I’ve Been Asked to Serve as an Executor: What Do I Need to Know?Submitted by Bernhardt Wealth Management on September 13th, 2021
A friend or relative asks you to be the executor of her estate. What, exactly, is she asking you to do? You may feel honored by the trust being placed in you, or you may be motivated by feelings of loyalty to family or friends. For many small and medium-sized estates, the executor is often a friend or family member, so this decision is a common one. But it is an important decision with many ramifications, so you need to consider carefully what you’re getting into.
You can start by simply googling, “What does an executor do?” You’ll get multiple results, and a little bit of internet research is very enlightening. You’ll learn, for example, that the executor has to find the deceased’s relevant documents, starting with the will. The executor must inventory the decedent’s assets and debts and arrange appraisals for the tangible assets that the deceased may have owned. In addition, you must communicate with financial institutions and governmental agencies, manage any property owned, and keep careful records of everything. If the estate includes a home, the house may have to be emptied of possessions and readied for sale.
Individually, these activities may not seem intimidating, but they add up. A survey by EstateExec, an online tool for executors, found that the typical estate takes about 16 months to settle and requires 570 hours of effort. Estates worth $5 million or more typically take 42 months to settle and 1,167 hours to complete. Some of those hours will be hired out to professionals—attorneys, a CPA, or a wealth advisory firm—but the executor has to watch over and coordinate everyone’s efforts.
Disputes are not uncommon. You may find yourself in the role of referee when the heirs disagree about the way the assets were divided, and they may disagree with some of your judgment calls, such as whether to spend the estate’s money to fix up a house for sale.
For all these reasons, the role of executor for larger and more complicated estates is often assigned to a legal professional specializing in estate planning and management, or to an institutional manager such as a bank trust department or an independent trust company. Most states’ laws allow for an executor to be compensated for time spent in managing the estate, but when the executor is a friend or family member, they often decline payment. However, that doesn’t mean the job won’t require time, effort, and emotional commitment.
Before you accept the role of executor, you might insist on seeing the will or trust documents to ensure that there aren’t any unpleasant surprises that could cause discord among the heirs and to make sure that everything is inventoried and the assets are in good order. You can also insist that the documents name alternates in case you can’t or decide you really don’t want to serve in this complicated role. It’s very important to know what you’re getting into before agreeing to serve as executor of an estate, no matter how close you are to the person making the request.
As fiduciary wealth managers, we help our clients make wise decisions about managing their assets, both now and in years to come. To learn more, you can click here to read some of our recent articles on various aspects of estate planning. For details on how we can place our expertise and professional network in service of you and your family, please contact us.