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What role does a financial advisor play in settling an estate?

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Get tips on finding the right financial advisor for you.

The Executor Adviser is an advice column created by Executor.org for Legacy. Executor.org's experts aim to help readers with questions about executorship and provide comprehensive, free online resources to guide executors through this complex process.

While executors are not required to hire a financial advisor or planner, in most cases it’s a smart move. 

Having a financial expert on your team can help you uncover investments you might not know about, maximize the assets that will go to beneficiaries, and offer insights to everyone involved about the best way to minimize the taxes paid on transferred retirement savings. Not to mention navigating seemingly countless financial details, down to the different executor fees by state.

They also can help you avoid costly mistakes that could land you — as an executor with a fiduciary duty — in legal trouble.


Protect your family from worry — consider pre-planning a funeral


Here are just a few of the benefits of consulting with a financial advisor:

They can help locate assets you might miss

Ideally, you will be able to contact any financial advisor that the deceased previously worked with to learn more about estate assets. They should be able to offer you a roadmap to where assets can be found.

And you’ll also probably find at least some paperwork about checking accounts, IRAs, and other retirement accounts, if they exist. 

But what if you think there’s something missing or, worse yet, have absolutely no idea about what investments or accounts the deceased had?

A good financial advisor will be able to tell you the best way to search for assets and benefits you might otherwise miss — even when you have no idea where to begin. 

Note: Keep in mind that in order to share information many financial institutions will require you to provide a copy of the deceased’s death certificate or letters of testamentary, indicating that you have the legal right to obtain this information.

They can help you sort through paperwork

Not sure what, if anything, is important in that big pile of papers? 
 
Should you keep that box of paid credit card bills? What about the income tax records from 1996?

A financial expert can help you sort through paperwork and quickly determine what is important and needs to be kept and what can be shredded and tossed. 

One caveat with this one, however. The cost of the financial advisor should be paid from estate assets, not your pocket. So you’ll want to make sure you are being mindful about spending estate money. 
 
In this case, for example, it means that you probably don’t want to drop off 50 boxes of paperwork that will take someone a lot of (billable) hours to go through. 

Take some time to review the documents yourself and talk to the advisor about what is there and what might need a second look. 

They can reduce worry about making mistakes

If you’re serving as executor, it’s most likely you are grieving the loss of a person very important to you. 

You may feel stressed, scattered and exhausted. 

The last thing you probably want to worry about is whether you are making the best choices about estate assets. A skilled financial advisor can help clearly explain your options and answer any questions you have so you can make informed decisions with confidence.  

In addition to reducing your worry, a great financial advisor also can help you determine which decisions need to made right away versus which ones can wait until later.

They can help you make the right decisions

There are a range of ways to legally minimize the taxes owed by the estate and, as executor, you’re responsible for making sure beneficiaries receive as many estate assets as possible. If the deceased had a lot of savings and investments and some beneficiaries would rather hold onto investments than cash out, a financial advisor can also be a big help. For example, they can help you:

  • Use date-of-death or alternate-date valuation on stocks to cut taxes
  • Meet IRS requirements on inherited IRA’s
  • Garner tax advantages for decades to come on inherited IRAs
  • Ensure fair “after-tax” distributions to beneficiaries

 

So, how do you find a great financial advisor?

Hopefully you already have a financial expert you trust. But if you don’t, here’s some tips:

   Ask other professionals you know — such as lawyers, accountants — for suggestions.

 •  Get references from associations like the American Institute of Certified Public Accountants, Financial Planning Association, and National Association of Personal Financial Advisors.

 •  Don’t be afraid to interview the financial advisor to make sure they are the right person for the job. You likely will be working a lot with this person, so personality matters too. Are they approachable? Are they open to answering your questions?

 •  Do your homework. Learn their background and discuss, in detail, their fees. How do these fees compare to those charged by similar financial advisors?

Dealing with the financial portion of the executor job can be confusing and require expertise that most people simply do not have. If you’re uncertain and need help, don’t feel badly about reaching out to a financial pro for advice. In fact, as executor, you have a fiduciary responsibility to effectively manage estate assets and minimize expenses, including taxes, so it’s your job to make wise financial decisions.  

If you’d like to learn more about your role as executor, check out our free executor checklist at Executor.org. It covers everything you’ll need to know to settle an estate as quickly and easily as possible — and it’s 100% customized to your specific situation!

Have a question about executorship? Get an answer by sending an email to [email protected]


About the Author: Patrick O'Brien is CEO and co-founder of Executor.org, a free, comprehensive online resource that helps executors manage their responsibilities and duties in this complex role. The free tools include a helpful step-by-step interactive guide for executors and invaluable tips on everything from planning a funeral and keeping beneficiaries happy, to dealing with grief and managing estate assets.


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