Being named as an estate executor may reflect the trust someone has in you. But dealing with the many issues involved with settling an estate often involves many hazards and surprises.
Dealing with co-executors
Parents often name all their children as co-executors to avoid favoritism. However, some children may live far away which makes it difficult for them to help secure assets, sell the home, execute documents and deal with other local issues. Other children may lack the financial knowledge to deal with creditors, understand tax issues, and do the required accounting.
Even with scanning, more executors require more time and effort to execute forms requiring wet signatures.
Better options include naming one executor. Co-executors can also waive their appointment and agree that one person will serve as executor. Another more expensive option is to name a bank trust department to perform these duties.
Executors must secure the estate’s assets and distribute them according to the deceased’s s directions in the will or a separate guidance document. Wills sometimes give the executor the discretion to disburse items to heirs.
But heirs often swoop in a decedent’s home before the funeral to take heirlooms and valuables. Executors have the unpleasant task of dealing with disputes over awarding property.
Executors should secure the home and other property as soon as possible and tell heirs that this security is legally required.
This is a time-consuming duty. It includes contacting government agencies to stop Social Security and other benefits, tax authorities, unclaimed property departments. Executors need to cancel utilities and other services and sell the decedent’s home.
Being organized can save time. Lawyers and accountants may assist with preparing legal and tax documents. Real estate agents can help sell the home. But the estate must pay these professionals.
Executors must pay taxes before disbursing inheritances to heirs or they may be liable for these taxes. Debts to creditors also need to be settled.
Executors should explain to heirs that they will not receive their inheritance until creditor claims and taxes are settled. They should be advised of the amount of funds needed to pay these liabilities.
Executors are usually entitled to a commission which is usually based upon a percentage of the estate’s assets. Executors may be asked to waive commissions, especially with smaller estates.
Executors sometimes have to pay out-of-pocket costs because the estate will not have access to its funds until it is settled. An estate checking account may cover some costs. Executors should keep track of their costs and seek reimbursement later.