Helping clients discover their executor

Who can be trusted to complete your affairs when you are gone? This is the question all financial advisors should ask, but they often leave that question to an estate attorney.

Even though financial advisors do not provide legal counsel, our relationships with clients make it easier to discover estate planning concerns and convey them to an attorney. In a time where there may be some family transitions, the advisor may have some level of familiarity with the family dynamics instead of addressing these topics coldly.

You have probably watched your clients' lives flourish, and their children grow; now it’s the time to ensure their legacy is fulfilled. Here’s how to help clients evaluate suitable candidates and select the best executor.

Discuss potential executor candidates

It can be difficult to start the conversation about who the executor should be. Starting with small, meaningful steps can help transform this conversation into more complex estate questions.

For example, during a meeting, ask if your client has designated a legacy contact on their phone. From there, you can transform the conversation into reviewing beneficiaries on their accounts. Ask questions such as, “Do you still want your ex-spouse as a beneficiary?” or “Are we missing someone as a beneficiary?” Once the initial estate planning conversation has started, ask the client to write a short list of potential candidates to be their executors.

If your client has someone in mind, prepare them to review whether the person is still a good fit. Here are some questions to ask:

 

1. Will their distance (physically or emotionally) make it difficult for them to be an executor?
2. How is your relationship with your executor? Do you have open conversations?
3. Has the chosen person died or become disabled?

 

Creating a financial family map with clients is a great way to learn about their relationships, who is essential to them and any existing family conflicts. If your clients are still determining the executor they have in mind, you can refer them to stories they have illustrated or concerns they have mentioned.

Share factors to consider

Discussing potential executors is like saying, “Mirror, mirror on the wall, who is the fairest of them all?” But choosing someone goes beyond just looks.

Clients frequently consider only one factor: trust. Beyond trust, the person must have the best temperament, communication and skills to do the job. Being an executor isn’t a sprint; it’s a marathon. Having the right person in place can save your client’s beneficiaries emotional pain, money and time. Here are some factors to brainstorm with your clients.

• Location: For practical reasons, it's usually wise to name an executor who lives near you. It will be more challenging to handle estate matters from a distance. However, if the best person is far away, there’s no law against naming them as executors. Although every state allows out-of-state executors to serve, be aware that many states have special rules for out-of-state executors.

 

• Age: Since many people tend to draft only one will during their lifetime, many things can change. While naming only one executor is needed, it’s essential for clients to name one additional younger executor who is likely to outlive them. This way they have a backup person in case your client’s first choice of executor predeceases them or chooses not to serve.

 

• Availability: People’s obligations and priorities change. For example, if a client’s executor recently had a baby or is busy caring for an aging parent, you might encourage the client to choose another person to be the executor.

 

• Family: Clients often feel safe knowing they have a spouse or child listed as an executor. However, closing someone's estate can cause grief, anger and tension to surface. It is essential to communicate the possibility of unrest and what that could involve.

 

• Minor children: The executor doesn’t need to be named guardian of minor children. But if a guardian exists, your client should consider how these two people work together in the child's best interests.

 

• Co-executors: Even though estate attorneys can name multiple people as executors, this can further complicate and prolong the estate process. Since all executors must agree to all decisions made on behalf of the estate, coordinating the administration process can become more complex.

 

Consider a third-party executor

Family dynamics can be complicated. If your clients have a blended family or children who don’t get along, it might prevent your executor from performing their duties diligently. It may also cause conflicts that culminate in arguments or costly court battles — suggesting appointing a professional fiduciary who can serve as executor, trustee or conservator to fulfill the client’s wishes and keep the process running smoothly from any potential family conflict.

In addition to complex family dynamics, here are some other factors that support hiring a professional.

 

1. Family members live far away.
2. The estate is complex.
3. There are minor or disabled children.
4. Less legal responsibility of the executor.
5. Assets or beneficiaries are out of the country.

 

Whether a client chooses a family member or a professional, ensure that your client’s executor knows that they have been appointed, understands their role and is willing to accept the duties. Meeting with your client, the executor and their estate attorney to share information about the estate and your client’s wishes would be imperative.

Creating an ‘in case I die’ file

No matter who your client chooses, briefing that person on their essential estate and financial documents is important. Having an “in case I die file” is a guide for the executor to do tasks efficiently, such as making an estate inventory list, making distributions, filing final tax returns and paying off debts.

The file should at least include critical financial documents, account information and passwords, and estate planning documents. As you put the file together, check for any missing pieces to their estate plan. For example, the client may have educated you about their life insurance plan but hasn’t discussed prepaying their funeral costs or educating you about how they prefer their burial. Remind clients that although no one wants to think about their death, preparing for their passing with an “in case I die” file is an act of love.

Ultimately, the client decides to choose who their executor should be. However, helping clients navigate the executor conversation and preparing their financial documents can alleviate clients’ anxiety in the estate planning process.

 

Danielle Miura, CFP, EA, is founder of Spark Financials in Ripon, Calif. Contact her at [email protected].

 

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