The Executor Adviser from Executor.org
By: Executor for Legacy
6 months ago
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.
This is an incredibly important topic for executors, as squabbling between the executor and beneficiaries about money in an estate can rip families apart. Managing this piece well will not only ensure that you’ll close the estate within the legal guidelines, but that all beneficiaries feel like they’ve been treated fairly in the process.
As we guide you through the entire process as an executor on Executor.org with our free tools, we also want to help you strengthen the family.
A good starting point is a reminder that, as an executor, you’re now a “fiduciary” who has agreed to act in good faith on behalf of the deceased.
This is a simple concept, but perhaps your most important guiding principle. As a fiduciary, you are legally bound to act in the best interest of the beneficiaries, not yourself.
This doesn’t mean that you should be unfair to yourself, as you should be reimbursed for all legitimate expenses. But you cannot put your interest above that of the other beneficiaries.
A key part of your success will be great communication. If beneficiaries feel you are being open with them (and asking their opinions, as appropriate), you will be much more successful in keeping the peace. And, if you’re acting in the best interest of all beneficiaries, there is really nothing to hide.
In general, there are two scenarios in terms of how this process will unfold. You’ll either spend your own money and be reimbursed by the estate, or you’ll actually be spending money directly from an estate account. We recommend that you open a checking account in name of the estate as quickly as possible (you’ll need a death certificate and letters of testamentary to do so) because it will eliminate you writing reimbursement checks to yourself.
Let’s get to some specifics on estate expenses:
Spending on funeral costs. In some cases you will know that you’ve been named executor in the deceased person’s will. Therefore, even before you are officially confirmed by the probate court, you can start thinking like an executor. For example, if you believe that money in the estate is going to be tight, you may want to avoid the most expensive options when working with a funeral director. You may also want to see if the funeral director can bill the estate for the arrangements instead of someone paying out-of-pocket and having to wait for a reimbursement.
In other cases, you may not know that you are the executor until after the funeral is complete. In this case, remember that funeral expenses are estate expenses so don’t be surprised if the estate gets a bill from the funeral home or a family member seeks reimbursement for funeral costs.
Spending on costs related to property upkeep and improvement. Have you ever heard of the phrase “penny wise, pound foolish”? Don’t be tight with money in every little thing at the expense of losing money in the long run. As an example, say the deceased owned a home. You may be tempted to just sell the house as quickly as possible so the estate can be settled and the beneficiaries can get the proceeds. Maybe the beneficiaries are even pushing you to do so. But if a reputable realtor says putting some money into the home (replacing the carpet, fixing the roof, etc.) will bring a higher sales price, it might be worth it. Remember that you have a duty to maximize the estate’s assets as much as possible for beneficiaries, even when they’d rather just settle for less.
Spending on the costs you incur as executor. Executors spend money in the course of completing their executor role — there’s no way around it. Everything from obtaining a death certificate to paying final bills are among the executor’s responsibilities. Executors are also called on to travel, even if it is only around their own town. There are court appearances and trips to the bank to set up the estate account and close other bank accounts. Executors may need to run documents to the accountant who is preparing the estate’s taxes or return a DVR and internet modem to the cable company. All of these expenses can typically be reimbursed by the estate. If you aren’t sure if an expense is covered, reach out to an estate attorney or call the probate court — the court will always have the final say in what expenses can be covered by estate funds.
Spending on professional help. This is not the time to pretend you are equipped to do all of this alone. Even if you are an accountant, you may not want to tackle the estate’s taxes. An estate attorney can make sure you avoid legal missteps. And appraiser can better ensure you don’t undervalue assets; a realtor can help you sell a home or property for the right price. Think about not only how another professional might be able to do it better but also the toll it can take on you, your emotions, your family, etc. if you do the work yourself, and don’t bite off more than you can chew.
As a final thought, please also be fair to yourself. Things like your travel to meetings with professionals or supplies used to clean out the house (trash bags, paper towels, etc.) are usually reimbursable. Expenses that you may have to pay out of your pocket before getting the estate’s checking account set up for things like lawn care, or flowers for the funeral, should not be your personal costs to bear. Whether or not you receive compensation for your services as executor, you should be equitable in your treatment of yourself as well as the beneficiaries.
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.