Being trusted with handling a loved one’s estate is an honor. It’s also a taxing job at the best of times, mentally and, often, emotionally as well.
Those in the role of executor should focus on staying organized, and should not shy away from reaching out for help to ease the process as much as possible. And if you have not yet created your estate plan, or even just drafted a will, it’s never too soon to make sure your survivors will have what they need to get your estate taken care of according to your wishes.
The first thing an executor should keep in mind is this: it takes time. “Handling an estate is very slow,” said Paul Viren, president of the National Association of Estate Planners and Councils, in an interview. “People’s lives can be complicated, even in the simplest of situations. It’s first gear the whole way.”
What does an executor do?
At the core of an executor’s role is figuring out what the decedent’s assets are, and then what to do with them.
Legal information website Nolo.com explains the typical duties of an executor, which include:
- Finding the deceased person’s assets and manage them until they are distributed to inheritors
- Deciding whether or not probate proceedings are needed
- Figuring out who inherits property
- Filing the will (if any) in the local probate court
- Handling day-to-day details
- Setting up an estate bank account
- Using estate funds to pay continuing expenses
- Paying debts and taxes, and
- Supervising the distribution of the deceased person’s property
This process can be more or less complex, depending on the decedent’s family and financial circumstances.
Figuring out who gets what
The first step, Viren said, is to “take a deep breath. There’s no proverbial clock ticking. It’s not a race. Better to be organized and disciplined than to try to rush through to the end.”
Organization is key when dealing with an estate, and an inventory is an executor’s best friend. Start by taking stock of the assets you’re dealing with.
Assets generally fall into two categories: those that go through probate, and those that don’t.
Things like IRAs, retirement savings plans and life insurance policies go directly to the beneficiary, as do Payable- or Transferable-on-Death accounts, and most trusts. Naming a beneficiary generally allows an asset to bypass probate, which makes the transfer easier, although challenges can happen if a beneficiary designation doesn’t look right. (Related: Trust services)
“Take for example having an ex-wife listed as the beneficiary on a life insurance policy,” Viren said. “Was it a court order as part of the divorce settlement that the ex-spouse stay listed on life insurance? Or was the beneficiary designation just never updated after the split?”
To determine the fate of probatable assets, start by looking at the will, if there is one. Probatable assets tend to be less cut-and-dry than those with a named beneficiary, and each unique situation must be handled appropriately depending on what’s on the table. (Related: Why People Fear Probate)
Titled assets, like a car or a house, would have to transfer or be sold. Non-titled assets (which are pretty much everything else) need to be re-homed or disposed of. Heirlooms or other precious items should be dealt with according to the decedent’s wishes, and a will can help to settle disputes that might crop up in the absence of clear direction on who should receive them.
“If the decedent owned a business,” asked Viren, “how do we deal with management of that business? Who runs it until it can be sold or shut down or whatever’s going to happen? If the person had non-business responsibilities, like liability for children from a prior marriage, how is that handled?”
Dealing with claims on the estate
But even when a will exists, it often doesn’t capture the full picture. While the will states the decedent’s intent for the distribution of his or her property, claims on the estate must also be dealt with. (Related: Will basics)
The executor must determine and pay debts from the estate and file the decedent’s final taxes before any remainder can be distributed to heirs. Depending on the situation in the decedent’s final days, especially if the death was sudden or unexpected, this may include sorting through medical insurance and bills.
“Figuring out who’s responsible can sometimes be tough,” Viren said. “Dealing with people saying ‘I’m owed money from the estate’ can be challenging,” especially if unexpected claims arise.
And that’s not just because of the stress of keeping everything in the estate accounted for. Underneath the logistical tangle lies the emotional component. Dealing with an estate may benefit from organization, but in many cases the executor is also family or otherwise close to the deceased, and it can be difficult to stay organized in the wake of losing a loved one.
“They’re in a stressful situation, their world has been turned upside-down, and they have to deal with managing what’s left behind. It can be a lot,” said Viren.
But if it all seems overwhelming, remember that handling an estate is generally not something the executor does alone.
Help for estate executors
There are a number of people who generally need to be involved when deciding where the decedent’s money goes, and a key component to successful estate management is the step that Viren refers to as assembling the team.
“Generally, the core team consists of the CPA, the attorney, and any family members key to the situation,” Viren said. It can also include insurance, medical or HR professionals, depending on the circumstances around the death and claims surrounding the estate. (Related: Find an advisor)
This team can help the executor stay on track and make good decisions. Communication is key, Viren cautions, both among the team members and also between the team and the family to make sure there are no hidden agendas or underlying suspicions.
“Most people named executor aren’t trained to deal with this sort of thing,” said Viren. “That’s where the team can help.”
In addition to having a team for support, executors are generally entitled to some kind of compensation, which may also help to ease the burden of taking on the management of an estate. But if the prospect is still too overwhelming, executors do have the option to resign from administering the estate, after which the probate court will assign someone else to step in.
Make it easier on your executor
Processing an estate tends to be easier when everything is in order, so creating an estate plan can go a long way toward helping your executor handle your final affairs after you’re gone.
“An estate plan doesn’t have to be complex,” said Pete Lang, founder and president of Lang Capital in South Carolina. “However, everyone should take the time to help ensure that their financial and personal affairs are in order prior to their death.”
Creating a will is an excellent first step, and it’s important to keep it — and beneficiary designations on any eligible accounts — updated as time goes on. Viren also recommends creating a password list to streamline the handling of your digital presence, as well as an emergency document with everything from your blood type to emergency contacts and doctor information: whatever would help your family handle an emergency of any size. (Related: What my loved ones need to know)
The most important documents you leave behind, though, may not be the legal ones.
Viren tells his clients to create handwritten love letters to family and leave those sealed envelopes with the legal documents so your family will have something from you that’s not an asset assignment. He highlights this as a chance to remember happy things, express your love, or even to ask for forgiveness, because families aren’t perfect. This is the personal, human side of a legacy and shouldn’t be overlooked in the process of estate planning.
“No matter where the journey takes us, it all starts with a love letter,” Viren said. “It should end with love letters too.”
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