Financial Planning

Choosing the Right Executor for Your Estate

When it comes to estate planning, most physicians are familiar with the importance of establishing a legal will. However, many doctors overlook another key aspect of estate planning: choosing an executor for your estate.

An executor is the person legally responsible for fulfilling the deceased’s financial obligations and for overseeing the distribution of assets according to the will. For physicians, estate administration can have an extra level of complexity depending on factors such as private practice ownership, professional liabilities, and outstanding student debt. Thus, all physicians, even medical students, and residents should designate a trustworthy, capable executor for their estate.

What Does an Executor Do?

In general, an executor is charged with carrying out the deceased’s will, as well as settling any outstanding financial obligations of the estate. Depending on an estate’s level of organization, planning, and complexity, the executor’s specific duties will vary widely. Common tasks include:

Managing distribution of assets
Property maintenance throughout estate settlement
Bill and tax payment (with funds from the estate)
Court appearances on behalf of the estate

If an executor is not named within the will, one will be appointed by a court.

Who Can Be an Executor

Most physicians choose friends or family members to be their executors, although virtually anyone can fulfill the role. Typically, the executor is not required to have any specific professional expertise. However, there are few rules and restrictions that apply to estate executors:

Executors must be over the age of 18.
In many states, felons are barred from acting as executors.
Non-US citizens living abroad cannot be executors.
In some states, out-of-state executors are only permitted if they are also the primary beneficiary.
Up to 4 individuals may be named joint executors.

In some states, executors must be bonded to insure against theft or mismanagement. In these cases, individuals with a history of bankruptcy or bad credit may not be approved for a bond.

Specific rules regarding estate executors vary by state, so it is important to familiarize yourself with any applicable state laws.

For financially complex wills, some doctors will appoint a professional such as a lawyer, bank representative, or accountant to act as executor. Professional executors will charge for their services, either by billing for time or taking a share of the estate’s total value. To find a professional estate executor, you can consult the National Association of Estate Planners and Councils and the National Academy of Elder Law Attorneys.

What Makes an Effective Executor

When selecting an executor, it’s important to remember that this decision is not intended to reflect who is your favorite loved one. Your choice of executor should be based on who you think is most capable of fulfilling the necessary tasks and duties. Certain family and friends may not be up to the demands of the role, particularly during a time of grief. When choosing a trusted executor, keep the following criteria in mind:

Responsible and organized. An executor’s role can come with a lengthy to-do list, including managing taxes, paying bills, arranging property sales– the list goes on. It helps if your executor is comfortable handling financial and legal documents and capable of juggling multiple deadlines.

Tactful and drama-free. Throughout the estate settlement process, emotions often run high, and it’s not uncommon for beneficiaries to become impatient or disgruntled. Consider picking an impartial executor who will minimize conflicts and deal sensitively with all parties involved.
Patient and diligent. Even for the most simple, straightforward estates, the probate process can be lengthy and taxing. Throughout the settlement, your executor will be in charge of handling various minutiae and responsibilities for the estate. Make sure you select an executor who will have the necessary time, patience, and attention to detail to see the process through to the end.

How to Prepare Your Executor

To make your executor’s role as simple as possible, you will want to clearly communicate with them throughout your estate planning process. Consider taking the following steps to prepare your executor:

Ask permission before naming someone as executor.

Finding out that you have been named as an executor in the wake of a loved one’s death can come as an unwelcome surprise in a difficult time. Before naming someone as an executor, is it important to ask for their approval and ensure they will accept the role.

Brief the executor on important information

Once your executor has accepted, you should sit down with them to detail the financial particulars of your estate. Make sure they know how to locate and access any important financial documents.

Designate any necessary funds for the executor

In the event of complications or disputes in estate settlement, your executor may need to hire a lawyer or accountant. If you anticipate such complexities, you should designate money from the estate to cover the cost of professional assistance.

Identify the executor in your will

Make sure you clearly identify your executor in your will, including their full name, address and contact information. You should also consider naming an alternate executor in case your first choice is unable to fulfill the role.

To Conclude

Regardless of age, every physician should take estate planning seriously. It’s important to establish a will, durable power of attorney, and an executor in the event of your death to ensure that your wishes are properly carried out. Choosing the right executor allows the estate settlement process to proceed with ease, efficiency and peace of mind for everyone involved.

To learn more about estate planning for physicians, schedule an appointment with an advisor today.

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