Executors have important duties such as collecting assets, settling debts, filing tax returns, distributing assets and closing the estate. Being selected as an executor is an honor, but you should plan for that role before accepting it.
Co-executors
One of the drawbacks of estate administration is sharing that position with other executors. Parents, for example, often name all of their children regardless of their abilities to avoid favoritism.
Some co-executors may be far away, which makes it difficult to execute duties such as securing assets and selling the home. Executors may not have the financial ability to deal with creditors and handle taxes. Having co-executors also means that more signatures are needed on documents.
Instead, avoid naming co-executors or find out if family members will agree to one executor. All children may also decide to appoint a bank trust department as executor to prevent conflicts.
Heirs
Executors must secure estate assets and distribute them according to the decedent’s wishes. Wills often give wide discretion to executors for the distribution of personal property and heirlooms. But this discretion often places the executor in the middle of disputes.
Many family members act quickly to take these articles, even before the funeral. Decisions on distributing this property can create tension and arguments.
Executors should secure the home and its belongings as soon as possible and tell relatives that this is legally required. A will, or another document, needs to contain specific instructions on distribution of these heirlooms, which the executor can follow.
Time
Executor duties are time-consuming. Contacting government agencies, such as Social Security, taxing authorities and unclaimed property departments are only a few of the time-intensive tasks.
Executors can use attorneys, CPAs, and other tax preparers to handle some of these tasks. Being organized and using their time deliberately can help reduce the costs of these services.
Personal liability
Paying heirs their inheritance before paying taxes and leaving a tax liability can expose executors to legal liability. Executors must explain to heirs that they must pay the estate’s taxes and settle its debts before inheritances are distributed.
Costs
Executors may receive a commission for executing their duties, which is usually determined by the estate’s size. In smaller estates; however, executors may be asked to waive their fees. Executors sometimes pay costs out of their pockets because they do not have access to estate funds until it closes.
Executors should keep detailed records of these costs. After the estate closes, they can seek reimbursement. An estate checking account may also be used to pay expenses.
Attorneys can assist executors with completing their duties. They can help reduce some of the stress and uncertainty of this role.
