When it comes to choosing an executor to settle their huge estates, more multimillionaires choose someone they trust above all else, according to a new study.
That includes financial knowledge, health, emotional state, time availability and mental health.
The most difficult part of serving as an executor is the time commitment involved, as well as having sufficient legal and financial knowledge – which is multiplied in the case of the very wealthy.
Only one in four wealthy individuals considered the health or longevity of the person they name as executor of their estate, according to the 2014 U.S. Trust Insights on Wealth and Worth survey.
Most often, a spouse is chosen as executor, with men naming their spouse more often than do women, who statistically tend to outlive their husbands. Women are twice as likely to name a friend. Three out of four high net worth individuals appoint a family member or friend as executor.
Only 6 percent appoint an attorney as executor and 9 percent a friend.
Surprisingly, almost one-fourth of the nearly 700 Americans with $3 million or more in investable assets who participated in the national survey have not dealt with estate planning. They haven’t established a trust or named an executor.
Those wealthy respondents in the study who had done estate planning ranked the most important reasons for having an estate plan as follows:
1. To ensure that financial needs of spouse or significant other are met
2. To minimize taxes on estate
3. To minimize the administrative burden of settling the estate
4. To protect assets from abuse or falling into the wrong hands
5. To ensure the financial needs of children from current or previous marriages are met
6. To treat all heirs equally
7. To preserve family wealth for future generations
8. To carry out philanthropic wishes
9. To prevent discord among family members
10. To influence the behavior or decisions of heirs
Members of the Millennial generation and Generation X ranked “To prevent discord among family members” higher than Baby Boomers or the Silent Generation over age 69.