When we sit down with clients to discuss their new Wills, one of the first questions we will ask is “who would you like to be your Executor”? For some clients, the answer is usually straightforward – their surviving spouse, and in default, a relative, close friend, professional advisor or their children (subsequent to them attaining a pre-determined age). For other clients, the choice is not so straightforward as they may have little by way of extended family in Australia or may not want to ‘burden’ those who are or their friends with the responsibility of administering their Estate. In this blog post, we will use the ‘5 Ws’ – who, what, where, when and why – to explore some important considerations that you should make in choosing your Executor.
Who can act as an Executor?
At a very basic level, the only requirement for your Executor is that they are an adult with legal capacity. They can act solely or jointly, with a maximum of four Executors permitted to act at once. You can appoint as many alternate Executors as you like, so that there can be a ‘Plan A’, ‘Plan B’, ‘Plan C’ and as many subsequent back-up plans as suits you. The Executors can receive a portion of your estate as well as holding other roles in accordance with the provision of your Will, such as being a Beneficiary and the Guardian of infant children. Often your executors are the same people who you have appointed as your Attorney(s) during your lifetime.
What skills does an Executor need?
There are no specific skills or qualifications that an Executor needs and they can come from any career background and all walks of life. There are ‘soft skills’, however, that make some Executors more effective in their roles than others. These include:
- The ability to compromise with other Executors, particularly where they are working alongside siblings;
- A willingness to seek (and take) advice from professionals such as accountants and financial planners on matters such as tax returns and the investment of trust monies;
- Good record-keeping;
- Good time management to ensure that the application for Probate and distribution of assets are dealt with promptly;
- Even-handedness when dealing with beneficiaries and resisting “taking sides”; and
- Honesty, as it is the duty of an Executor to not engage in self-dealing (e.g. purchasing property from the Estate at under market value without beneficiary permission)
Where should your Executor be located?
While an Executor can technically reside anywhere in the World, it is much more practical to have your Executors living close to you and to the assets with which they must deal following your death. We would recommend that you appoint Executor(s) living in Victoria or at least in Australia. In the circumstance where you would like to appoint someone who currently lives overseas, we recommend appointing them jointly with two other Executors who can act by majority in their duties locally. If the third Executor is still living overseas at the time of your death, they can also decide not to apply for Probate and to reserve or to renounce the role if acting as Executor will be too inconvenient or simply “not work”, at least when probate is being applied for. It is possible for an executor to be able to “come on board” at a later date by reserving the right to do so as opposed to renouncing such right. The current COVID-19 pandemic provides a graphic illustration of where the postponement of such an appointment would make sense
When should an Executor take on the role?
Some of our clients choose to appoint their children as alternate Executors subject to them attaining a certain age. This may be the minimum age at which a person can act, being eighteen, or another age where they feel that their children will be capable of managing the Estate’s affairs. We recommend that the age at which your child can act is consistent with other parts of your Will, such as the age at which your child will receive their inheritance or be entitled to access the capital of a testamentary trust. A popular choice for our clients is the age of 25, when most children would have finished their studies and (hopefully!) have the maturity to manage an Estate. If you are appointing minor children as alternate Executors (subject to them attaining an age over 18 years), we recommend that you carefully consider whether another alternate is needed in the event that your first choice of Executor is unavailable and your children are still under the age of 18 or the age which you have nominated for them to attain prior to so acting.
Conversely, as discussed in our blog post regarding changing your Will, consideration should be given to whether your choice of Executor is likely to predecease you due to their age. Many clients who had appointed their parent(s) as Executor(s) under a previous Will find that their parents predecease them or are “unable or unwilling” to so act. If you do wish to appoint an Executor older then you, we recommend including an alternate Executor who can act should your first choice not be able to “step up”.
Why should you use a professional as well as, or instead of, a family member or friend?
If you feel that you do not have anyone close to you who meets the above criteria in terms of qualities, age or location, you may choose to appoint a Trustee company or another professional (such as a solicitor or accountant) as your Executor or alternate Executor. The advantage of such an appointment is that these professionals are impartial and removed from any family conflicts which could cloud the judgement of a lay Executor. The knowledge and resources of a professional will also streamline some elements of the process; for example, Trustee companies (both public and private) have in-house or preferred solicitors who can make the application for Probate of your Will.
On the other hand, professionals charge a fee for their work, which may be an hourly rate, a set scale, or a percentage of the Estate. Some solicitors will also charge commission on top of their rate for acting as your Executor. You must consider whether such fees are appropriate and proportionate in the context of the size of your Estate. The arms-length of a professional Trustee also means that they are not sentimental about your Estate and may liquidate assets that you had hoped would be retained in a Trust, such as real property, in favour of their preferred investments. It is up to you whether this approach accords with your wishes.
In any event, the question of remunerating your executor (lay or professional) needs to be considered as they are able to make application to the Court to be compensated for their “pain and troubles”. The expense associated with such an occurrence should be avoided by ensuring that all parties agree on the circumstances surrounding such an appointment.
Struggling to make a decision regarding your choice of Executor, or any other decision relating to your Will? Making a Will can seem overwhelming, but it need not be. With nearly fifty years’ experience in Estate Planning, Tony Kelly can provide you with the guidance you need to make an Estate Plan and the legal framework to implement your wishes. Contact him today to arrange a no-obligation meeting or videoconference.