In the state of Virginia you can choose any adult to be an executor of your estate. If that person is not a resident of the state of Virginia, you will probably need to appoint someone who is a resident of Virginia as a ‘co-executor’. The person you pick might need to post a bond. Posting a bond means that the person will need to get an ‘Insurance policy’ to cover at least 1.5 times the value of the estate so the beneficiaries can be paid in case you do something wrong. The insurance company will require that the person posting the bond have a clean credit rating with no bankruptcy filings in the past. The actual requirements are up to the insurance company. The requirement to post a bond can also be waived in your Will, so it is important to look at that when your Will is being written.
So who should you choose? The law says you can pick any adult. That’s a lot of options.
Typical Choices for Executors:
- One of the heirs: Most common, by far. I would say in about 90-95% of Wills I draw up, one of the heirs is named as the executor. But that can be cringeworthy if the decision is based on something like, “she’s the oldest” or “I don’t want his feelings to get hurt.” If you are going to go this route, choose the heir that 1) has the most business savvy; is organized, knows something about taxes, or has a support system to get answers and 2) has the best communication skills. If you name an executor that fights constantly, you don’t want that person in control of your assets.
- All of the heirs: “We have 4 kids and we want them treated equally.” As a general rule, three or more co-executors will significantly delay the probate process. And it doesn’t take a lot of imagination to see how this can turn sour. For each of the 10-15 steps an exectuor is required to make, all co-executives have to agree and you can’t move forward until all co-executors have fulfilled the step. Imagine having a 4th executor who is simply too busy and therefore delays each step by weeks or months. On the other hand, if the estate is relatively simple, it can make things go quicker if all of the beneficiaries are also named as executors. Your attorney can help you with understanding that ‘balancing act’.
- Close friend: This could be a great option assuming three things; they have the business savvy, they have the time to deploy that savviness and most importantly, you aren’t putting them in a position where they are taking sides against some or all of your heirs. It’s a tall order but if you have a friend who fits those criteria - go for it.
- Attorney: There’s two parts to this. First, an attorney is typically the attorney for the estate. Some people name their divorce attorney or business attorney as their executor. That’s like hiring your orthopedic surgeon to do heart surgery. Attorneys have specialties. If your reasoning is that an attorney will know the ins and outs of probate, at least pick an estate law attorney. The other part of this is there is a lot more business to being an executor than actual law. Being a lawyer doesn’t automatically make you a good businessperson. Should you have an attorney for the executor? Absolutely! But with a good attorney, the executor should be able to rely on the attorney for all of the legal stuff. Also, in Virginia, if you are going to name your attorney as the Executor of your estate, that attorney should also give you some additional information about conflict of interests and most of the time, the attorney will have you sign a form that you have been given that information and that you know and accept any conflicts.
- CPA: This is similar to using an attorney. Not all CPAs are the same. They have specialties just like doctors. And while they will be more comfortable with income tax there’s no reason to believe they are comfortable or up to date with estate taxes. Also, there’s no inherent reason to believe they will be any better at smooth communication. An executor needs to lead this “group project” to completion by keeping things on an even keel. And one more caveat about CPAs comes back to the time they have available. You don’t want your probate extended just because you died during tax season.
- Corporate Executor: This is the choice with the most experience. Frankly, they might be the only option on this list with specific executor experience. And it’s probably the most likely way to keep your heirs from fighting with each other. However, as of this writing Corporate Executors are a great option but they are only interested in working with larger estates. Now, this very well might change and I assume that in 10-15 years you will start seeing Corporate Executors as a service for the sub 1 million dollar estates. Financial services across the board are becoming less expensive as everything is going toward automation.
I hope that narrows down the list from any adult to a few you might consider. Now let’s look at some common mistakes I see when completing probate.
Executor Mistakes to Avoid
These are probably the most common mistakes I see or hear about in my estate law practice. If you are choosing an executor for your estate, consider someone who is less likely to make these blunders.
- Executor delay. There are approximately 10-15 steps every executor has to make. None of them are particularly difficult but they can be time intensive. If your executor (or one of your co-executors) is a very busy person who takes a week to fill out a form, your probate will be unnecessarily delayed. A week fifteen times is an entire quarter.
