The Executor Adviser from Executor.org
By: Executor for Legacy
12 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.
Taking on the executor role can be challenging and there is the potential for many expenses along the way. As executor, however, you are not responsible for paying these expenses and, in fact, should try to avoid doing so from your own pocket. You also can take compensation for doing the job and for extra costs specifically related to serving as executor, such as mileage and travel expenses.
There are several important things to consider, however. We here at Executor.org have learned a lot from both our users and our team of experts, and we offer these tips to navigate the financial side of serving as an executor:
1. Determine whether the estate has assets/funds available: Be aware that in some cases the deceased will not have enough assets to cover their final expenses or leave money to their beneficiaries. You’ll want to get a realistic picture of the finances so that you can consider that when making decisions. For example, costs should be considered carefully when planning the funeral. Or when making decisions like whether to pay someone to clean out the deceased’s home versus making it a weekend project for the family.
2. Set up an estate checking account as soon as possible. One of your first priorities will be setting up an estate checking account in the deceased name. You need to follow the specific instructions of the probate court in setting up the account and in spending money from the account. This account should be funded with money from the estate, not your personal money. In general, the account will be used to cover final bills, funeral costs and other expenses that come from settling the estate, such as attorney and probate court fees. It is also where you can deposit any checks that are written to the deceased or the estate, such as a refund or interest payment. Keep in mind to set up the account you’ll need specific paperwork — for example, the death certificate and proof you are the legal executor — so you’ll want to be sure to determine what is needed before you head to a bank.
3. Consider taking compensation for serving as executor. In most states you can be paid for completing the executor job. It’s typically calculated as a percentage of the estate’s value, but state rules can vary. If it isn’t spelled out clearly in the will, it is wise to contact an estate attorney or the probate court in the county where the deceased lived to find out specifics. Keep in mind that this can be a tricky area with heirs. Some might not understand the significant amount of time and energy that goes into being an executor and may be upset you are taking compensation, viewing it as you profiting from the loss of a loved one. If you plan to take the fee, it is wise to discuss this with beneficiaries early in the process so they are fully aware.
4. Be a great money manager. You have a fiduciary responsibility as executor to not waste money. You’ll want to work hard at minimizing expenses and maximizing the amount earned from the deceased’s assets so that beneficiaries receive as much as possible. For example, if there’s a home or car to sell, you want to make sure it sells at the highest price possible. This is not the time to give someone a good deal out of kindness, or because there’s a desire to settle the estate quickly. You can be held legally responsible for poor financial decision-making on behalf of the estate, so you’ll want to make sure you can justify your choices to beneficiaries and a probate judge, if needed.
5. Create a plan and keep detailed records. This may be an obvious one, but our legal experts have told us too often executors fail to stay on track or keep detailed records of things like discussions with beneficiaries and calls to insurance companies, utility companies, banks, etc. They also often forget to keep important receipts that explain and document expenses. You’ll want to take time to get organized and stay organized. In fact, it’s for this very reason that Executor.org exists — to give executors a personalized, step-by-step plan of action that explains the process and keeps them on track. By staying organized you’ll ultimately save yourself time and reduce the chances that you could end up making a costly mistake, upset beneficiaries, and put yourself at legal risk.
One of the areas you’ll need to be most focused on as an executor is properly managing the estate’s assets. While it might be a daunting task for many of us, following the above advice and reaching out to an estate attorney, accountant, the probate court, etc. when you have a question will not only ensure you are handling the financial matters correctly, but also give you peace of mind.
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.