Being called forth to perform family duties unexpectedly is a jolt to begin with. What if it’s something really technical, though, like being named as executor of a will? Don’t panic! In this blog we’ll cover what you should do, what the responsibilities are, etc.
But before we get into it… We are financial advisors in Morristown, NJ, providing financial advice for New Jersey residents as well as folks across the country. Before we get started, you may want to check out these financial planning blogs we’ve written:
How to get through probate in New Jersey
Filing your tax return: traps to avoid
Retirement Account Contribution Amounts – 2024 changes!
Do I have to pay taxes on an inherited annuity?
Let’s go!
What is the executor of a will?
An executor is named in a will to carry out the instructions provided by the decedent. As an executor of a will, your responsibilities may include tasks such as:
- Arranging the funeral and burial
- Distributing assets to the named beneficiaries
- Executing the final wishes
- Paying off any liabilities using the decedent’s assets
- Paying off any taxes owed
- Paying expenses such as funeral and legal costs
The executor is usually named by the decedent beforehand, if proper estate planning was done. If no executor was named in the will, one will be appointed by the probate court.
Are you paid for your labor?
Yes, executors are paid dues for their labor. It’s a significant contribution of time, as the process can drag out for months and even years, depending on the complexity of the estate.
How much do you get paid for being the executor of a will? The amount you are paid is dictated by state law. It is usually a percentage of the estate’s assets.
Here is a list detailing the breakout by state. For example, executors in New Jersey (our home state) are paid 5% of the first $200,000, 3.5% of the next $800,000 and 2% on any amounts over $1 million.
So should I panic?
It may have come as a surprise to be called to this role – but don’t panic!
- If the estate is small with clear instructions, it is usually not too much of a hassle to act as executor of someone’s will.
- You can always decline the role. There is usually an “alternative executor” named by the will. If this falls through, the court can always appoint someone else.
- If you need outside expertise (lawyers, financial advisors) to help you, it will be paid for by the estate.
Think about how hard or easy the job is likely to be. If the beneficiaries are likely to quarrel a lot, it could be a headache. For example, are the person’s children likely to argue over which funeral home to use? Are they likely to contest the will? Also consider your ability to access what you need. If you weren’t close with the person, it may be quite a bit of work to get access to the documents, beneficiaries, and even the assets themselves.
This is a big decision – don’t take it lightly. Think it over and ask questions before taking on the task of administering someone’s estate.
You don’t have to handle estate planning matters alone
We are financial advisors in Morristown, NJ serving the local community and beyond. If you have questions about how to invest or manage an inheritance you are receiving, how to retire, how to manage the financial aspects of your estate, or (like us) are just plain old Bruce Springsteen fans, reach out and send us a message.
Sources
O’Brien, Patrick. Executor.org. Executor Fees By State. https://executor.org/resource/executor-fees-by-state/