You’ve been asked to be an Estate executor. What does that mean?
by David Straus, CEO Legacy Logix
Your parents, a relative, or a close friend asked you to be their executor. What does this mean, and what should you do now?
More than 20 years ago, my parents asked me to be the executor of their Estate. I'm the most business-focused of my siblings, and our parents didn't have any brothers or sisters. I didn’t think twice: my answer was yes. But saying yes to the role was not the issue. My lack of understanding and not spending any time learning about the role was my big (and I mean BIG) mistake.
As the executor, you are responsible for everything in the settlement process, and it can be a massive effort. As important, as executor you are the decision maker, and that potentially puts you in an awkward position if any of the other stakeholders (e.g. beneficiaries) dispute a decision you made or have an agenda that conflicts with your role as a fiduciary for the Estate.
Here is a partial list of those responsibilities.
Filing the Will and Probate
Identifying and Securing Assets
Notifying Beneficiaries and Interested Parties
Paying Debts and Expenses
Filing Tax Returns
Distributing Assets
Accounting and Record-Keeping
Closing the Estate
If the Estate is in great shape, then you simply have a ton of work in front of you. If there are issues with the Estate, this work multiplies exponentially. In my case, settling my parents’ Estate took me hundreds of hours. Not sure if it is closer to 300 or 500 hours, but it was months of my time over the course of multiple years. And 4 years in, I'm still not done.
My experience settling my parents Estate, combined with my passion as a product person and technology entrepreneur led me to team up with some colleagues and start Legacy Logix. We designed the software to help people like my parents manage their Estate plans so that the issues I talk about below can be avoided. And to provide a blueprint for their successors in charge of settling Estates. Had it existed, I would have used a solution like Legacy Logix to work with my parents to make sure their Estate was in great shape. I also would have used it to manage the settlement process.
Here is a list of things I would have done with my parents, if I had known better. Honestly, if anyone else asks me to be their executor, I’ll ask them to work with me on this list. And if they aren’t willing, I'll likely say no.
Ensure you have access to Estate documents
This includes the Estate plan documents (wills, trusts, powers of attorney), as well as other documents critical to their Estate (title to their home, insurance policies, etc.). Without these documents your problems range from bad to horrible. If you can’t find the title to their home you will need to go to the county and get a new title sent. That will cost you hours, and headaches. If you can’t find their will or trust, then you have a real problem that can only be dealt with through the courts.
Confirm legal documents are correct and up-to-date
Here's a real example of why this matters. A couple listed their grandchildren by name as beneficiaries in their trust. A new grandchild was born, but the trust was not updated. The couple passed. At this point, the executor does not have the right to assume they meant to include that new grandchild. If all of the stakeholders agree to include the new grandchild, then you only have minor work. But if one of the stakeholders doesn’t agree, there may be nothing the executor can do short of litigation.
Ensure Estate holders have documented their Estate assets
You’ll need to know about all assets for settlement. This includes the obvious: home, cars, financial accounts, businesses owned, property, insurance policies. But this should also include the less typical, such as stock options, or saving bonds stored in a safe. This should also include any valuable assets that the executor will need to deal with, such as jewelry, art, a special Pokemon card collection, collectible dolls, antiques, etc.
Ensure Estate holders have identified how to distribute special assets, such as jewelry
In my parent's case, they said everything should be split evenly between their kids. This is easy when you are dealing with financial accounts. This is very hard when you are dealing with things that are of varied value and may be sentimental. I’m still working through the process of dealing with my mom’s jewelry. It would have been much easier if she had allocated specific jewelry pieces to each of the kids.
Verify that all relevant Estate assets are held in the name of the trust (if there is one)
This is critical when a trust is involved. The objective of the trust is to avoid the court system (probate). However, any asset not held in the name of the trust may require effort and money to work through probate anyway.
Verify that the beneficiaries named in the Estate holder’s financial accounts do not conflict with the beneficiaries in the will or trust
The beneficiaries listed in a financial account will get the proceeds, regardless of what is stated in the will or trust. In this real situation, a man divorced in 1999 and remarried in 2006. He passed in 2023. He never updated his retirement account, which had his ex-wife’s name listed as the only beneficiary. There was nothing his current wife of 17 years could do.
Make sure the Estate holders have provided you with a way to access their passwords
These should include passwords to all their online accounts. You will need access to some of these accounts (such as their email) to perform your role as executor. Also consider the pin to their phone - some companies use SMS to verify the right to access an account. Eventually, you will need to make decisions about what to do with their email account, their social media, etc.
Ensure you have access to the Estate holder’s bill-paying mechanism
Settling the Estate includes paying final bills and closing accounts that might have recurring costs. Without access to what payments have been made, it is hard to figure out what accounts you will need to deal with.
Ensure the Estate holders have provided access to tax returns for the last 3 years
This is critical to filing final taxes for the Estate. These tax documents are also a fantastic wealth of knowledge regarding assets owned - you may find an asset reflected in the tax forms that you would otherwise be unaware of.
Optionally, but of great help: consider working with the Estate holders to downsize their home
I understand if you want to avoid this - it’s a tough one. I spent almost 3 weeks going through my parents’ home. I had to work with my sisters to decide what they wanted and what could go. There were years worth of paperwork to sift through, which in the end was worthwhile because we found some valuable family heirlooms. It would have been nice to have things better sorted before the fact. Toss what you can and write down what is staying and who gets it.
In addition to working through these items with the Estate owners, I would recommend having an annual meeting to review for changes. Are there any new assets? Has a grandchild been born that would cause them to change their will or trust? Are there any other changes in their family or financial circumstances that would affect the Estate?
Nobody likes to consider the passing of a loved one. Nobody likes talking about what must happen after they have passed. As uncomfortable as reviewing the Estate owners Estate plan is, not doing so can really create problems for you. It will take you far less time now to make sure the Estate you will be settling is in great shape, than it will to deal with the problems once you are in the executor’s role.
