What makes a good Executor?

By |2022-06-29T15:44:12+10:0029-6-22|

One of the most difficult choices to make when developing your end-of-life plan is deciding who to appoint in the various roles that need to be taken on in your absence.

My experience is that for some people this decision comes easily as they already trust and rely upon one or two key people in their lives, both personally and in a financial or business sense. Many people consider appointing an independent person to take on these roles, particularly those wishing to provide distance between the executor and the emotive, anxiety-producing element of standing strong in the face of family disputes, and/or those with potential to have complex estates. However, for others the cost of an independent professional is not justified by the size of their estate. Of course, there are alternatives – one of which is to empower those you trust in the knowledge they will receive support from professional advisers as/when needed.

Roles

Executor: Also called Legal Personal Representative, is the one (or up to 4 people) who makes decisions surrounding how your ‘deceased estate’ is dealt with – funeral arrangements, debt collection, securing assets, resolving disputes, and ultimately distributing the gifts you have made (among other things).

Beneficiaries: These are the people you have named in your Will who are to receive the gifts you have to give.

Guardian: Those you entrust with the care of your children, who ought to work well with those who control the finances (or be the same people).

Trustee: The trustees are the people you choose to look after the finances in the longer term (for example, when there are children who are too young to handle the inheritance themselves, or for those in need of a more advanced trust structure, for managing complex business issues or larger inheritances).

Engaging a Professional

There are many issues to take into account when deciding who to appoint to these important roles. For the purposes of this article, we have highlighted some key considerations when thinking through the role of an Executor. Each of these decisions is personal to you and your circumstances. We recommend that you invest the time to talk through the issues with an experienced professional, so that we can guide you to make the right choice for you and those you leave behind.

Key Considerations

  1. Who comes to mind first? Are they ready to take on the responsibilities when the time comes? This includes gathering all of your assets, debts, making distributions (short-term and final), engaging with accounting professionals… and a lot more.
  2. Determine if that person is likely to be ready, willing and able to get your estate administration underway and finalized without delay (not letting their own grief result in poor communication, increased costs and lengthy time delays).
  3. What is the size and complexity of your estate? Complex business structures, taxation or legal issues suggest a professional appointment may be justified.
  4. Is there a real potential for fraught relationships to be exacerbated by the appointment of one and not the other person?
  5. Will the burden be too great on a particular person, in the knowledge that they may be overwhelmed handling the personal impacts on them from your death? A solution to this can often be to nominate the first desired person, with a planned ‘reserve person/s’ if the first is too overwhelmed to accept the responsibility.
  6. A trustworthy and competent financial decision-maker is, without doubt, a necessity.
  7. Are you comfortable telling your appointed people now? An agreement to take on this responsibility is important and avoids last-minute problems.
  1. Are there one or two trusted family members/friends who can handle the administrative pressures, and simply delegate the larger more complex tasks to an accountant or legal team?
  2. What accountability measures are in place? The use of more than one person can create complexities in the necessity for each to sign and authorise transactions, however more often than not, this accountability can have a twofold benefit – support for the decision-makers and keeping relevant people informed.
  3. Do the people you trust work well together? Or is forcing them into a joint role likely to exacerbate frictions and lead to disputes/delayed resolutions? It might seem ‘fair’ to appoint the surviving step-parent and step-children, but is this realistically a viable solution?
  4. What locality are people in? Is it better to appoint two people in the same city or should you consider the third member of a trio of siblings to ensure that two do not overrule the wishes of the non-appointed sibling?
  5. Are those you want to appoint not only skilled at the administrative side of things, but also have an understanding of the emotional intelligence needed during a time like this?
  6. Is an emotional connection to you or your loved ones important at this time – or is it appropriate to remove the decision-maker from the dynamics of the family.
  7. Do you have particularly important family heirlooms, or non-valuable items that are emotionally important to those you leave behind? Perhaps you can leave a detailed wish on these items, removing them from the discretion of the Executor and relieving them of an arduous division.
  8. Opportunities to simplify mechanisms/powers of the Executor can reduce unnecessary complexity in an estate, but should be weighed carefully with a need for objective, independent assessments. For example, some methods of valuation may suffice to satisfy all involved, whilst others will need more detailed and objective review.

So, take a moment to consider the above. Then commit an hour of your time to invest in a good plan that will relieve the pressure on those you care about, when their grief is most acute.

Are you ready to develop a clear and considered Estate Plan?

Contact Tammy Parsons, Senior Associate at Nicholsons Solicitors at trp@nicholsons.com.au or call (07) 3226 3944.

Think Wills and Estate Planning. Think Nicholsons.

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