When a person passes away and leaves behind an estate, they often name someone in the family as the executor of their estate: the person who settles debts, distributes assets to people mentioned in the will, arranges to have estate taxes paid, and so on. If you’re chosen for this role, it could sound like an honor that someone would trust you with all this responsibility.
If you are named the executor of an estate, however, you are within your rights to turn down the appointment. There are reasons why it might be a good idea to do so. Before you accept the position of executor of an estate, think about how the position could put you in a difficult spot.
You may not be the only executor
Sometimes, a person writing a will names more than one person as executor. They do this, often, to avoid being accused of favoritism. However, it can be a hassle when multiple executors are involved. For example, each form that needs to be filled out would need the signatures of all the executors. If some happen to be out of town, you’d need to send those documents to them, wherever they are, to have them signed. In addition, if part of the work involves selling a home, it could be difficult if some of the executors named are away.
If you would like to execute the estate in question, you could ask the other executors to waive their appointment so that you alone have authority. Alternatively, you and all the other named executors could decline and leave the job to the trust department of a bank named in the will, even if this costs money.
You may need to be the bad guy
If the will gives the executor the right to decide whom to pass certain assets to, you may find that apart from the heirs you settle on, the others become furious about being left out. You’re likely to become the bad guy to many extended family members.
It can require a lot of your time
Executing an estate can take a great deal of time. You’ll need to deal with various government authorities like the Social Security Administration (to stop benefits), the IRS (for income and death tax payments), the Unclaimed Property Department (for utility deposits), and so on. You could get an attorney and a CPA to handle most of these time-consuming responsibilities, but they would cost money.
Any mistakes you make are on you
An executor must arrange for taxes owed by the estate to be paid first and only use the money left over to distribute inheritances to heirs. It is common, however, for executors to make the mistake of distributing inheritances first. They then find that no money is left over for the taxes owed and have to pay those taxes with their own money.
If the heirs named in the will are eager to receive their inheritance as soon as possible. In that case, it’s important to consider whether you are strong enough to hold them off by explaining that there are obligations to the government to meet first. You may find, however, that some people don’t accept this explanation and ask to be paid at least part of their inheritance right away.
It involves upfront expenses
An executor working on a large estate may receive a commission, a percentage of the assets they handle. Handling small estates, however, comes with no commission. Several expenses come with closing an estate; the executor first needs to put up cash for all of it and then claim reimbursement from the estate. You’ll need to be prepared for this financial burden.
Being an executor can be a challenging job to take up. Someone has to do it, but you should consider whether you want to be that person. The points mentioned here give you the awareness you need of the challenges involved.