Being named as an executor in someone’s will sounds like an honor. It means the deceased trusted you to handle important tasks, like collecting assets, settling debts, filing estate tax returns, and distributing the estate’s assets. However, serving as an executor can be far m🍎ore chall🧜enging than it seems.

Before accepting the role, it's important to understand the potential hazards that come with the job. And know how you can address some of these potential hazards so that being an executor can run smoothly.

1. Disputes With Co-Executors

Often when a parent has more than one adult child, all children are named as co-executors so as not to show favoritism. For those who are named, however, this arrangement may not work smoothly. Some children may live in different locations making it difficult to handle the hands-on activities, such as securing assets and selling a home. Some lack the financial ability to 澳洲幸运5官方开奖结果体彩网:deal with creditors, understand estate tax matters,🔯 and perform effective acco🐎unting to satisfy beneficiaries that things have been properly handled.

Also, having multiple executors adds ꦓgreatly to the amount of paperwork. For example, forms that need to be signed by a🀅ll executors must be sent around to all. (In some cases, scanned documents that have been signed are acceptable, but in others only originals are acceptable.)

A Better Way

Ideally, naming co-executors can be avoided altogether. But if this isn't possible, see if co-executors can agree to allow only one to serve; the others simply waive their appointment. This waiver works well when co-executors trust the person who will serve as the sole executor.

Another alternative is for al꧋l of the children to decline and instead let a bank’s trust department handle the job (the will may name the bank as a successor executor). This costs money and is best suited for large estates. However, using an entity rather than an individual as executor can alleviate conflicts among the children and relieves them from what could be an onerous job.

2. Disputes With Heirs

An executor’s job is to secure the assets of the estate and then distribute them according to the deceased person’s wishes. In some families, heirs descend on a decedent’s home even before the funeral, cherry-picking heirlooms, and other valuab𒐪les. Also, the will may give latitude to an executor in making disbursements to heirs (e.g., property distribution and disposition). An executor may unfortunately create family tensions by virtue of simply doinꩲg their job.

A Better Way

Secure the home and other assets as quickly as possible. Inform heirs that this is the law. Share information about the decedent’s wishe𓆉s, which may be described in a will or listed🥃 in a separate document (the separate document isn’t binding on the executor but can be a good roadmap for asset disbursements). 

3. Time Drain

The duties of an executor can consume a significant amount of time. Tasks such as notifying government agencies (e.g., 澳洲幸运5官方开奖结果体彩网:Social Security Administration, IRS, state tax authorities), stopping benefits, or handling unclaimed property require attention. Executors may need to spend hours on administrative tasks, sometimes while managing their own personal or professional obligations.

A Better Way

An executor can allow an estate attorney to handle many of t▨hese matters. However, the attorney will bill for their time and thus cost the estate money. Even if an attorney uses a paralegal for various actions, it can still be expensive.

Also, a CPA or other tax preparers can work on the decedent’s final income tax return as well as income tax returns for the estate. Where estates are modest, these fees can mean little or no inheritances for some heirs. An executor in this situation should use the services of professionals sparingly and 澳洲幸运5官方开奖结果体彩网:understand the time commitment they will need to make instead. Being organized can help an executor us🌞e time most efficiently.

4. Personal Liability Exposure

As an executor, you must pay taxes owed before disbursing inheritances to heirs. If you pay heirs first and do not have sufficient funds in the estate’s checking account to pay taxes, you are personally liable for the taxes.

While many estates no longer are concerned about federal 澳洲幸运5官方开奖结果体彩网:estate taxes because of the high exemption amount ($10 million through 2025 with upward annual adjustments for inflation), many states continue to impose 澳洲幸运5官方开奖结果体彩网:death taxes on smaller estates. And the estate tax exemption is slated to drop back to a base amount of $5 million in 2026.

The value of the estate for death tax purposes can be greater than the probate estate (the assets that do not pass automatically to named beneficiaries). It includes all assets in which the decedent had any interest (e.g., IRAs, annuities, life insurance owned by the decedent)ꦓ.&nbs🦂p;

A Better Way

澳洲幸运5官方开奖结果体彩网:Explain to heirs who are eager to receive their inheritances that you are not permitted to give them their share until you have settled with creditors, the I▨RS, and others with a claim against the estate. (Creditors cannot go after the proceeds of a life insurance policy that has a specific beneficiary,♌ however.) Make sure to understand the extent of the funds needed to pay what’s owed. 

5. Out-of-Pocket Costs

An executor is allowed to receive a commission for carrying out their duties. Usually, the amount of commission is determined by the size of the estate (e.g., a percentage of assets). However, in many cases, particularly smaller estates, an executor is asked to waive any commission.

A Better Way

Track your out-of-pocket expenses and pay for them from the estate’s ch💎ecking account when possible. Keep records of all expenditures to ensure༒ reimbursement from the estate when it is settled. Be aware that, in smaller estates, there may be little to no inheritance left for beneficiaries after paying administrative costs.

The Bottom Line

Being an executor is no easy task. While it can be a great honor, the role comes with significant responsibilities and potential risks. Before agreeing to serve as an executor, make sure you understand the scope of your duties and the possible hazards involved. For further guidance, review the American Bar Association’s guidelines on executor responsibilities and consult IRS Publication 559 for tax-related concerns.