When you are serving as executor, it may seem like you have to do everything all at once. From filing the right paperwork with the probate court, hiring an accountant, creating an estate bank account, conducting an inventory of the estate assets and liabilities, and even distributing the remaining assets to the beneficiaries, it all can be overwhelming.
Often beneficiaries also add stress by pressuring you to complete the 100+ steps as quickly as possible so they can inherit items and receive their financial share of the estate. One of the biggest executor mistakes you could make, however, is to give into the pressure of distributing assets too early in the process.
While it may not seem like it, there are distinct steps (and a logical order) to the executor process. There is a natural sequencing to events that will provide the best possible outcome, which is one of the benefits of using free online executor tools, like Executor.org. And your legal responsibilities as an executor are very real. If you do not administer the estate according to state law, probate court instructions, and the direction spelled out in the will, you could be held legally liable and face hefty penalties.
One of your early steps as an executor is to determine what all is included in the estate. Creating an inventory of all estate assets is the obvious way to do this, but don’t forget that you need to account for liabilities too. What debts are owed? Will there be enough money in the estate to pay these debts? Will items within the estate need to be sold to cover expenses? The answers to these questions may ultimately affect distribution of assets to beneficiaries.
If you’re feeling the pressure from beneficiaries, here are some reasons you can share as to why you can’t distribute assets until the very end of the estate-settling process:
You can’t distribute items before you know what they are worth.
If you’re trying to split the estate equally between several people, you can’t give something away until you know it’s market value. It would unfair and be a breach of your duties.
Assets might need to be sold to cover final expenses.
Funerals can be expensive, particularly when things like a headstone and grave site are desired. Family members sometimes overspend out of a desire to honor a loved one, and the estate will typically need to pay those expenses.
Assets might need to be sold to cover final tax bills.
Depending on the personal situation of the deceased, there may be a federal, state, and/or local tax bill due after death.
Homes tend to sell better when furnished (versus empty).
Taking a random collection of items out of a house can make it much less attractive and send the message to a buyer that you are very anxious to sell — potentially lowering the offer you receive.
Even if you expect proceeds from the sale of a home to cover all of the expenses of the estate, funds may be needed in the interim.
This means cash assets in the estate might be needed to cover expenses incurred before the home is sold, or that physical assets may need to be sold to pay bills or other expenses.
And finally, if you start distributing assets early, where do you stop?
One of your primary roles is to help the family stay together or at least get-along during this difficult time. The chances are very high that someone’s feelings will be hurt if you start distributing assets to beneficiaries on an adhoc basis.
These are just some of the reasons why the last step in the executor role is distributing assets to beneficiaries. You never know what the earlier steps will bring, so be strong in encouraging patience among beneficiaries. Don’t rush, and know that by doing your job correctly, you are ultimately helping the beneficiaries and saving yourself from legal liability.
If you need more help figuring out your role as executor, click here to see our full list of online executor resources, which includes executor software, tracking spreadsheets, and more.
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.