When creating your estate plan, an important factor you will want to consider is who to appoint as the executor of your estate. This person will help ensure that the transition process of your assets goes smoothly after your death, and in accordance with your wishes. The role of the executor is a significant one so you will need to choose carefully. However, there are many misconceptions about what the executor of an estate really does, as well as whether or not they can take money from the estate as part of their role.
Here at Trust & Will, a leader in online estate planning services, we know how confusing it can be when trying to understand the many different terms and elements that go into your estate plan, including what the role of your executor looks like. We want to help alleviate the stress and confusion and help make your estate planning journey a smooth one. That is why in this article we will be answering the most common questions that tend to be asked in regard to the role of the executor within your estate plan.
Keep reading to learn the answers to the following questions regarding executors of estate:
What is an executor?
Before we discuss whether or not an executor can take money from the estate, you first need to understand what an executor is and what their role is within the estate plan. An executor is a trusted individual that you appoint to execute your estate plan after you pass away. This means that the person you choose to be your executor will be responsible for ensuring that the wishes documented in your estate plan are followed through.
Additionally, the executor will be responsible for being an active participant during the probate court process that will determine where assets are settled and how they are to be transferred to their new owners. Your executor will be present during this process to make sure everything adheres to your stated wishes. Additionally, your executor will often be tasked with fielding questions from your family including notifying the beneficiaries listed in the will. The executor will be responsible for keeping all the beneficiaries up-to-date on the status of the probate court process.
Often, your executor will also be responsible for overseeing your assets until they are passed on to their new owners. For example, your executor will maintain the upkeep of your home until it is passed on to its rightful owner.
Due to the importance of this role within the estate process, it is important to ensure that you put careful thought and consideration into who you choose as your executor of estate. You will want to be sure that this is someone you not only trust, but someone you deem will be fair and diplomatic along the way.
Because appointing a trusted executor is such an important decision, some individuals opt for a professional fiduciary. This is a person whose job is to make decisions on behalf of another individual, often in a legal or financial capacity. So if you’re not comfortable appointing a family member or friend, you could consider going this route.
What is an estate account?
The second consideration you will need to understand before diving into the issue of money is regarding an estate account. an estate account is a bank account that the executor will be required to open upon the deceased’s passing. This account will handle all financial assets that the deceased had upon their death. The assets will remain in this account until the probate court process is completed, at which point the assets will be passed on to the named beneficiaries.
Can your executor take money from the estate?
It is a common misconception that the executor of your estate has total control of the assets within your estate once you pass away, meaning that they would have total control to take a portion of the estate for themselves. However, this is not the case
The executor is not the owner of the estate, meaning they do not have rights to the assets within the estate. They are however permitted to be paid for their duties. This does not mean they are free to take whatever sum of money they wish from the estate account. Executors are required to document their duties and the hours they have put into their role as an executor and submit the request for payment to be approved by the court. By submitting the requested paperwork to the court, you are able to keep the charges the executor makes transparent to all parties involved so that everyone is made aware of all expenditures on behalf of the estate, and the reasoning behind them.
It is these charges that executors make for the time they put into the probate court process that has led to the misconception that executors can take whatever they want from the estate. Although there are horror stories of executors taking advantage of their role, this is often not the case as the expenses charged to an estate have to be documented, many hours are put into the duties of an executor. To help ensure that a nightmare story does not happen to your family, make sure to choose your executor wisely.
Can executors also be beneficiaries?
The answer is yes, and it's actually fairly common. The person you feel is best for the role of executor of your estate can also be a named beneficiary. It makes sense, too, because executors are better able to perform their duties when they are familiar with the deceased and their financial situation. In this situation, the executor of the estate will be entitled to their share of the assets, and can be paid for their time as an executor. If you want your child to be the executor of your estate, they must be over the age of 18.
Picking the right person to be the executor of your estate can be a stressful decision. however, the creation of your comprehensive estate plan does not have to be. At Trust & Will, we’re here to help keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning options today!
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