Unfortunately for many executors, the job comes as a surprise, leaving them scrambling to make sense of the estate during an emotional time. Here are some tips to help you navigate settling an estate.
When your loved one asks you to oversee the management of a will or trust, it demonstrates they think you possess the confidence and responsibility needed to successfully fulfill their wishes. The responsibility may be overwhelming, but some simple tips can help guide you through the process.
Most families have a will because they’re quite simple to set up. If you’re the executor of a will, it controls how you’ll distribute assets. A will must first go through probate court, which is a legal process formally appointing you as executor to administer the deceased’s estate.
A revocable trust is similar to a will in that it guides the overseer of the estate in distributing assets, but it skips the probate process.
“We see more clients with revocable trusts as part of their estate plan,” says Bill Ringham, director of private wealth strategies for RBC Wealth Management-U.S. “Usually their estate tends to be larger and is more complex. Privacy and probate avoidance may also be important. A revocable trust may also benefit families with multiple properties in different states. You can put the title of those properties into the trust and avoid probate in each state where the property is located.”
While trusts don’t require court oversight, as the trustee, you do have a fiduciary duty to administer the assets listed in the trust as specified in the document.
Unfortunately for many estate distributors, the job comes as a surprise, leaving them scrambling to make sense of the estate.In the case of trusts, usually the spouse is the trustee, and children are successor trustees.
First, you need to decide if you have the skill and time to take on the task, says Dean Deutz, private wealth consultant with RBC Wealth Management-U.S. He estimates between six months to two years to fully execute an estate.
“If your loved one asks you in advance to serve as executor or trustee for an estate, it gives you opportunity to be organized when it’s time for you to take the role,” adds Ringham. “You can learn about your loved one’s legacy expectations, where assets are stored and what professionals were involved in the development of the estate.”
Learning the wishes of your loved one is an important first step in executing an estate. Ask the following questions:
Deutz recommends you determine how much of the work you want to accomplish on your own, what you will need help with and who’s going to provide that assistance. A traditional team includes an attorney, financial advisor, CPA and professionals to evaluate for property values.
Locating the assets is often a large undertaking. “It’s harder today than it was two years ago, because so many people are going online,” Deutz says.There are two tricks to finding online assets. Get a copy of the deceased’s recent tax return, which will show a list of all of the incomes. And, if you know in advance, you ask the person creating the will or trust to create a list.”
Once you’re in position to oversee an estate as trustee, or named by probate court for a will, it’s time to prioritize management of the estate.
The executor is caught in the middle and thinks they’re doing the correct process. But if household items are not specifically listed in a will with an heir’s name, it becomes very difficult.
Everyone has the right to decline executor duties. Ringham recommends you communicate this quickly, especially if the person creating the will or trust is still alive, allowing them to find another person they trust. For those who decide they want to proceed as an executor, keep the following in mind:
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