WHEN TO NAME A BANK AS EXECUTOR

Although banks were commonly named as executors many years ago, this is seldom true anymore. But it certain cases, it still makes sense.

If your children have issues with each other, the child named as executor will have a thankless job. The child’s siblings will be miffed that they were not appointed executor. They will continually contend the executor is acting out of self-interest or favors some siblings at the expense of others. Tasks as insignificant as dividing the decedent’s personal property may turn into a war. Every action the executor takes will be questioned or opposed by at least one sibling. By the time the estate is closed, your children will be so frustrated with each other that family gatherings may be a ritual of the past. In general, your family is better served if they are mad at a bank rather than each other. Thus, if your children are or might turn hostile, using a bank is money well spent. Keep in mind that children are usually on their best behavior while one or both parents are living. The bottled up resentments usually surface after both parents are deceased.

A bank is also good choice if all of the children have serious problems (mental illness, health, substance abuse, developmental disabilities, gambling, incarceration, terrible judgment, etc.) or live too far away to effectively manage the estate. While you can always nominate an uncle, aunt, cousin, nephew or niece, the executor fee is usually insufficient to inspire enthusiasm to intervene in another family’s matters. Further, if the decedent has no close family, a bank makes sense.

Another advantage to a bank is that the trust officers seldom make serious mistakes. They have experience administering estates. They are aware of the deadlines. They know the potential problem areas and how to avoid them. The executor fee to a bank is no different than that payable to anyone else — roughly 2% of the estate. A relative might waive the fee, but you will probably get what you pay for.

In conclusion, while everyone (including me) has a horror story about a bank, there are many scenarios in which a bank is absolutely the best choice for serving as executor. You may end up saving your family enormous trauma and legal fees by naming a bank as executor.

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