Personal Finance

Friday, September 25, 2015

Why is it so important to choose the right executor?


Senior Estate Planner, Mike Repak, offers advice on choosing the right executor and how that decision could affect the quality of estate administration later.



One of the most important decisions a person can make to ensure their final wishes are being fulfilled is selecting the right executor of their estate. People frequently choose a spouse, relative or friend to fill this important role, and if that person doesn’t have a family member that is suitable for the job, they may choose an attorney or accountant. For people whose financial affairs are more involved, a corporate trustee or bank trust department might be an appropriate choice. Whatever the final choice is, careful thought and consideration should be given when choosing an executor.

Sometimes the selection of the person to serve as an executor and their decision to accept this appointment are made without understanding what this role really entails. Probably the most important criteria for selecting an executor is to pick someone who is trustworthy, financially stable, liked (or at least respected) by his/her heirs, and likely to outlive the owner of the estate. The executor’s job includes: gathering the assets of the estate, preparing an inventory of estate property, paying the legal claims of creditors (including taxes), possibly representing the estate in any matters which are contested, distributing property to their heirs, and making the required court filings for an estate administration. It can be a lot of work, some of which can be very complicated. Of course, an executor can retain professional help to assist with those duties that require legal and financial expertise.

Although this may come as a surprise, but executors are entitled to be paid for their work. Many times, if the executor is a family member or benefits under the will, he or she will waive the executor fee, or at least be expected to do so. Since the executor’s fee is taxable income, while an inheritance is not taxable when received, it can frequently make economic sense to forego the fee. However, the case for a paid executor can be strong if an estate is complicated or likely to be contentious. An executor who does not stand to benefit directly from the will may be less likely to be accused of cheating by disgruntled heirs, and especially in the case of a corporate executor, can avoid the interpersonal dimension of conflicts arising from the administration of the estate. On the other hand, where the possibility for conflict is remote and the decedent’s affairs are relatively simple, using an unpaid executor can avoid unnecessary expense.

Appointing a co-executor may be a good idea at times, as it allows family members the opportunity to share the work involved in administering an estate. While there’s really no limit to the number of executors appointed, if all executors involved have to agree on every decision, the process can become rather cumbersome. When I was involved more actively in preparing wills for clients, I would suggest that if multiple executors were going to be used, that the number be odd so that a majority vote could be used to resolve disagreements.

Regardless of who is ultimately chosen as the executor, it’s vitally important that every detail and desire be written down in either a will, trust, or memorandum of some sort. Providing documentation is the only way to make sure all final wishes are carried out once the owner of the estate passes.

Your team at Janney can help you and your executor with the estate settlement processes to ensure all of your needs are being met, and the executor has a sense of ease and clarity when settling your estate.

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Michael Repak
Vice President/Senior Estate Planner
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Mike provides advice and guidance in all aspects of financial, tax, and estate planning issues. He earned his Bachelor’s degree from William Paterson University in Wayne, New Jersey, and has a Master’s degree from the University of Wisconsin in Madison, Wisconsin. He has a CPA/PFS credential, and Series 7 and 66 securities licenses. He received his J.D. from the University of Florida and his LL.M. in Tax Law from NYU. 

He has been an adjunct professor in the MBA program at Temple University and is a sought-after speaker for professional conferences and events. He is also frequently featured as a Money Doctor on www.360financialliteracy.org, the public education site of the American Institute of Certified Public Accountants. Mr. Repak has served on several non-profit and civic boards, is a graduate of Leadership Philadelphia, and a member of the Union League of Philadelphia.


Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any taxrelated statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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