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I recently heard from a former client who wanted to reengage our services. Naturally, I asked her why. "I was named the executor of my father’s estate last year, and I now have a huge appreciation for what you do."
Whether one is named as the executor or personal representative in a will or the trustee or successor trustee for a trust, being chosen to carry out someone's last wishes can be viewed as a high compliment. The person writing the will – the testator – often selects a person they trust and believe to be competent to handle their affairs. This is most commonly a family member, usually a child.
The person selected often feels so honored to be named that the response is almost always a gracious agreement. Sometimes, there is no request. The executor is simply named in the will and might be told at a future date, or even worse, upon the death of the person.
In most cases, neither party understands the huge time commitment, complexity, and liability that being an executor entails. It’s possible that, if both did, fewer people would be asked and even fewer would accept the job.
It takes up to 18 months to settle about 80% of all estates, according to Estateexec.com. If the estate is over $5 million, the average time jumps to over three years. The average executor will spend 570 hours working to settle the estate. On estates over $5 million, the time more than doubles to 1,167 hours.
Clearly, being named an executor means taking on a part-time job. Often, executors have day jobs so the duties of being an executor happen during lunch hours, after work, and on weekends.
The challenges of managing the probate of an estate go far beyond the time required. An executor needs these attributes:
- Patience and organization. Legal processes take time. Heirs may need repeated explanations. Countless administrative details need attention: sorting paperwork, tracking expenses, inventorying property, and meeting deadlines.
- Willingness to work and to learn. Executors commonly work closely with attorneys, accountants, and financial planners. It's important to be able to learn from and be guided by the professionals, accepting both the responsibility to make decisions and the obligation to carry out assigned tasks. It's a bit like being simultaneously the boss and the lowest-level employee. Completing the required inventory of the estate, for example, can involve meetings with financial advisors as well as sorting through dusty boxes of stuff from attics and basements.
- Confidence and detachment. An executor may need to navigate conflicts among family members, say no when necessary, and make decisions that others may not understand or agree with. The executor's fiduciary responsibility and loyalty is to the estate.
If you are asked to be the executor of someone’s will, seriously consider whether you have the time and skill to complete the duties. Have a discussion with the will maker about their expectations, size of the estate, assets in the estate, and the compensation. If you are still unsure, you can always say no. Most wills name a second choice in case the first choice is unavailable or turns down the job.
If you are making your will, consider naming a professional executor such as a bank trust department, giving your favorite, most trusted loved one the gift of not having to oversee the process. It’s a thankless job that often adds stress and misunderstanding to family relationships.
If you do name that trusted loved one, specify in your will that your estate will pay them and how much. Next week's article will address the topic of compensation for executors.
Rick Kahler, MS, CFP®, CFT-I™, ChFC, CCIM, is founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
Read more articles by Rick Kahler
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
