An estate executor plays a critical role in your estate plan, and choosing the right executor can reduce stress, prevent delays, and help ensure that your wishes are carried out. While executors are often family members, sometimes circumstances require someone outside of the family to take on the role. When choosing an executor outside of your family, carefully consider their qualifications, trustworthiness, availability, and age.

Quick Answer: Can You Choose an Executor Outside Your Immediate Family?

Yes. Common examples include a trusted friend, an attorney, a bank, a trust company, or another professional fiduciary. The person or institution must be willing to serve and must meet your state’s legal requirements.

What Does an Executor Do?

An estate executor manages and distributes a deceased person’s assets according to their will. An executor must complete organizational, financial, and legal duties to ensure the estate plan is followed.

An executor’s duties include, but are not limited to:

• Locating the original will
• Filing the will with the appropriate probate court, if required
• Identifying and securing assets
• Notifying beneficiaries and creditors
• Paying valid debts and estate expenses
• Coordinating tax filings
• Maintaining records
• Distributing assets according to the will
• Closing the estate

What Makes Someone a Good Executor?

Willingness to Serve

The first step is asking the person or institution to be your executor. If they are willing to take on the responsibilities, you can name them as executor in your plan.

Organization and Follow-Through

Executors will need to manage paperwork, including account records and court filings. They will also need to stay on top of deadlines and beneficiary communications.

Financial and Tax Awareness

Your executor does not need to be a tax expert, but they should know when to involve attorneys, CPAs, and financial professionals. Ideally, your executor will have a solid understanding of taxes and estate planning.

Impartiality

Your executor’s goal should be to follow your plan and your wishes, not those of your beneficiaries. If family conflict is a possibility, impartiality will be especially useful.

Availability and Location

The executor must have three crucial things to serve properly: time, health, and proximity. Because managing estates can be a complex process, make sure your executor has the time to carry out their responsibilities. Your executor should also be in good mental and physical health. Finally, it’s helpful for your executor to location-based proximity to your family and estate

Your Options When Immediate Family Is Not the Right Fit

If you do not have eligible immediate family to be an executor, there are still many options for you.

Examples for non-immediate family executors include:

• Extended family members such as an adult grandchild, niece or nephew, or cousin.
• A trusted friend.
• An estate planning attorney.
• A CPA or tax professional.
• A bank or trust company.
• A professional fiduciary.

Should You Hire a Professional Executor?

When a Professional Executor May Make Sense

• No trusted candidate within your immediate family or friend circle
• Beneficiaries are likely to disagree
• Estate includes a business
• Estate includes real estate in multiple states
• Estate has significant tax issues
• You want a neutral third party
• You want to avoid burdening family or friends
• You have charitable or special-needs planning goals

When a Personal Executor May Be Enough

• Estate is simple
• Beneficiaries get along
• Assets are organized
• Beneficiary designations are current
• The executor has professional support

Executor Candidate Comparison Table

Executor vs. Trustee: What’s the Difference?

An executor carries out instructions in a will, and a trustee manages assets owned by a trust. Wills and trusts can both be valuable parts of an estate, but they serve different purposes. Trusts offer more privacy and assets generally avoid probate, but they’re more complex and require active funding and maintenance during your lifetime. Some estates require both roles if they have both a will and a trust.

The same person or institution can sometimes serve both as an executor and a trustee, but the duties are not identical.

How Beneficiary Designations Can Reduce the Executor’s Workload

Ensuring that each of your assets has a beneficiary makes managing your affairs much easier on your executor. Not only do beneficiary designations help with administration, certain assets may pass outside of probate when properly titled or assigned. It’s likely that assets such as your retirement accounts and life insurance policies already have a listed beneficiary. However, your bank accounts and property should also have named beneficiaries.

Before passing, make sure your assets have a beneficiary designation including:

• Retirement accounts
• Life insurance
• Payable-on-death bank accounts
• Transfer-on-death investment accounts
• Certain jointly owned assets
• Assets titled in a trust

Beneficiary designations can override instructions in a will, so review them regularly.

How Executor Compensation Works

Executor compensation is not one-size-fits-all. It varies by state law, estate complexity, and whether the executor is an individual or a professional fiduciary.

