An executor’s job is no easy feat. However, an Executor will be properly set up for success with proper estate planning. An executor has the following responsibilities:
- Sort through the assets, debts, bills, and other financial affairs of a deceased person
- Hire an attorney, and then follow the rules prescribed by the state to ensure that the estate is settled following the terms of the will and applicable law.
An executor who does not follow the rules is likely to be either removed from their role or held personally liable for any damages that may result. The ten most common costly errors that we see executors make are the following.
1. Ignoring Claims Against The Estate
It is common for an estate to have debts. The executor is responsible for ensuring that all valid estate debts are paid from estate assets. Distributing assets to beneficiaries before ensuring that all estate debts are paid may result in personal liability for the executor.
2. Getting Advice From Friends Instead of Professionals
Not every attorney and accountant is well-versed in the intricacies of estate law and estate accounting. Make sure you get “professional advice” instead of “friend advice.”
3. Failing to Collect Estate Funds in Estate Account
Do not deposit any estate funds into your personal bank account if you are an executor. And, if you do not collect estate funds into an estate account, you will be violating probate procedure rules, and you may be removed from your role.
4. Confusing Probate Assets With Non-probate Assets
Do not include the deceased’s IRAs and life insurance policies in the probate estate when the deceased was the owner and the accounts are payable to beneficiaries. These accounts are typically referred to as “non-probate assets.” The account owner likely designated beneficiaries on the account with the financial institution or the insurance company, so they do not need to go through probate.
5. Failing to Communicate
Failing to communicate estate information to the estate beneficiaries can make those beneficiaries doubtful, nervous, or anxious. On the other hand, an executor who is transparent with all beneficiaries regarding estate assets, debts, income, and expenses will likely be praised and trusted by the estate beneficiaries and reduce the chance of any family infighting.
6. Failing to Supply All Asset Information
Ensure you provide all of the information regarding the deceased’s assets on the front end of the probate process. Discovering that the deceased owned an asset after probate has concluded requires the estate to incur additional expense and delay.
7. Not Following the Terms of the Will
Even though you know that the testator may have intended for their estate to be distributed in a manner other than what the terms of the will provide, an executor must follow the terms of the written last will and testament. An executor who does not follow the terms of the will may be personally liable to beneficiaries who should have received more according to the will.
8. Paying Estate Funds Too Early
An executor can get themselves in trouble when they quickly distribute the cash in the estate to the heirs and then later realize that cash was needed in the estate to pay debts or other estate expenses. Review the entire estate plan before distributing any funds.
9. Executor Delay
Many people complain that probate takes a long time to complete. And when you add additional executor delay to a process that is lengthy to start with, you often wind up with frustrated estate creditors and beneficiaries. In addition, assets that were owned by the deceased need to be maintained throughout the probate process. Executor delay in maintaining estate assets and keeping estate expenses and bills current can cause harm to the estate’s value.
10. Self Dealing
Because you were named as the executor of a will, you do not have the right to treat yourself by purchasing estate assets personally for less than fair market value. If you do so, you may find yourself removed from your role for self-dealing and held personally responsible for any losses to the estate.
Every Estate is Different
Since each estate varies in complexity and size, an executor’s job may be easy to handle for a few months, or the estate settlement can pose numerous challenges that take years to resolve. Therefore, an executor needs to understand essential executor roles and responsibilities before embarking on their estate settlement journey.