If you are named as executor, there are some things you should know before you dive into your duties of probating a will.
In this article, you will learn the top things that people forget or neglect to do as executors. Make sure to look at this opportunity to be an executor as an honor rather than just another thing on your plate. It may require some effort at times, sure, but you can do it. Just make sure you don’t make any of these common mistakes and you will do great as an executor probating a will.
To make this a little more fun, we are going to break up the mistakes people make into categories of personal mistakes and legal mistakes.
4 Personal Mistakes Executors of Estates Make
Mistake #1: Executors not being prepared to begin the process.
Broad mistake isn’t it? Everyone’s level of knowledge on probating a will and being an executor are a little different, don’t let that be your downfall. Ignorance is not bliss in the case of being an executor. Be smart before you begin, do your homework and learn more about anything you don’t know. When you have some of the ambiguity cleared up, you will be better prepared to find help or answers on things that come up during the process of probating a will.
A great place to start is to understand the probate process. Luckily for you, we've made that incredibly easy with our Beginner's Guide to Probate. It's the guide we wish we had when we first became an executor.
Once confident in the overall process, the executor should fully understand their duty of being a fiduciary.
Wait, what is a fiduciary? Great question. A fiduciary is someone who acts in the best interest of another individual and legally owes them the duty of good faith, undivided loyalty, and honesty during the process of taking care of financial and legal matters.
So all in all, do your homework and learn more about what to do as an executor before you get in too deep or get overwhelmed.
Mistake #2: Executors thinking they are all powerful.
It is an honor to be named as executor, but be sure to withhold developing an ego from it. You were named as executor because the decedent believed in you and trusted that you could do things right. Don’t let your head get big and think you have the power to change family dynamics that may have been clashing for years now.
You have a rigorous job to complete as an executor, don’t add anymore self-inflicted stress to the process. Before you let your ego get in the way of doing the executor role correctly, remember that there is a level of personal liability as an executor. If you do something you shouldn’t, you may be held personally liable. Take it seriously and do things right for the person who believed in you to be their executor.
Mistake #3: Not keep communication open with all parties involved.
A common mistake made by executors is to keep information to themselves as they go through the process. Keeping open communication and transparency is key and will prevent drama from happening with beneficiaries and family members.
An extra piece of advice — avoid the "favorite beneficiary syndrome". As a fiduciary, you are held to a duty of impartiality. By being fair and honest with all beneficiaries, the distribution process will be a lot smoother.
Mistake #4: Choosing friends over professional help.
The job of being an executor will be stressful at times, but you can prevent some of that stress by doing things correctly. It may seem easier for you to hire your Uncle Bobby’s friend Terry to help you appraise the car and boat since he used to own a boat, but in the long run it may make things inaccurate when filing taxes.
Getting professional help is the right thing to do when you are unsure of the best way to do something as an executor. Do things right from the start and you will be just fine as an executor.
6 Legal Mistakes Executors of Estates Make
Mistake #5: Waiting too long or failing to act.
This may sound funny, but you would be surprised how many people get named as executor but then do nothing more than an initial meeting with a lawyer or get some clarity from the clerk of court and then do nothing. Your job as an executor is to take care of things for the decedent’s estate, and to do so within reasonable amounts of time. If you wait too long to act, bills are going to pile up, beneficiaries will become irritated, and things will just get harder to deal with the longer they are delayed. Kind of like life.
For an idea on how to approach the various probate deadlines, go here.
Mistake #6: Making distributions before the estate is ready.
When someone dies, heirs expect to get their inheritance pretty quick. They can also become pushy. Sadly, the whole "gimme gimme my inheritance" process takes a little bit longer than those type of beneficiaries would expect. As an executor, make sure you do not distribute assets to the estate too early. If you do, you could be held liable for the mistake. So before distributing any assets to beneficiaries, make sure all bills, taxes and any other outstanding debts are taken care of first.
Go here for a timeline of executor actions and in what order to do them.
Mistake #7: Trying to make the estate more profitable.
An executor has no obligation to increase the value on the estate (well, other than being a prudent investor). Going back to Mistake #2, don’t let your position (or your ego) tempt you into trying to make more money for the estate in the stock market.
Playing in the stock market is risky, playing in the stock market with someone else’s money is even riskier. With a legal duty to do what is in the best interest of the estate, and to also protect yourself of any personal liability, we suggest not making investment you're unfamiliar with or that are riskier than those by normal investors. Some assets of the estate may be in the stock market, so monitor those to make sure they perform well based on the ongoing market environment and be sure to remain prudently diversified.
Mistake #8: Improperly advertising the estate to creditors.
If someone dies owing a debt, that debt has to be paid. That debt is often paid out of the estate. In order for debts to be paid, executors must advertise the estate and the death of the person. Creditors have the right to a certain window of time to be properly notified of an opportunity to make their claims. Despite that, it's pretty surprising how often this step is neglected or done improperly by executors. You don’t have to be a marketing professional to do this correctly, it can be as simple as an ad in the newspaper.
Mistake #9: Improperly paying claims.
To this point, we know there are a lot of things that need to be paid out and bills can become confusing. That said, there are often certain ways that things need to be paid, as well as a priority of creditor repayment. Generally speaking, any estate administration fees, funeral & support (hospital) expenses should be paid first, followed by any known creditors or bills before making distribution of assets to beneficiaries. Make sure you do this correctly so that you as an executor will not be held personally liable for a mistake.
Mistake #10: Improperly closing the estate.
The final mistake we caution avoiding involves the final step in the process of probating a will or settling an estate. All taxes and debts must be paid, assets distributed to beneficiaries, and any other loose ends must be tied up before the estate can officially be closed. Many people work their way through the process, yet forget to officially close the estate. Filing a family settlement agreement to prove to the court that everyone involved is in agreement or going through the formal court accounting process are the two most common ways to properly close the estate. If you've come this far... be sure to actually close the estate. You can do this!
Bonus: Not tracking executor expenses!
Dissolving an estate is like running a temporary business, and you can deduct a whole bunch of things to save on taxes. For a total breakdown on how to cut down costs and taxes as an executor, read this article: What Expenses Can An Executor Claim?