- Paying estate funds out too early. This mistake often happens for the best of intentions. An heir is going through a difficult period, the estate has some cash… problem solved, right? Not okay. That cash or car or whatever you paid out early might be needed down the road. Maybe there’s a forgotten tax bill or another debt the estate has to pay. Maybe by the time all the ducks are in a row the housing market crashes. Don’t pay out any estate funds until you have a big picture of all the happenings. And don’t forget, you can be personally liable for funds that are paid out of order, which can easily happen when funds are paid too quickly.
- Failing to keep up with changes in the estate tax laws. There is a federal estate tax and there might also be State estate taxes. As of today, Virginia does not have a separate estate tax, but does have what is termed a ‘probate’ tax which is really quite small. But...this can change at any time based on the new laws passed by politicians. It is important for the executor to know what sort of taxes might need to be paid so they can figure out how much money is left to pay bills and give to the beneficiaries.
- Not following the terms of the will. Imagine Dad told you one Christmas that he wants to give all the grandkids $5k. But when the Will is read it’s not mentioned. So you go ahead and give the 7 grandkids that $5k. Which is sweet, and wrong. There are a lot of variables that could make this an issue. Maybe one of the heirs doesn’t want the grandkids to get that money and so they demand they get their portion of that $35k.
- Failing to supply all asset information. Found another bank account? Forgot the summer cabin? While it’s the job of the executor to know all the assets, it’s to the benefit of all the heirs that all assets are claimed.
- Failing to communicate. Legal stuff makes some people nervous. Death makes a lot of people nervous. There’s no such thing as too much communication when it comes to estates and probate. A great solution is a weekly or monthly email to everyone. Just say what’s happening, what’s next, rough dates, etc. You don’t need everything to be official certified mail with receipts. Even a group text might be sufficient. Just get the word out there as to what you are doing and what comes next.
- Confusing probate and non probate assets. This is a complicated one. IRAs and life insurance proceeds are non probate if they have a beneficiary named., but they may be considered part of the probate estate if there is no named beneficiary, or if the named beneficiary is ‘my estate’. Real Estate can also have designations that change the title of the property by operation of law, or not. There are also Jointly owned accounts that are required to be on the list of assets, but that aren’t really part of the probate estate to be distributed.
- Not collecting estate funds in an estate account. Sometimes people move money out of fear. A child is a signer on their father’s bank account. Dad passes away, the child drains the bank account and places the funds in their personal account. Not okay. So don’t move money unless and until you are moving it into an estate account. And don’t use electronic transfers to get money from the estate account. I know it is ‘old fashioned’, but use paper checks so you have a clear trail of where the money went. Keep copies of bills received and make sure you can get copies of the checks that were used to pay those bills.
- Getting help from friends instead of professionals. This is pretty obvious. Even if your friend is a lawyer, they may not be an estate lawyer. Or even if they were an executor in the last 5 years, they might not know the new rules as of 2021. There’s an expression, “the cheap comes out expensive” which applies here.
- Ignoring claims against the estate. It’s very likely for medical, credit card or other bills to be due. If you as an executor just ignore these claims, or if you just pay all of the bills as they come in, it’s very possible you will become personally liable for those payments. So open all the mail, even if it looks like junk. Send the company making the claim a letter telling them that your loved one has died and the estate is in the process of being handled. If it looks like there isn’t going to be enough money to pay everything, go ahead and tell the creditor that the estate might be insolvent. Make sure that you are extra careful to pay attention and deal with claims. Even including what you might think are fraudulent claims. Now, you might not be held personally liable for a completely fraudulent claim but it’s a much smaller headache to tackle this kind of debt head on then ignoring it.
- Self dealing. Don’t buy your parents house for 10% of the asking price. Don’t decide to keep a car that isn’t yours. Don’t do it. If you would like compensation for being an executor, there are ways to fairly and legally get compensated. Self dealing is not okay.
- Handling tangible assets under your own terms. Don’t pick and choose what items you want from your parents house first. And don’t let anybody else do that either. Communicate, talk it over. Who gets what vase? Okay, you want this vase then maybe someone else should get that painting, etc.
Choosing Your Virginia Executor of Estate
As noted before, you can legally choose any adult. If that person lives outside the state of Virginia, they will probably need a Virginia resident to help them. That’s it. The bar is pretty low. I hope considering some of the potential pitfalls of choosing the wrong Virginia executor for your estate will help you narrow it down.