Is Being an Executor a Badge of Honour or a Hospital Pass?
When choosing a family member or friend as your executor it can often be perceived as an honour, however most of the time people don’t realise the responsibility that comes with it. When you’re writing your Will, choosing your executor is one of the most important decisions you’ll need to make. As they are accountable for following your wishes to a T, understanding what’s involved in the process and the personal financial risk they’re responsible for can make a world of difference. In this blog, we’ll explain the remit of your executor, the things you should consider before choosing yours and the different options available to you.
Your executor’s responsibilities
Your executor’s main responsibility is to follow the instructions laid out in your Will once you pass away, and make sure all of your stuff ends up with the people you intended; this process is referred to as administering your estate (a.k.a. estate administration).
Here are just some of the tasks your executor will need to do:
applying for probate from the Supreme Court (this is to validate the Will and get permission from the Court to administer the estate);
identifying, securing, collecting and valuating your assets;
advertising for creditors;
finding and contacting your beneficiaries;
paying any outstanding debt & expenses;
claiming insurance or any entitlements;
closing bank accounts, transferring ownership of joint assets, and cancelling any credit cards or subscriptions;
completing an end of life tax return; and
distributing all the assets to the beneficiaries in the Will.
To pick a professional executor or not, that is the question!
Though some tasks are easier than others, having a high level of comfort dealing with finances, accounting and legal processes is going to be handy. It certainly isn’t unusual to choose a family member or friend as your executor assuming the process will cost a lot less than appointing a professional. This thinking isn’t as clear cut as it seems; 95% of non-professional executors end up hiring legal support to help them through the process, though rates will vary you could estimate $400 -$600 per hour. In some cases, these rates can mean that the end cost worked out to be a lot more than using another professional body such as a trustee company like Perpetual Guardian. Other than the costs another big difference between selecting a trustee company and a personal friend or family member is that a trustee company takes the financial liability risk rather than someone you care about. Put simply, if there is a mistake made that negatively impacts beneficiaries then the executor may have to front up with the dollars to cover any deficit. Trustee companies are insured against this, unlike the rest of us.
What are my options?
You can nominate anyone you want as your executor whether it’s your spouse, your child (18 or over), a trusted friend/colleague or a professional. Whomever you choose you’ll want to make sure they’re aware of what’s involved and that they agree to take on the responsibility. Your chosen executor will have the right to hand over the responsibility if they don’t want to, or cannot perform the duties. If that happens you could end up with someone you wouldn’t have wanted. To reduce the risk, having a conversation is a good start.
Someone you know
If you choose someone you know there are a few things you should consider:
Age and health: When choosing someone older than you or someone who is unwell, there is some risk of them not being around or not being sound enough to administer your stuff when you pass. If that’s the case someone else will need to step in and it might not be a person you would have wanted.
The skills & time: Unless your executor knows what they’re doing, the tasks involved aren’t particularly straightforward, and they certainly can’t all be done in one day. If you’re choosing someone close to you consider whether they will have the time and the capability to do what they need to.
Impartial and comfortable interacting with others: Your executor will need to interact with all sorts of people like lawyers, accountants and more importantly your family and the beneficiaries in your Will. Choosing someone who is impartial and capable of dealing with a variety of people will make it much easier, especially if there’s the possibility of conflict or existing disputes within the family. It’s also not uncommon to see executors named as beneficiaries in the Will so impartiality is especially important.
Your relationship: Many people default to appointing their spouse or their children as executor because they’re likely to know and trust them the most. Although they may seem best suited for the role, it’s important to consider that in this crucial time they may not be in the right mindset and might need some time to grieve.
A professional
Appointing a professional trustee company such as Perpetual Guardian or an advisor like a lawyer or accountant can be a good idea;
They’re experts in their field
Unlike a lawyer, a professional trustee company actually takes on the financial liability if a mistake is made, rather than it falling on someone you care about who may be less experienced.
Professionals are also impartial which is particularly good during a period when emotions might be running high
Consistency, experience and availability also help with a quicker less stressful process
You can appoint an advisory trustee who will work with them to ensure your wishes are followed out the way you would have wanted.
Choosing what’s right for you
Now that you have a better understanding of what’s involved in being an executor, hopefully, you’ll be able to determine who is best suited for the role and whether you want to be tasked with the responsibility for someone else.
At Footprint, through our trusted partnership with Perpetual Guardian, we offer a unique rewards program designed specifically to reduce probate and estate administration fees while also saving your family from the responsibility that comes with being an executor. To learn more about how you can save on estate administration fees through Footprint Rewards explore our Will packages online or get in touch with us today!
