Being named the executor of a family member’s or friend’s estate is often seen as a compliment. But the reality is that managing the final wishes of the deceased is a daunting task that comes with its fair share of headaches.
“It’s a thankless job,” said Eric Bond, president of Octave Wealth Management in Long Beach, Calif. In addition to all the paperwork and interactions with the probate court, executors must also brace themselves for intense scrutiny from heirs and beneficiaries. “The beneficiaries,” said Bond, “always think they can do it better, even though they’ve never done it before.”
No doubt, people tasked with administering wills and estates are often put in a challenging position. That’s because most executors have no prior experience doing it. “The problem is, how many executors — moms, dads or adult children — have closed an estate before in their lives? Lots of times it’s zero,” said Bond.
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Being an executor is not an easy job.
It involves a heavy workload. There are time-consuming block-and-tackling tasks, such as obtaining death certificates, locating and closing financial accounts, taking an inventory of assets, and distributing bequests ranging from stocks and bonds to real estate and family heirlooms. There’s also a steep legal learning curve. Not to mention crushing paperwork.
Of course, there are also heirs to contend with. It’s not uncommon for executors to have to mediate family squabbles, especially when beneficiaries feel they’ve been short-changed, didn’t get their fair share, or weren’t the recipients of dad’s collectible cars or mom’s valuable jewelry, antiques, or artwork.
“You have to understand that this is going to be a lot of work,” said Karen Altfest, executive VP at Altfest Personal Wealth Management in New York City, who has spent the past four years as executor of a complicated will. “It’s never just clear sailing. There’s always going to be an unexpected twist or some kind of surprise, like a disowned relative (getting part of an estate) or an argument over who gets the art collection. And if the estate goes through probate court, there are going to be very strict rules and deadlines to meet.”
But just because an executor’s job can be challenging doesn’t mean you can’t perform your duties with the strategic focus and efficient manner of a CEO. There are steps you can take throughout the process to turn an often-difficult job into one that is manageable for you, the executor, and acceptable to the beneficiaries receiving the proceeds of the estate.
The role of an executor
As executor, there are key tasks you must perform after the estate owner passes, according to a blog post from Seder Law, a full-service law firm headquartered in Worcester, Mass. They include:
- Open the estate to probate. (Probate is the formal legal process that gives recognition to a will and appoints the executor who will administer the estate and distribute assets to the intended beneficiaries, according to the American Bar Association.)
- Collect information about the deceased’s assets and debts.
- Defend the estate against false claims and fraudulent creditors.
- Protect assets until they can be distributed to heirs.
- Pay estate expenses and fees, including taxes.
- Distribute assets to heirs and close the estate.
But just like there are key qualities to look for in a spouse, there are certain traits that all good executors possess, according to Seder Law.
Once you’ve agreed to take on this important task, which can be extremely time-consuming, make sure you’re willing to commit the time needed to deal with all affected parties, including heirs, creditors, lawyers and probate judges.
Being a good executor comes down to character. Dependability is a key quality. Carrying out your duties in a reliable and responsible manner is a prerequisite for the job. Conducting yourself ethically is a must, too. A good executor must also not be afraid to ask professionals, such as attorneys, accountants, and investment professionals, for help if they’re unclear about how to proceed on their own. The more organized an executor is, the better.
Executors must also be tough and be willing to deal with unscrupulous family members as well as dishonest creditors and estate claimants, according to Seder Law.
“A good executor is someone who is trustworthy, honest, and organized,” said Bond.
How to be a good executor
Discuss the will with the writer and the beneficiaries. If possible, discuss the will with the will writer while they’re still alive so you have a clear understanding of his or her wishes. If there’s something in the will that you think will anger one or more heirs, such as leaving money to an ex-wife or cutting one or more children out of the will entirely, ask the will writer to explain the reasoning. If necessary, ask the will writer to explain his or her thinking in writing in an informal document known as a last letter of instruction.
Even better, have the will writer discuss their wishes in person with all family members before passing. “I tell parents to give the kids the trust or will before they pass away,” said Bond. “What that does is hopefully alleviate conflict. If there are two kids and it’s a 60/40 split, not 50/50, the kid getting 40% is going to say, ‘Wait, what do you mean? Why am I getting 40%?’ Mom and Dad should have that discussion with them beforehand.”
