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Friday, March 4, 2011

What Does an Executor Do?

Many times DIY Investor meets young families with children and substantial assets, and yet there is no will or other plan for the disposal of assets in the event of death. I ask the parents who will raise the children if something happens to them, and I get that look that tells me that anytime the question has crossed their minds they have quickly dismissed it. Estate planning work is, of course, the venue of estate attorneys; but every financial advisor needs to question prospective clients in the initial meeting on the subject of wills, trusts, and so forth.

This is one of those areas where many things can be done right; but, if the foundation isn't there, it is all for naught.

Referring clients to get estate planning work done by competent attorneys and pushing them to do it is, I feel, one of my primary functions. I know they don't want to do it. Thinking of guardians and executors of an estate is not fun. But it is important.

Along these lines, the New York Times provides an excellent overview of the difficult task of picking an executor in  "Choosing the Right Executor for Your Estate" by Deborah L. Jacobs. DIY Investor was especially interested in the qualities deemed necessary.  According to Howard M. Zaritsky, a Rapidan Virginia lawyer, "...the ideal executor should not only be honest and diplomatic, but also well organized, good with paperwork and vigilant about meeting deadlines.  His litmus test: Is this someone who always files income tax returns on time?"

The article goes on to mention that naming children as co-executor, which is frequently done, is not usually a good idea.

To me, this article is one that families should read, copy, and keep. It provides excellent background information before meeting with attorneys. Facing one's mortality and planning for the ongoing well-being of one's family is one of the most important functions parents can carry out.

From a completely different angle, the article is worth consulting in the event you are tapped on the shoulder and asked to be an executor.

1 comment:

  1. This is a thought provoking article. Choosing an executor isn't as much fun as other aspects of investing, but your point about the rest being all for naught if the foundation isn't there is right on the mark. This is an area that I know too little about, and I appreciate the link to the Times article.