Being a designated executor of estate is a serious responsibility. Perhaps while still grieving over the loss of the loved one, you will begin a challenging journey to ensure that the affairs and assets of the deceased are executed according to their final wishes.
Hopefully, you already know the location of all essential documents and can retrieve them promptly to begin the process.
Executor Mistakes to Avoid
1. Hiring the Wrong Legal Counsel
Proper management of the liquidation of the estate does not mean hiring a lawyer friend or brother-in-law who specializes in real estate or malpractice cases. Appropriate legal advice is essential in executing a will. Hiring an experienced and reputable probate lawyer to help efficiently administer the estate should be your first step. The individual can provide timely advice regarding minimizing taxes and handling any probate issues.
2. Keeping the Beneficiaries in the Dark
A common executor mistake is trying to handle estate affairs without keeping all beneficiaries informed of the progress. Not only can this create anxiety and strain the relationship among family and friends, inactivity or lack of communication may even cause other beneficiaries to try to remove you as the executor.
3. Not Acting Promptly
Do not delay in producing documents and addressing issues as they arise. Slow or no response in these instances delays the whole process. According to a recent Forbes article, inactivity happens frequently. If you are not confident in your ability to handle the job or are too busy, then you should consider having the alternate executor named in the Will serve as executor. This decision should ideally be made before you have qualified as executor.
4. Confusing Probate and Non-Probate Assets
Probate property is distributed to the heirs by the courts. Other assets, non-probate, may be distributed directly to specified heirs. Your legal advisor can help you understand the probate process, which involves a court ruling to complete.
Non-probate assets are those that can bypass the courts because they have beneficiary designations already. Assets including insurance policies, annuities, payable-on-death bank accounts, and other financial instruments are non-probate items. Nevertheless, these assets should not simply be distributed to beneficiaries since inheritance taxes may need to be paid from them prior to distrubution. Discuss this issue with your probate attorney.
Probate assets have no beneficiary designations or may not be held as a joint tenant with right of survivorship. These must pass through a probate court process and distributed according to the will if it exists. If no will is in place, the probate assets will be distributed according to state statute.
5. Take Personal Advantage
If something of real value is to be liquidated, do not try to sell it to yourself at a price significantly below market value. “Self-dealing” is a breach of your responsibility and can even be viewed as stealing from the rest of the beneficiaries.
6. Not Liquidating Securities Before a Market Downturn
As we well know, the stock market can swing in any direction. Rather than being accused of speculating with the other heirs’ assets by holding these unnecessarily, consider selling immediately. Holding securities through a sudden and prolonged downturn like 2008-2009 can make you very unpopular with the other heirs.
7. Forgetting You Have Legal Responsibility
Improper management or disbursement of the estate can become your personal liability. In these instances, your assets may be at risk to repair any damage that has been done by your actions.
8. Not Taking the Job of Executor Seriously
If you feel that the trustworthiness, communications, scope, or responsibilities of becoming an executor of an estate are beyond you, do not take the job. Executors have strict legal obligations. Poor performance may prolong the probate process unnecessarily and permanently damage your relationship with the other heirs.
About Giuditta Law
Nick Giuditta provides sound advice for a variety of estate planning issues, including wills, trusts, durable powers of attorney, probate, and estate administration and other elder law matters.