Start the paperwork. The first order of business is to obtain 10 to 15 copies of the death certificate, which banks, insurers and probate courts will require. Next, locate the original will (not a copy) and other estate planning documents. Secure the home and other property. Gather key financial documents, such as bank statements, insurance policies, and retirement account information, for use in probate and asset inventory later. Then take care of the legal side. File the will with the probate court and apply to be formally recognized as the executor. Once appointed, you can begin the work of inventorying assets, notifying creditors, and ultimately paying debts and distributing property according to the will.
File the will and the death certificate with the probate court to obtain a letter of testamentary, which recognizes you as the executor, a required step before you can take any actions on behalf of the estate.
Hire an attorney and other professionals. Most executors have day jobs and don’t have law degrees. So, navigating estate rules and probate laws, which are different in each state, on your own is likely too much of a heavy lift. “Don’t think you can do it alone unless it’s a very, very simple will,” said Altfest.
It’s prudent to consult a lawyer specializing in wills and estates. “Get counsel,” said Bond. “Hire an estate planning attorney.”
To ensure the entire process runs smoothly and is handled properly, hiring additional professionals is also a good idea, says Bond. For example, an accountant or tax professional can file the deceased’s tax returns and advise on how to reduce estate taxes. Connecting with the deceased’s financial adviser or other financial professional may be helpful in identifying and valuing assets, such as 401(k)s or insurance policies. If the estate includes hard-to-value assets, hiring a professional appraiser to value items such as paintings and antiques is also advised. And if any real estate needs to be sold, working with a trusted realtor is recommended.
“Rely on the CPAs and financial advisors,” said Bond. “You don’t want to be the one making the financial decisions.”
Keep good records. If “location, location, location” is the key to success in real estate, “document, document, document” is the key to smoothly administering an estate, says Altfest. “You have to keep very, very accurate records of all costs, all assets, any income, or any donations,” said Altfest. “You have to document everything because people are going to ask questions.”
Provide as much transparency as possible. Keeping heirs and beneficiaries updated on all facets involved in closing the estate is critical, adds Altfest. “You want to be forthright about every single thing and follow the will to the letter,” said Altfest. “The best tip? Keep all heirs informed. Step by step. We’re doing this. We’re doing that. You don’t ever veer from that. You must be very accurate.”
Safeguard property. Scammers who track obituaries often target vacant homes. There are also plenty of examples of adult children or other relatives taking possession of things they perceive as their stuff that doesn’t belong to them. As a result, it’s a good idea to ensure the deceased’s home is secure and take the time to photograph all the belongings.
Prepare for conflicts. It’s not uncommon for siblings or other heirs to challenge a will or squabble over who gets what. There might also be times when beneficiaries mistrust you and the process. So, prepare yourself for conflict and be ready to manage the emotional side of settling estates.
One proven way to keep the peace is to regularly update heirs and beneficiaries on everything that’s going on, whether that’s keeping them abreast of the status of real estate transactions, the performance of assets, debt payments or anything else that will have a bearing on the size of their inheritance, says Altfest.
Getting input from beneficiaries can also ease some strain, adds Bond. For example, if there is a house to sell, you might ask whether there’s a particular realtor they’d like to work with. Once the house is sold, you don’t want a beneficiary to complain, “We could have gotten more if we used this other realtor,” said Bond. “Make the beneficiaries feel like they are part of the decision-making process.”
Similarly, if the estate has a large position in a high-flying stock that has gone up a lot, you should discuss with the heirs and a financial advisor whether it makes sense to pare back the position to avoid the stock losing a big part of its value in a market selloff, adds Bond.
When it comes to heirs and beneficiaries, be firm about what the will states and what they’re entitled to, Altfest advises. “They may have their own wishes and desires, and it’s up to you to say, ‘the will says this, I just can’t give everything to you,'” says Altfest. “You may find yourself saying no over and over again.”
Distribute assets and personal items fairly. While estate documents typically clearly outline who’s getting assets like mutual funds or stocks and how much, that’s not always the case with family possessions like a set of antique china or a Steinway & Sons piano. So, if needed, set up a process for dividing possessions among family members equitably.
