You’ve been asked to serve as an executor for a family member or a close friend.
I didn’t know that my uncle had named me executor of his will until shortly before he passed away. He called to let me know about his desire for me to take on the role, and that he trusted me to handle his financial affairs.
It was really nice to hear that he trusted me. What I didn’t fully understand at the time was how much work would be involved to fulfill my duty as executor.
My uncle’s estate was too small for a bank to settle (most banks have a minimum estate value of $1 million threshold for that service), but there were still many details to address like a condo, bank and retirement accounts, credit cards and personal possessions.
I admit to feeling a little embarrassed for not appreciating how much work a relatively simple estate would take. At the time, I was head of Investment Management & Trust at Wells Fargo. People on my team settled hundreds of large, complex estates every year. I knew what they did for our clients, but what I learned is that it’s a lot different when you’re doing the work yourself.
If you’ve been asked to serve as an executor for a family member or friend, here are some ideas to help you understand what’s involved.
The term “estate” refers to all of an individual's assets and liabilities. Estate settlement is the closing chapter in someone’s financial life. If you serve as executor, you’re carrying out the terms of someone’s will.
There are three primary responsibilities during estate settlement
1. Determine what assets were owned by the person that passed and place a value on them
2. Pay any debts and taxes that may be owed
3. Transfer assets to the people or institutions identified in the will
That said, the estate settlement process can take a lot of time to complete. In many cases, more than 12 months. Probate is also a possibility, which will see a public court manage the transfer of assets to beneficiaries after paying off debts and taxes; there are ways to avoid probate (i.e using a trust). Probate can extend the settlement process timeframe.
If you agree to act as an executor, learn as much as you can from the person asking you to serve.
Some questions you should ask when named an executor:
- What are the details and situational factors? For example, is this a larger estate or smaller?
- Are there a lot of different types of assets involved – financial securities, real estate, businesses, art and collectibles or is it simple with just a few bank accounts and personal possessions?
- Who are the beneficiaries and how do they get along with the person who created the will?
- How do they get along with each other?
- Are there other factors that could make the estate settlement process more challenging? For example, children from multiple marriages, long running litigation issues or open income tax issues?
- Are there any unusual family dynamics?
It is an honor to be asked to serve as an executor. It implies trust and respect you’ve earned with the person making the request. It’s also a big commitment for you. The more information you can get from the person asking you to serve, the better off you are. For a comprehensive list of all steps involved in the estate settlement process, check Atticus' ultimate guide of What to do when someone does - 2020 checklist.