We were recently involved in helping clients work through the estate settlement for their father. The estate was sizable, but the diversity of assets was both small and not complex…investment accounts, home, personal property. The father’s will provided straight-forward instructions so you’d assume this would be an easy task. It wasn’t. Over the past forty-plus years of working with families, it’s been my experience that family dynamics are often exacerbated when money is involved. Family members will often fight over the most innocuous things like ‘Who gets the living room lamp.’ Some of this has less to do with money and value and a lot to do with unresolved emotions.
So who is the best choice to be the executor of your estate? Here are several options to consider:
- Spouse. Simple and effective, particularly if the spouse has experience with financial matters and the estate is not complex. If he or she does not have a lot of financial experience, he or she may still be the best choice if you’ve identified a professional (lawyer, accountant, financial advisor) to guide them through the process. In most cases, the surviving spouse will be the beneficiary of all or most of the estate assets.
- Child or another family member. This is more likely to be the choice when only one parent is living or if parents are divorced. This can be a good choice if the estate is not complex, and the sibling dynamics are good. If sibling dynamics are poor before your death, they are likely to deteriorate even more during and after the settlement of your estate.
- Professional as executor. This could be an attorney, trust officer, or other trusted professional. The advantage is they are unlikely to be swayed by family dynamics and are experienced in estate settlement. The downside is that they can be expensive. I had a case decades ago where the bank trustee was the executor of a $12 million estate, and their fee was about $600,000. My view of the estate was that it was large but not overly complicated and could have been settled for significantly less had the family had the option of negotiating fees. If you’re going to choose a professional as executor, be sure to include in your estate documents a mechanism allowing the beneficiary(ies) to negotiate fees.
Follow The Welch Group every Tuesday morning on WBRC Fox 6 for the Money Tuesday segment.
FOX 6 TALKING POINTS
Who Should Be Your Executor?
- Even simple estates can be challenging
- Spouse- Does he or she have financial experience?
- Adult child- What are the family dynamics?
- Professional- How do you control fees?
- Combination- family member and a professional
Stewart H. Welch, III, CFP, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. More information about The Welch Group and important Disclosures can be found on our website. Investing in securities involves the risk of loss. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable or equal any historical performance level(s). Consult your financial advisor before acting on comments in this article.