Selecting an Executor
What Is An Executor?
An executor is a personal representative who acts for you after your death. You nominate or designate an executor in your will to settle your estate. The person chosen will act in your place to make decisions you would have made if you were still alive. An executor's responsibilities typically last from nine months to three years (although, an estate may remain open for several years because of will contests or tax problems).
The functions of an executor are varied, but generally your executor:
- Locates and probates your will
- Inventories and collects your assets (and sells them if necessary)
- Pays legitimate creditor claims
- Pays any taxes owed by your estate
- Distributes any remaining assets to your beneficiaries
Your executor may be entitled to a fee from your estate for services rendered.
What are the Duties of an Executor?
Your executor acts in a fiduciary capacity.
This means that he or she must act exclusively in the best interest of the estate, and exercise a high degree of care at all times. Additionally, your executor is under court supervision.
Some states require executors to post a bond, which is later paid back to the executor from the estate (though you may be able to waive this requirement through a will provision). In addition, your executor is personally responsible for ensuring that all the proper tax returns are filed and that any taxes due are paid. Finally, your executor is accountable your beneficiaries and may be required to file an Account with the court upon completion of his or her duties.
How do You Select an Executor?
Your choice of executor is a very important one.
Ideally, you want someone you can trust, who has a close relationship to your family, who has some understanding of tax laws, and who has a keen sense of business (especially if you are a business owner).
Oftentimes, family members or close friends are nominated without consideration to the critical factors that should be considered in selecting an executor where a corporate executor may be a better choice.
Some of the attributes you should look for in a good executor are:
- Ability to serve
- Willingness to serve
- Technical knowledge
You can name multiple executors to oversee different aspects of your affairs. However, co-executors may result in an increase in paperwork and a slowdown in the probate process.
What Does a Corporate Executor Bring to the Table that an Individual is Generally Unlikely to Bring?
In terms of technical knowledge, the corporate fiduciary has investment knowledge, trust administration knowledge, and estate administration knowledge.
Further, as a disinterested (though not uninterested!) third party, the corporate fiduciary is naturally impartial. In terms of permanence and accountability, the corporate fiduciary provides continuity of administration (important in particular for trusts that last for generations or in perpetuity) and generally carries insurance as a cost of doing business and otherwise has the financial resources to make a claimant whole. In addition, a corporate fiduciary carries with it the benefits of continuity of administration, corporate oversight, security for bank deposits and custodial investment assets held by the corporate fiduciary, protection from fraud and embezzlement, strict confidentiality standards, ability to value unusual assets, and provide post-mortem tax planning.
Cost Effectiveness Analysis
Where the family member usually has no knowledge and will need to hire professionals to coordinate the work, the corporate fiduciary already possess most of this organizational structure to handle trust administration and estate settlement.
In addition, corporate fiduciaries often have strategic partnerships with specialists to manage real estate and closely held business interests. Because a corporate fiduciary is responsible for all of these duties, coordination is built in and, depending upon the complexity of the assets and administration, naming a corporate fiduciary may be far more efficient and less costly in the long run. There are many instances where family members tried to settle an estate or run a trust, only to decide later that things have run amok. At that point, it becomes a vastly more expensive process to right the wrong turns made by those less experienced.
When Might a Corporate Fiduciary Be Less Effective than a Family Member?
When the estate is relatively small, family conflicts are minimal, and there is someone able and willing to assume the responsibility.
Also, when most or all assets are in joint name with the surviving spouse or children, or when the surviving spouse is the sole beneficiary and no stepchildren are involved, or if the decedent's only child serves as sole fiduciary, for example, as the executor of the estate, and that child is also the sole beneficiary. Even under these circumstances, however, numerous technical issues must be considered, and the fiduciary is still personally liable for his or her actions or inactions.
What If You Don't Leave A Will?
If you leave no will, if you do not name an executor in your will, or if your executor refuses or fails to serve, the probate court will appoint an administrator or other type of personal representative, usually in accordance with state law that establishes an order of priority for appointment. An administrator performs many of the same functions as an executor but has much less power and authority. If this happens, you have no say about who will manage your final affairs.
Important Legal Disclosures and Information
The PNC Financial Services Group, Inc. (“PNC”) uses the marketing name PNC Wealth Management® to provide investment and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds through its subsidiary, PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and to provide specific fiduciary and agency services through its subsidiary, PNC Delaware Trust Company or PNC Ohio Trust Company. Securities products, brokerage services, and managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and member of FINRA and SIPC. Insurance products may be provided through PNC Insurance Services, LLC, a licensed insurance agency affiliate of PNC, or through licensed insurance agencies that are not affiliated with PNC; in either case a licensed insurance affiliate may receive compensation if you choose to purchase insurance through these programs. A decision to purchase insurance will not affect the cost or availability of other products or services from PNC or its affiliates. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”). Investment management and related products and services provided to a “municipal entity” or “obligated person” regarding “proceeds of municipal securities” (as such terms are defined in the Act) will be provided by PNC Capital Advisors, LLC, a wholly-owned subsidiary of PNC Bank and SEC registered investment adviser.
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Important Information about Procedures for Opening a New Account
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What this means for you: When you open an account, we are required by Federal law to ask for your name, street address, date of birth (for natural persons) and other information as required to identify you. This may include a request or requests for confirmatory information such as presentation of your driver’s license and/or other document(s).
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