Who Can Be Named Executor Of An Estate?

When it comes to estate planning, one of the most important steps is selecting an executor who will ensure that your wishes are carried out and your financial affairs are settled after your death. While many people choose a family member or friend to serve as an executor, it is possible to name a law firm or an attorney as the executor of your estate. This decision, however, comes with certain considerations and implications that you should be aware of.

Pros and cons of hiring a law firm as executor

Yes, a law firm can be named executor of an estate. Here are the pros and cons of hiring a law firm or an attorney to be the executor of an estate:

Pros

• Legal Expertise: Attorneys have a deep understanding of probate law and can navigate the legal complexities of the estate administration process. This can be particularly helpful if the estate is large or complex.
• Reduced Burden on Beneficiaries: The fiduciary is responsible for gathering estate assets, which involves visiting banks, calling pension fund companies, preparing tax returns, and retitling automobiles. An attorney acting as the fiduciary would take these actions, relieving the beneficiaries of learning a new process.
• Impartiality: An attorney serving as the executor can remain impartial and make decisions based solely on the best interests of the estate. This is important if there are conflicts between the heirs or beneficiaries.
• Liability Protection: By appointing an attorney as the fiduciary, the estate gains the protection of the attorney's professional liability insurance, providing an extra layer of security for the estate and its beneficiaries.
• Reduced or Eliminated Up-Front Cost: If the estate has liquid assets, an attorney can use the estate's funds to secure payment for costs and fees, without requiring a large deposit upfront.

Cons

• Cost: Hiring an attorney to serve as the executor can be more expensive than appointing a family member or friend. Attorneys typically charge a fee, which can be a percentage of the estate's value or an hourly rate.
• Potential Conflict of Interest: There is a possibility of a conflict of interest when an attorney drafts a will and designates themselves or another member of their firm as the executor.
• Ethical Considerations: Attorneys must obtain informed consent to be included as an executor in a will and cannot require the client to designate them as such.

It is important to carefully consider these pros and cons before making a decision about hiring a law firm or attorney as the executor of an estate.

Legal requirements for an executor

The role of an executor is to manage a person's assets after their death. This includes filing a copy of the will with the local probate court, paying off any debts, filing tax returns, and distributing probate assets to the beneficiaries. An executor should be someone who is trustworthy, financially responsible, and organised, and respected by the beneficiaries. They should also be in good health, live locally, and not have too many other responsibilities.

In the United States, each state has its own rules about who can serve as an executor. Some states require the executor to be a relative or resident of the state, while others do not. Many states impose special requirements on out-of-state executors, such as posting a bond to protect beneficiaries in case of mishandling of estate assets. Some states may also require the appointment of an in-state agent to accept legal papers on the executor's behalf.

Executors are often paid for their work, with the amount varying depending on state law and the will's specifications. The executor may receive a percentage of the estate value, an hourly rate, or a flat fee. The probate judge or court approval may determine the compensation amount. It is important to note that executors can decline the role if they feel overwhelmed or unprepared.

Attorneys can be appointed as executors and bring legal expertise, impartiality, and liability protection to the role. However, stricter disclosure rules and potential conflicts of interest may apply when an attorney serves as an executor. It is recommended to carefully consider the pros and cons before appointing an attorney as an executor.

Overall, the legal requirements for an executor vary by state, but the key qualities sought are trustworthiness, financial responsibility, and organisational skills to effectively manage the estate.

Executor compensation

Yes, a law firm can be named executor of an estate. Executors are often compensated for their work, and the amount may vary depending on state law and whether the will mentions compensation. In some cases, the will states the compensation, while in others, it is based on the state of residency of the will's author.

In states with reasonable compensation laws, the probate court determines executor fees based on past compensation rates in the area and the complexity of the estate. For example, if executor fees were typically 1.5% in the previous year, 1.5% would be deemed reasonable, while 3% may be unreasonable.

If an attorney is not named executor in the will, they must post a fiduciary bond and obtain probate court approval to sell real estate or personal property. Hiring an attorney as executor can provide liability protection for the estate and its beneficiaries through the attorney's professional liability insurance. Attorneys can also bring legal expertise and impartiality to the role, making decisions based solely on the estate's best interests.

Potential conflicts of interest

Naming a law firm as the executor of an estate is possible, but it is not recommended due to the potential conflicts of interest that can arise.

One potential conflict of interest is if the law firm also stands to benefit from the will. In this case, they would have a duty to act in the best interests of the estate, but their personal interests could influence their decisions. For example, they may favour their own interests by purchasing assets from the estate at a lower price than market value, or by hiring their own company to provide services for the estate at an inflated price. This type of conflict of interest can also occur if a family member is named as the executor, as they may also be a beneficiary of the will.

Another potential conflict of interest could arise if the law firm has previously provided legal services to the estate. In this case, the firm would need to be careful to avoid any breach of fiduciary duty, as they would have a duty to act in the best interests of both the estate and the beneficiaries. This could be challenging if there are competing interests between the estate and the beneficiaries.

Additionally, there may be concerns about the law firm's competence and experience in executing estates. Executors have a legal duty to carry out the wishes of the deceased as articulated in their will, and this often involves complex tasks such as collecting and distributing assets, managing finances and paying taxes. A law firm may not have the specific knowledge and experience required to effectively execute these tasks.

Furthermore, there may be potential conflicts over executor compensation and attorney fees if the law firm is also providing legal services to the estate. These fees can be significant, and it may be challenging to determine fair compensation for the law firm without creating a conflict of interest.

Finally, it is worth noting that conflicts within a family are generally not considered a strong enough reason to remove someone as the independent executor of an estate. However, if there is a substantial conflict of interest that directly affects the balance between the executor's official responsibilities and personal interests, the court can intervene and potentially remove the executor.

Executor responsibilities

Yes, a law firm can be named executor of an estate. Executors are often compensated for their work, and the amount may vary depending on state law and whether the will mentions compensation. The executor may receive a percentage of the estate value, an hourly rate, or a flat fee.

Being the executor of an estate comes with many responsibilities and can be time-consuming and emotionally draining. It is important to understand these responsibilities before accepting the role.

Executors are responsible for sorting out the finances of the deceased, including paying off any debts and filing tax returns. They must also distribute the remaining assets to the beneficiaries in accordance with the provisions of the will. This includes notifying beneficiaries, creditors, and other applicable parties about the person's death. Executors may also be required to make court appearances on behalf of the estate.

In addition, executors are responsible for identifying and collecting the assets of the estate, safeguarding and investing those assets, and disposing of any property left after paying off debts and distributing assets to beneficiaries. They should also review insurance policies on real property, household contents, automobiles, and other tangible assets to ensure adequate coverage during the administration process.

Executors should be trustworthy, financially responsible, organized, and respected by the beneficiaries. They should also be prepared to handle the emotional and administrative tasks involved in executing a will.

Frequently asked questions