Retirement & Financial Planning Report

When you draft your will, you should name an executor. It will be up to your executor to handle all the paperwork after your death and the distribution of your assets.

If you don’t expect any tax or family problems with your estate, you can name a family member as executor. A surviving spouse may be too overwhelmed by grief to deal with everything but a grown son or daughter who is conscientious and lives nearby might be a good choice.

However, if you name a relative as executor, that person may face pressure from other heirs. Family disputes might erupt.

One possibility is to name an independent party as your estate’s executor, such as a bank trust department or perhaps an independent trust company. That comes at a cost but it may be worth it.

One reason is that an executor assumes a fiduciary responsibility that may be better left to an institution. An executor must file an estate tax return, pay any estate tax due, and distribute the estate’s assets.

If the tax return is later audited and more tax is due, the executor is legally responsible; other heirs may not be willing to give some of their money back to pay the tax. When you name an institution you shift that liability away from a family member.