunderstandings and disputes.

Conclusion

Your estate's executor holds a position of significant responsibility. While trustworthiness and competence are critical qualities, practical considerations like location can profoundly influence the probate process' efficiency and cost. Properly weighing these factors, along with periodic reviews and professional advice, can ensure your estate is managed in line with your wishes and with minimal complications.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at legacyassuranceplan.com.

Phone - 844.445.3422
Email - info@legacyassuranceplan.com
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