Ten ways to help your executor - now!
When you draw up your estate planning documents or your will, you will be asked to name an executor to handle your estate and distribute your property when you die. Here are 10 ways to help your executor now.
It’s a serious responsibility
When you assume the role of executor, you are acting as a “fiduciary”, meaning that you are obligated by law to place the underlying benefactors’ interests before your own. When choosing an executor, give this assignment serious consideration and thought. Serving as an executor is a huge time commitment and serious responsibility and it is a job that can last for years!
Statistics say that even estates under $10,000 take an executor almost 400 hours and 11 months to settle while estates over $5M average almost 1,200 hours and 42 months! (EstateExec, 2021)
One executor’s story
I am currently acting as executor of my dad’s estate. He did tell me that those were his intentions, but had I known then what I know now, I would have asked for more information (and gotten him more organized) while he was alive. He did some things in advance that made it much easier to proceed as executor, but there are other things I wish he had done.
Communicate with your executor. I know finances tend to be private, and he was private, but every little insight into his financial affairs helped me a lot.
My dad wrote down his funeral wishes. This was invaluable. He even went so far as to give me the name of the engraver that I should use on the headstone, so the fonts would match my mom’s!
Provide a copy of your estate docs and the contact information for your estate planning attorney and other financial professionals (CPA, insurance agent, financial advisor)
Keep an up-to-date list of accounts and assets and give it to them, or tell them where you keep it. (We had to go through piles of statements and mail to find this.)
Make sure your executor can find copies of your tax returns and other important documents, like title to your car, death certificate of spouse, social security number, etc. (Again, those piles of papers!)
Keep a list of current usernames and passwords and tell them where to find it.
If you have any special bequests, for example jewelry or art, be sure to include it in your will or at least make a written list to help family members distribute them without animosity or confusion. I know of many friends who have permanently damaged relations with their siblings over distribution of their parents’ belongings.
Make sure there is plenty of cash available. Estates need funds for funeral costs, income taxes, attorney fees, CPA fees, estate taxes, and if you own real estate, maintenance and taxes on the real estate until it can be sold. It can take months for the courts to provide the proper authorization for executors to have access to accounts, and bills still need to be paid.
In my case, the document from the court took over four months. In the meantime, most of his regular bills still needed to be paid. I was extremely fortunate that my dad had appointed me as a joint account holder on his bank account and held a generous amount there – enough to cover the expenses until we were able to sell the house. In addition, he had his utility bills on autopay, which allowed for uninterrupted gas and electric.
Make sure your beneficiaries are up to date on any retirement and/or annuity accounts.
Make a notation in your estate documents for any compensation you wish to be paid to your executor. Probate courts will uphold reasonable compensation for executorship; however, most executors will not request payment.
Your executor will do everything from pay your bills, do your taxes, deal with the IRS, and clean out your basement. It is not a glamorous job. Executor compensation can be determined by what state you live in.
Getting it straightened out ahead of time
An estate plan is an important aspect of your overall financial strategy. If you are seeking guidance on your financial planning and investments, as well as coordinating it all with your estate plan, contact us.
Sources
EstateExec. Estate Settlement Statistics. Retrieved on June 3rd, 2021 from https://www.estateexec.com/Docs/General_Statistics