f you’re named as an estate executor your responsibilities will be extensive. All of the decedent’s assets, from bank books to antique quilts, will have to be distributed as per the decedent’s wishes. Titles need to be changed on securities, real estate and cars. As you can imagine, this process can be unsettling. Therefore, it’s best to do the groundwork ahead of time.
You and the person who is naming you as executor should go over the entire estate plan in advance. Preparation now will reduce the tensions that inevitably will appear at the time of death. As executor, here’s what you should know about:
A will: Without a will, the state will decide how the decedent’s assets are to be distributed. In some states, half of all assets will go to the children of anyone who dies without a will. Minor children may become wards of the state, and the surviving spouse may have to account to a court for every penny spent on the children’s behalf. Other relatives, including parents, may have no claim on the estate. With a will, a person can decide how his or her assets should be distributed.
Moreover, the will is where you’ll be named as executor. After the death it will be up to you, as executor, to inventory assets, protect them against loss, pursue outstanding claims, pay bills, file tax returns and pay taxes. As executor, you will be responsible for protecting the heirs — and liable in case things go poorly.
Therefore, you should know what the assets are, how the title is held, and where the paperwork can be found. A formal “organizer” may help. In Florida, for example, the typical process of settling an estate takes between 12 and 18 months, while settlement costs range from 3 percent to 6 percent of an estate’s value. If an organizer is in place beforehand, settlement time may drop to six months or less while costs may fall to around 1 percent.
You should see the will, or at least know what’s in it, so there will be no surprises. If there are heirs you don’t know you should meet them, to get an idea of the personalities involved. Because you will be responsible for filing tax returns after the death, a meeting with the decedent’s tax preparer likely will help things go more smoothly.
A letter of instruction: Most people won’t change a will every time they buy a new car or sell mutual fund shares. Therefore, the decedent may want to leave a letter of instruction in addition to the will. This letter can spell out, in some detail, exactly what assets will be in the estate and how they should be distributed. Such a letter is not legally binding but it may help you locate assets and decide how to distribute them.
Remember, the death of a loved one is a very emotional time for the survivors. People may argue over who gets this plate or that picture. The more that’s done during the decedent’s lifetime, spelling out his or her wishes, the easier it will be for everyone.
Suppose, for example, there are some valuable watches to be left to a nephew or some jewelry for a cousin. That type of bequest can be handled in a letter of instruction to the executor.
Although bequests should be discussed in detail with everyone concerned, there may be some things the decedent would rather not discuss. In that case, he or she might want to make a video recording with a final message to the heirs as well as other instructions.
Insight: Some people keep what they call a “death drawer”, known to all the family members. In that drawer can be left a video and a letter of instruction spelling out property wishes. Even if the decedent has explained everything carefully to the heirs, it can’t hurt to go over it all again, on tape and in writing, so everyone knows exactly what the decedent had in mind.
Life insurance: As executor, you should know how much insurance is in place and where the policies are kept.
Funeral and burial arrangements: Does it make sense to pay for a funeral in advance? The main advantage of prepaying for funeral and burial arrangements is peace of mind. Survivors won’t have to make those arrangements during a time of stress. That’s especially true if some family members live far away and travel delays might complicate matters.
Insight: Be sure to find out about such arrangements. Otherwise, you may pay again for funeral arrangements or a burial plot, unaware that the decedent had already paid for them.
You should make sure you have all the details and that any deeds or contracts are in an accessible place. Don’t let your loved one put funeral and burial wishes in the will if the will is kept in a safe-deposit box. That box may not be opened until after the funeral – too late for burial instructions.
To minimize problems, heirs should know in advance what they’ll be inheriting, and why. Ideally, your loved one should go over the estate plan with each heir, but that may not be practical, because of personality clashes. If that’s a concern, a professional adviser (lawyer, accountant, financial planner) can be included in such meetings. That makes the meeting more businesslike and may help keep the heirs from being touchy about certain subjects. Facing up to the fact that death is inevitable can make life easier for the survivors.