Individual Executor Compensation

When your executor is someone you know, often their compensation is part of your estate. If your executor is a family member or friend, you can often leave them a percentage of your estate in your will. Some family or friends may waive compensation, but they are not always required to.

Professional Executor Fees

Professionals, such as banks, attorneys, CPAs, and professional fiduciaries may have different fee set-ups. Professionals may use fee schedules, hourly rates, percentages of estate assets, or a combination. Certain states may have guidelines on how little or how much your executor should be compensated.

Why Fees Should Be Discussed in Advance

If you pay a professional executor with a percentage of your estate, you will leave less to heirs. Discussing fees in advance helps with clarity and can avoid errors, delays, and family conflict.

Should You Name Co-Executors?

Under certain circumstances, your estate can have more than one executor. Naming co-executors has multiple people share the duties of an executor.

Potential Advantages:

• Shared workload
• Checks and balances
• Blend of family knowledge and professional experience

Potential Drawbacks:

• Slower decisions
• Disagreements
• Multiple signatures
• Different locations
• Possible confusion for beneficiaries

It is best to only name co-executors when their roles are clear and they are likely to work well together.

Always Name a Backup Executor

An executor may not be able to serve when you pass. Whether they declined, passed, moved away, or became ineligible, always name a backup in case your original executor cannot serve. If no named executor is available, the probate court may appoint someone under state law.

Questions to Ask Before Naming an Executor Outside Your Family

• Are they willing to serve?
• Are they legally eligible in your state?
• Do they have time to handle the role?
• Are they organized?
• Can they communicate clearly with beneficiaries?
• Do they understand your wishes?
• Could they have a conflict of interest?
• Are they comfortable working with attorneys and tax professionals?
• How will they be compensated?
• Should you name a professional backup?
• Where will they find your will, trust documents, account list, passwords, and advisor contacts?

What to Organize Before Your Executor Ever Needs to Act

Before you pass, there are several documents you should have organized and updated, including:

• Original will
• Trust documents
• Powers of attorney
• Healthcare directives
• List of financial accounts
• Insurance policies
• Real estate deeds
• Vehicle titles
• Business ownership documents
• Tax returns
• Digital account instructions
• Passwords or password manager access instructions
• Funeral or memorial preferences
• Professional contacts

How Wealth Enhancement Can Help

A Wealth Enhancement advisor may not serve as your executor due to potential conflicts of interest, but they can help you organize financial information, review beneficiary designations, and connect executor decisions to your broader financial plan. If you’re wondering how a non-immediate family member fits into your estate plan, contact a Wealth Enhancement advisor today.

Frequently Asked Questions About Choosing an Executor Outside Your Family

Can I Choose Someone Outside My Family as Executor?

Yes, in many cases. Your executor does not usually need to be an immediate family member, but they must be legally eligible under state law and willing to serve.

Who Can Serve as a Professional Executor?

Depending on your state and estate plan, options may include an attorney, bank, trust company, professional fiduciary, or other qualified institution.

Is It Better to Name a Family Member or Professional Executor?

It depends on your estate, family dynamics, complexity, and goals. A family member may know your wishes well, while a professional executor may offer neutrality and experience.

Can My Financial Advisor Be My Executor?

Often, a financial advisor will not serve as executor because of potential conflicts of interest. However, they may help coordinate your estate plan and support the executor with financial information.

How Much Does an Executor Get Paid?

Executor compensation varies by state, estate size, complexity, and whether the executor is an individual or a professional. Review compensation rules with your estate attorney.

What Happens if My Executor Refuses to Serve?

If your first-choice declines, your backup executor may serve. If no named executor is available, the probate court may appoint someone under state law.

Should I Name More Than One Executor?

Co-executors can share responsibility, but they can also create delays or conflicts. Consider co-executors only when they can work well together and their responsibilities are clear.

How Often Should I Review My Executor Choice?

Review your executor choice after major life events, family changes, moves to a new state, changes in wealth, health changes, or every few years as part of a regular estate plan review.

Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group.

This information is not intended to provide individualized tax or legal advice. Discuss your specific situation with a qualified tax or legal professional.

This article was originally published on 5/2/22 and has been updated.

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