You’ve Been Asked to Be the Executor for an Estate. Now What?

  • Wealth transfer
  • 12/9/2014
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Being an estate executor or trustee is both an honor and a serious responsibility. Do your homework before you say yes, and seek help if you need it.

If a friend or family member designates you to be the administrator, executor, or trustee for an estate, you might look at it in a couple of ways. Yes, it is an honor, but before automatically accepting the request, consider the seriousness of the responsibility.

Once you know about the duties and potential risks of the job, you may give it more than passing consideration before accepting the offer. If you do your homework, you’ll be prepared to earn the trust that he or she has placed in you.

It’s the same story if you’re the one choosing a person or institution to handle your own affairs after you are gone. It is a decision that can have real consequences for important people in your life, and should not be treated lightly.

In legal terms, an individual or organization who is making decisions and conducting the affairs of another has a “fiduciary” responsibility to the person being represented. Fiduciary simply means that the individual, bank, trust company, or other qualified organization is obligated to act in good faith solely on behalf of the person he or she represents.

Choosing a fiduciary can be part of estate planning, financial planning, setting up a trust, disability planning, guardianship of minor children, and estate administration, to name just a few.

Roles and responsibilities of an individual as executor or trustee

In the majority of instances, a loved one is designated as executor or trustee. Such decisions are almost always wrapped up in emotion, which means they may not be fully accepted by all parties. After all, this person must be counted on to fulfill the intentions and desires of a family member who has passed away or who can no longer act on his or her own. Some may question the executor’s qualifications or feel slighted because they were not chosen. Others may question someone’s impartiality.

At the same time, many individuals are unaware of the meaning and practical application of the executor’s or trustee’s role. In virtually every state, any breach in loyalty to the person being represented creates personal liability. In other words, if you are found to have breached your official responsibilities, you could be held personally liable and thus, your personal assets are at risk.

Having seen or been involved in hundreds of estates, I can personally attest to the fact that, had some individuals known what they were getting into, they would have declined to act as fiduciary.

It is often the simplest of intentions and the least valuable assets that create the most lasting animosity between friends and family members. For instance, there could be a tight-knit family where one sibling sues another over the sale of some sentimental knick-knacks that belonged to a deceased parent. One sibling is the executor, the other is not, and they disagree over this one minor action, even though it is clearly stated in the parent’s will. The suit may end up being dropped, but the conflict can be lasting and the emotional toll devastating.

The point is that the decision to accept the role of fiduciary is not as easy as it may seem. Likewise, when considering whom to appoint as executor, there should be full disclosure of roles, responsibilities, and potential complications. If you are the one who has been named, ask questions so you can fully understand what you are getting into before you say yes.

When to consider an organization as executor or trustee

You may wish to remove the burdensome aspects of the executor’s job from an individual by placing them in the hands of a team of professionals experienced in managing these matters. Typically, a bank, trust company, or some other professional services firm can act in a fiduciary capacity.

There are a number of reasons for choosing a qualified organization over an individual. It may be done to spare a surviving spouse or family members from the complex, often tedious details of settling an estate. It is also a common course of action when family members have shown that they are not up to the task, or that there will be conflicts that will make it difficult, if not impossible, to satisfy all parties.

An individual who has no expertise in the areas that the executor must handle may also wish to engage a team of professionals to provide advice in areas of specialized knowledge and experience. By doing so, the individual can be more confident in the decisions he or she must make.

All of the same standards of honesty and impartiality apply to institutions in the exact same way as they apply to an individual. The most important difference is that these organizations employ people who have spent a great deal of their professional careers acting in this capacity, or who have insight into specific aspects of the estate — taxes, legal contracts, investments, real estate, law, and other areas of specialized knowledge.

Because of this independence, you can often achieve the desired outcome without the emotional issues that can be attached to the role when it is performed by an individual. The decision-making process is usually clearly delineated in legal documents before it is accepted by the professional fiduciary. That typically means less ambiguity and fewer questions when decisions need to be made.

How we can help

At the very least, an attorney is going to be involved in settling an individual’s estate. Other professional services firms may also serve in an advisory capacity as you develop your estate plan or set up a trust. Every situation is unique, but to address the legal, financial, and human aspects of estate and trust issues, we recommend you seek guidance early and often throughout the process.

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