You’re a step ahead of the pack if you’ve created a will or trust. Don’t stumble at the finish line by naming the wrong executor or trustee.
See also: Reasons to reject an inheritance.
Follow these five rules to ensure your wishes are fulfilled.
1. Expertise helps, but common sense is just as good. You don’t need a Wall Street whiz to act as your executor or trustee. But you do need a person who knows when it’s time to involve an expert. “You need someone with good, basic business sense, and if you have a trust, I prefer someone who’s going to be conservative in managing the trust’s money,” says Thomas Taneff, an estate-planning lawyer in Columbus, Ohio. “Choose someone who has good judgment and common sense. I like people who aren’t afraid to research and ask for help, not know-it-alls who think they don’t need help."
2. Make sure your pick will be around to act. “Take into account the person’s age and health and the likelihood of that person being around to administer your estate,” advises Dave Heilich, a CPA and wealth planner at Brown Smith Wallace in St. Louis. “Obviously, an executor or trustee has to outlive you, so you wouldn’t want to name your brother or sister if they’re your age or older.”
Every estate-planning expert has faced an executor or trustee who was unavailable when needed — whether because of disability, distance, or death. That’s why they harp on naming backups. “I see people name their parents or an old uncle because he used to work at a bank,” says Debra L. Morrison, a wealth manager at Trovena LLC in Lincoln Park, N.J. “That’s fine, but a trust has to include successor trustees.”
You can name a successor yourself, allow your executor or trustee to name a successor, or designate a corporate executor or trustee.
“We always have a corporate trustee as final backup,” says Heilich.
3. Know when to use — and avoid — corporate trustees. Speaking of corporate trustees, there’s healthy debate over whether banks or financial services firms are a wise choice. “The advantage is that as long as that business is around, it can’t outlive the trust,” says Heilich. “But you’ll pay corporate trustees more than an individual trustee, and they can be impersonal. You could also work with different people over time. And since they’re businesses, sometimes corporate trustees are more inflexible because of increased liability and the fact that they must answer to shareholders.”