Most people name a family member, usually an adult child, to serve as their executor. However, that’s not always the best decision. A professional executor can make the task more efficient.
Deciding who to name as the executor of a will, is often a challenge. Should it automatically be a spouse or a family member? It’s completely up to the person making the will.
Executors are legally responsible for several tasks, including identifying everything in the estate, collecting all the assets, and paying the debts and liabilities. Finally, the executor makes distributions to beneficiaries, in accordance with the terms of the will.
nj.com’s recent article on this topic asks “Should I choose a bank to be the executor of my will?” The article explains that there are a few advantages to designating a bank as an executor.
Banks are in the business of managing money and are experienced in administering estates.
This typically means they may be able to settle the estate more quickly and efficiently than a family member.
Banks have policies and procedures in place to make certain that the assets are protected from mismanagement and theft.
Banks are impartial parties that cannot be influenced by beneficiaries. This can be a big headache for a family member asked to be executor. Relationships can deteriorate over the enforcement of the terms of a will, especially when one sibling is named executor and has the authority over the administration of the estate—perhaps to the detriment of her brothers and sisters.
One distinction from using a family member is that while an executor is entitled to compensation, family members frequently waive this. However, banks charge fees for serving as executors, and these fees may be higher than you’d expect.
For example, the bank’s fee might be up to 4% of the first $100,000, then decrease incrementally until it's just 0.5% of values over $9 million.
Talk with your estate planning attorney about your options for naming an executor. Is the estate large enough to meet the minimum fees charged by the bank for this service? Are there any other professionals who might be good candidates? This is an important responsibility that needs to be carefully considered.
Reference: nj.com (November 5, 2019) “Should I choose a bank to be the executor of my will?”