Wednesday, August 31, 2016
15 basic (but important) points about executors
Posted by Lynne Butler
1. First of all: co-executors. When two or more people are named to act together on an estate, they are co-executors. There is no "main" executor; both of them have equal say and equal responsibility for what goes on in the estate. Both of them must sign all the paperwork. If one of them goes his or her own way without involving the other co-executor, he or she can face sanctions from the courts. The will that appoints them should very clearly state that they are to work together. Any executor fee must be split between the co-executors, though the split does not have to be equal.
2. An alternate executor is one who is named to take over only if the person who was named first cannot or will not act as executor, or doesn't finish the estate. The will should clearly say that if A can't or won't do it, then B becomes the executor. If the will says "A and B are my executors" that means they are co-executors, not a primary and an alternate executor.
3. If an executor is also a beneficiary, that is not a conflict of interest.
4. An executor named in a will does not have to take on the job. He or she can refuse. This is called renouncing. There are rules for how it is to be done, the most important of which is that you can only renounce at the very beginning; once you start acting as executor you cannot quit without court permission.
5. The executor named in a will is automatically the trustee of any trusts that are set up in the will. such as a trust that looks after money for a minor until the minor comes of age. However, anyone making a will who wants to name one person to be the executor and a different person to be the trustee can certainly do so in the will itself.
6. The only lawful executors are individuals and trust companies. You cannot appoint a law firm or an accounting firm or a business of any kind (other than a trust company) to be your executor. If you appoint a lawyer as your executor, you are not appointing his or her firm; you are only appointing that individual person.
7. Executors are entitled to compensation for their time, energy, efforts, and risk. If the will sets out how much the executor is to receive, that's how much he or she gets. If the will does not mention the pay, an executor can charge between 1% and 5% of the estate. The higher end of the scale is intended for estates that are very complex, such as those which involve winding down a business, selling property overseas, etc.
8. Executors are obligated to share estate information with residuary beneficiaries. Summaries are generally enough unless the beneficiaries request more detail.
9. An executor may not change or ignore parts of the will to make the estate "more fair". He or she has to do what's in the will or face liability. If the executor strongly objects to the contents of the will, he or she should renounce right off the bat and not get involved.
10. An executor has zero power or rights while the testator (the person whose will it is) is still alive. There is no such thing as acting as executor while that person is alive.
11. The executor named in a will does not have the right to be informed if the person who named him or her changes the will to name someone else instead. While a person is alive and is mentally competent, he or she can make as many changes as desired to his or her will and need not tell anyone if they don't want to.
12. An executor who behaves fraudulently or negligently and ends up costing the estate money or property losses can be held personally liable for those losses.
13. An executor is required to be impartial among the estate beneficiaries.
14. An executor may not decide to give mementos from the deceased's home to family members who are not named in the will. As soon as the deceased passes away, those items belong to the people under the will. An executor who gives items (even small ones) to other people is breaching his or her duty to the estate and may be held personally liable.
15. An executor is not entitled to move into the deceased's home rent-free, to drive the deceased's car or use the deceased's cell phone. The estate does not belong to the executor. An executor is only holding onto assets for a brief time for the benefit of the beneficiaries while he or she pays bills and sorts out paperwork, and has a duty to sell or convert the assets as efficiently as possible.
Are there other terms or phrases you'd like to know more about? Let me know in the comments below.