When you name someone to be the executor of your estate, you’re sending a message of great trust, because you’re putting that person in charge of handling all your affairs when you can’t. But you’re also handing your executor a lot of work, because wrapping up an estate is a time-consuming process that requires a lot of attention to detail.
You can, however, make the job easier by taking some steps now. Your family will thank you for it.
Update your will, trust, and beneficiary designations.
The best present you can give your executor is a set of documents that reflects your wishes. Take a look at your will or trust, the beneficiary forms for your retirement accounts, and any payable-on-death designations that you’ve added to bank or brokerage accounts. If you created a living trust, make sure you’ve officially transferred to the trust all assets—real estate, bank accounts, and so on—that you want to pass under the terms of the trust.
Put important documents where the executor can find them.
A typical executor spends a lot of time searching for pieces of paper: the will, bank statements, insurance policies, birth and marriage certificates, divorce decrees, military discharge papers, cemetery deeds… you get the idea.
Even if you think you’re organized, that doesn’t mean your executor will know where to look. Rethink your system and consider putting together a binder that contains the items your executor is likely to need. Here are legal and financial documents almost everyone will need; you may think of others.
- Bank statements
- Birth certificate
- Brokerage statements
- Insurance policies or cards (car, house, life, healthcare)
- Death certificate
- Deeds to real estate
- Divorce decree
- Marriage certificate
- Military discharge
- Property tax records
- Social security records
- Vehicle titles
- Trust document
Introduce your executor to your professional advisers.
Executors also spend a lot of time on the phone, trying to find out what a company needs before it will, say, pay life insurance policy proceeds or turn over a mutual fund account to the executor. If your executor knows who to call at the bank, brokerage company, or insurer, it will be a huge help. Someone who knew you can steer your executor to the right department or person, or just take care of things. It’s a lot better than trying to navigate a phone tree when you have no idea who you need to talk to.
Think about introducing your executor—in person, if possible—to someone you rely on at your:
- brokerage company
- life insurance company, and
- home and auto insurance company (policies will have to be changed after your death).
If you regularly get advice or help from a lawyer, account, or tax preparer, your executor should meet them, too. Some people even negotiate fees—for handling a probate court proceeding, for example—ahead of time. But it will be up to your executor to choose and hire professionals if they’re necessary.
Make sure some cash will be accessible.
After a death, there are bills: expenses of the last illness, funeral expenses, appraisers’ and lawyers’ fees. Your executor will need access to some cash for estate expenses, so it’s a good idea to make sure the estate contains a cash account.
Leave plans, or at least your wishes, for a funeral or a memorial.
It’s tough to make quick decisions about cremation or burial, and services in someone’s memory, right after a death. But some decisions do have to be made quickly. If you express your preferences in writing, it will make things much easier for your executor and head off possible family disagreements, because memories can be faulty. Do as much as you’re comfortable with—but the more detail you provide, the better.
Paying for a funeral ahead of time, by contrast, is rarely a good idea. If you move, or the mortuary goes out of business, you may be out of luck and out the money you’ve paid. (See “The Prepaid Funeral and Its Perils.”)
Make a plan for hard-to-sell or hard-to-value assets.
Assets such as a valuable painting or collection can pose special problems for executors. There may be a very small or specialized market for these items, and it may take an appraisal by an expert in the field to get a value for them. There can also be questions about your wishes—did you feel strongly that they should be kept in the family, go to a museum, or simply be sold for the best price possible? Help everyone out by supplying clear directions and a list of appraisers or potential buyers if necessary.
Decide who gets items with sentimental value.
Family fights can and do erupt over little things just as easily as over big ones. Avoid these problems by specifying who gets what. Think about what might cause conflict, whether it’s an antique plate, a vase, souvenirs from family vacations, or whatever. Then spell out your wishes either in your will, in a “personal property memorandum” that goes with your will (in some states), or in an informal (non-binding) letter that you leave to your family.
Or maybe you want to give away some items during your lifetime—not only will this remove any doubt about who you want to have a certain object, but also gives you the chance to see the recipient enjoy your gift.
Think about compensation for the executor.
You may want your executor to be paid for all the time and work the job will require—but some executors, especially family members, are reluctant to accept payment. They may feel awkward about being paid for something that they see as a family obligation, or be afraid of stirring up resentment from other relatives (especially siblings).
If you want your executor to be paid but think he or she might forgo payment, there are ways to make it easier for everyone. For example, you could take your executor off the hook by leaving him or her some money in a separate bank account. Or if you name just one of your children to serve as executor, you could direct that the executor receive a slightly larger share of an account that you’re leaving all of them to split. That way the executor doesn’t have to claim compensation—it’s all taken care of. A further benefit is that inherited money, unlike money earned as compensation, isn’t subject to income tax.