Being asked to serve as an executor or a trustee for a family member’s estate is certainly an honor, but it’s also a considerable responsibility.
Many people don’t realize what they are taking on and all the duties required, says Lisa Montano, an Estate Planning Strategist for Wells Fargo Advisors. “Depending on the family dynamics, the estate’s level of complexity, and the assets in the estate that need to be administered, it can be very time-consuming,” she says.
Knowing and understanding your responsibilities — and asking the right questions — can help you be prepared. Here are five things you need to know now if you’ve been asked to serve as a family member’s executor or trustee.
1. It’s not an easy job. Serving as executor or trustee typically requires a significant amount of time, patience, and organization, Montano says. Read the estate documents carefully to make sure you understand your duties. It can take up to a year, maybe longer, to completely wrap up the lifelong financial affairs of a loved one, Montano says. If you are the trustee and assets are going to remain in the trust for a certain length of time, your responsibilities and duties to the beneficiaries will be ongoing. Expect to spend time sorting through documents, collecting information, meeting with professional advisors, and communicating with family members. If the deceased didn’t live nearby, you may also have to travel.
2. You need to know what the assets are and how to find them. You will have a fiduciary duty to make sure the assets are properly distributed to the beneficiaries under the terms of the will or trust, but first you need to know what the assets are and how to find them — and that often takes some digging, Montano says. Ask your loved one now where their will or trust is located and how you will be able to access those documents after they pass away.
Also, consider asking your loved one to make a detailed list of assets and to share that list with you. That includes documentation on investment and bank accounts, retirement assets, insurance policies, real estate holdings, and business interests. Any documents that verify the value of unique assets such as coin or art collections will also be helpful. If your loved one is not comfortable sharing those details now, ask that he or she make a list and let you know where to find the list, along with other documentation about their assets, once they are deceased.
3. You can seek professional help. If your loved one has a complicated estate with many different types of assets or significant tax liabilities, you can hire a lawyer to help you manage the most complicated duties or to oversee the whole process. You can also hire a CPA to help with tax issues. Even if the estate is simple, consulting with an attorney is a good idea, Montano says. “There are responsibilities and deadlines you have to meet that are laid out by state law,” she says. You also need to follow the instructions as laid out in the will or trust. Sometimes people do things on their own and it gets them in trouble. The court may remove them as executor or trustee, or they may be held personally liable for actions they have taken.”
4. You may be entitled to compensation. Trustees and executors are typically entitled to collect a reasonable fee for their services, Montano says. The amount may be regulated by state law or specified in the will or trust. Family members (especially those who are inheriting from their loved one) often waive the fees, but you may still want to be reimbursed for travel and other expenses necessary to perform your duties.
5. You can decline to serve. If you feel that you don’t have the time or the skills to be executor or trustee, it’s OK to tell your family member that you are not comfortable serving in that role, Montano says. Your family member will then have to select someone else. If there is no other family member to choose, they can name a trusted friend. They can also name a corporate trustee or a third-party executor such as a bank, trust company, or a professional who has experience dealing with estates.