Although being the executor of an estate is a great honor, it is not always easy. It can be stressful and confusing, especially if you've never been through the process. However, with a little research and planning, you can prepare yourself and avoid small mistakes that could become big problems. Here are some suggestions you might find helpful.
The best thing you can do is become familiar with your responsibilities as an executor. Learning what you will be doing from the beginning can keep you from feeling overwhelmed, which could help you as you go. You will be responsible for:
- Carrying out the terms of the will
- Paying all debts
- Filing taxes
- Distributing assets
Failure to do any of these things can lead to delays and legal issues. The executor's job is also fiduciary, which means you are legally bound to represent the best interests of the heirs and beneficiaries. You must act in good faith on their behalf and never your own. Consulting a probate attorney can help you get an overview of what your job will be.
Keeping communications open between all parties may help prevent drama between heirs and beneficiaries, as well as avoid legal disputes. Transparency is extremely important at all times. It will prevent anyone from questioning your integrity or trying to remove you from your position. Provide regular updates on your progress, clear expectations concerning timelines, and respond to questions promptly.
Don't wait too long to file the will. Other important documents shouldn't be overlooked, either. Probate is the legal process of validating the will, and nothing can be done until the will is declared valid. Delays in the process slow down estate administration. It also causes frustration among heirs and beneficiaries. Waiting too long can also allow bills to pile up, and things become more complicated. As the executor, it's your job to see that all paperwork is completed in a timely manner. File the will as soon as possible to ensure validation. Once that is done, gather all the necessary documents. Notify creditors and handle all debts and taxes in order to avoid missing deadlines.
Keeping up with those deadlines can be confusing. When it comes to creditors, some must be notified by certified letters with a legal amount of time to respond, while others are notified through a local newspaper. Consideration must be given to time of publication, as well as a reasonable amount of time for the creditor to see the notice and respond. Some debts have a thirty day deadline, while others have a ninety day deadline. Consulting a professional accountant can help avoid missing any deadlines when it comes to filing taxes. To keep everything straight, use a calendar or reminder program, such as a physical wall calendar or computer program. Either one will help reduce the stress of keeping up with what may seem like endless deadlines.
How you manage the estate is important as well. Here are some common mistakes executors make.
Determining the estate's value – You must determine the value of the estate. This involves more than financial assets. You must determine the value of such things as artwork, jewelry, antiques, and vehicles. Don't try to cut corners when it comes to determining estate valuation. Just because your neighbor has two mink coats doesn't mean she “knows all about them,” or your cousin with the used car lot has the expertise to evaluate a Rolls Royce. Calculating the value of items that depreciate can be especially difficult. Take the time to consult professionals in order to get accurate valuations.
Not keeping proper documentation – You will need detailed records of all transactions. Records of all communications and decisions made are also a good idea. Doing this allows for transparency and avoids disputes and confusion. Keep copies of receipts, statements, and letters in an organized file.
Distributing assets before the estate is ready – The probate process done correctly takes time. Debts must be paid, and taxes must be filed. Beneficiaries, however, often expect to receive their inheritance right away and may try to pressure you into distributing the estate too soon. If you do this, the estate could be responsible for any penalties or fees. Beneficiaries might even have to return their inheritance to cover any expenses the estate is unable to pay. Don't let them push you around!
Improperly paying claims/paying in the right order – Claims should be paid in a certain order. First to be paid should be any estate administration costs, as well as support fees, such as hospital or funeral services. Next, pay all bills and taxes. Finally, beneficiaries receive their inheritances. If you make any mistakes in paying expenses, you could be held personally liable.
Overlooking Taxes and Debts – Failure to pay estate taxes and outstanding debts may result in penalties, increased interest payments, and legal complications. Avoid this by making sure all debts and taxes are identified and paid as soon as possible. Keep accurate records of all payments. Consult a probate attorney or tax professional, if necessary, to be sure you are in compliance with all tax laws in your situation.
Improperly closing the estate – Once everything has been completed, it's time to close the estate. One way to do this is to go through the formal court accounting process. You may also file a “Family Settlement Agreement,” in which everyone involved agrees with the way the estate was handled. This is then submitted to the judge. If the judge accepts it, the estate is declared closed.
Serving as an estate executor may seem overwhelming, but it doesn’t have to be. Although some preparation is helpful, the assistance of a good probate attorney can help you keep things going smoothly and legally. Nancy Eaton can help you with any questions you might have. With years of experience, she can help you feel like you carried out your loved one's last wishes with pride.