I’ve Been Asked to Serve as an Executor: What Do I Need to Know?

A friend or relative asks you to be the executor of her estate. What, exactly, is she asking you to do? You may feel honored by the trust being placed in you, or you may be motivated by feelings of loyalty to family or friends. For many small and medium-sized estates, the executor is often a friend or family member, so this decision is a common one. But it is an important decision with many ramifications, so you need to consider carefully what you’re getting into.

You can start by simply googling, “What does an executor do?” You’ll get multiple results, and a little bit of internet research is very enlightening. You’ll learn, for example, that the executor has to find the deceased’s relevant documents, starting with the will. The executor must inventory the decedent’s assets and debts and arrange appraisals for the tangible assets that the deceased may have owned. In addition, you must communicate with financial institutions and governmental agencies, manage any property owned, and keep careful records of everything. If the estate includes a home, the house may have to be emptied of possessions and readied for sale.

Individually, these activities may not seem intimidating, but they add up. A survey by EstateExec, an online tool for executors, found that the typical estate takes about 16 months to settle and requires 570 hours of effort. Estates worth $5 million or more typically take 42 months to settle and 1,167 hours to complete. Some of those hours will be hired out to professionals—attorneys, a CPA, or a wealth advisory firm—but the executor has to watch over and coordinate everyone’s efforts.

Disputes are not uncommon. You may find yourself in the role of referee when the heirs disagree about the way the assets were divided, and they may disagree with some of your judgment calls, such as whether to spend the estate’s money to fix up a house for sale.

For all these reasons, the role of executor for larger and more complicated estates is often assigned to a legal professional specializing in estate planning and management, or to an institutional manager such as a bank trust department. Most states’ laws allow for an executor to be compensated for time spent in managing the estate, but when the executor is a friend or family member, they often decline payment. However, that doesn’t mean the job won’t require time, effort, and emotional commitment.

Before you accept the role of executor, you might insist on seeing the will or trust documents to ensure that there aren’t any unpleasant surprises that could cause discord among the heirs and to make sure that everything is inventoried and the assets are in good order. You can also insist that the documents name alternates in case you can’t or decide you really don’t want to serve in this complicated role. It’s very important to know what you’re getting into before agreeing to serve as executor of an estate, no matter how close you are to the person making the request.

As fiduciary wealth managers, we help our clients make wise decisions about managing their assets, both now and in years to come. To learn more, click here to read our white paper, “Securing Your Legacy: Basics of Estate Planning.”

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Empyrion Wealth Management (“Empyrion”) is an investment advisor registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. Information pertaining to Empyrion’s advisory operations, services and fees is set forth in Empyrion’s current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Empyrion. The information contained in any third-party resource cited herein is not owned or controlled by Empyrion, and Empyrion does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Empyrion of the third party or any of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner or investment advisor.

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