Selecting Professional Executors for Your Estate
Many Baby Boomer aged clients come to me needing to update existing wills which have become terribly out of date as their children age out of needing legal guardianship and the size of their estates become more significant.
A question they frequently wrestle with is who should be named Executor/Co-Executor of their estates.
They know that they each want to serve as the executor of the other’s estate, but a dilemma they often wrestle with is who should be named as a third party Executor/Co-Executor, a role only necessary if and when something happens to both of them.
Often, they choose to name a relative or close friend. But if that’s not an option, people generally ask me about the pros and cons of selecting a law firm, bank, or financial planner, etc. to fulfill this role.
Two big questions I am frequently asked are (a) whether this is a good idea, and (b) what will it cost the estate. The answers vary by state and by situation, but here are some good general guidelines:
- Trust companies, trust departments of banks, and individuals, called professional fiduciaries, can serve as the executor of your estate. There’s no up-front fee for nominating an institution or professional to serve in that capacity. But you need to be aware that they will charge the estate a fee for their services if they are appointed to serve after both of you are deceased.
- Often, these fees will be a percentage of the estate. If your estate goes through Probate, your executor is awarded statutory fees based on state law, which are usually a percentage of the value of the estate.
- Attorneys sometimes serve in this capacity, but, at least in the state where I practice (California) there are strict rules about doing so. These rules were written to protect against unscrupulous lawyers writing themselves into their client’s documents in order to generate future fees.
- Likewise, financial advisors often cannot serve due to conflict of interest rules in their companies, though some can.
My best advice is to ask your local bank or financial advisor what their fees would be for this service, or better yet, if they can recommend anyone in your area who could serve you in this capacity.