Once you start planning your estate, two of the terms that you will hear frequently are “executor” and “beneficiary.” Choosing people to fill these roles is a crucial step in creating a will, a power of attorney, or other estate planning documents. But what is an executor? What is a beneficiary? How are they different? Read on to learn more about the roles of executors and beneficiaries in your estate plan.
What is an Executor and What Do They Do?
As you are creating your will, you will need to name an executor of your estate. This is the person who will act as your agent after you pass away to administer your estate. Administering an estate involves gathering all of the parts of your estate, paying any outstanding debts or obligations, and then distributing any remaining assets to the people you have named to receive them. Being the executor of a person’s estate is a fiduciary responsibility, and must be completed in accordance with all relevant laws and regulations in your state. The executor is to act in the best interests of your estate and beneficiaries (more on that below) while following the wishes you set out in your estate planning documents, including your will. The executor will be your representative in the probate process, if there is one, and will make sure that all of your financial obligations are taken care of and your assets are distributed as you have specified in your will or other estate planning documents.
What Is a Beneficiary?
When you plan what will happen to your estate after you die, you choose people who will inherit from you or benefit from your assets. These are known as your beneficiaries. They are most likely family members or beloved friends. Your will is not the only place where you will name beneficiaries; any retirement plans, life insurance policies, or trusts that you have set up will have beneficiaries named, as well, meaning that those are the people who will receive the benefits of the retirement funds, insurance payouts, or inheritances when you pass away.
Can My Executor Also Be a Beneficiary?
It is very common for the executor of an estate to also be a beneficiary of that estate. Most people choose a spouse or one of their children to be the executor, and also want to leave some of their assets to that person. There is no problem with doing this. Being an executor is a fiduciary responsibility, regulated by state and federal law. There is no risk in naming your executor as a beneficiary, as well, as they will be bound not only by moral principles to handle your estate fairly and according to your stated wishes, but also by the law.
Why Do I Need an Estate Plan?
Life is unpredictable, and the last thing you want is for your family to be left in chaos, financial or otherwise, should you pass away unexpectedly or become incapacitated by illness or injury. Your family counts on you to provide for them, in the future as well as in the present. Not planning properly or soon enough can leave you without a representative to handle your affairs if you are unable, and can leave your family scrambling to organize what you failed to organize while you were still capable. For a family member to be faced with paperwork, legal issues, and financial confusion during a time of mourning and grief is too much to ask. Contact an experienced estate planning attorney today and make sure that your loved ones will be taken care of in the future.