At some point, your clients may ask for guidance on selecting an appropriate executor for their estate. Or you may be confronted by an executor overwhelmed by the responsibility handed to him or her. Here are some helpful guidelines in walking them through the process.

Executor Selection
Executors often don’t have a realistic understanding of what they’re getting into when they accept the position, if they are even consulted beforehand. Much of the problem can be traced back to the testator, the individual who has executed the will. They designate an individual and assume that the person has the ability, acumen, stability, time and desire to act as executor. Many testators don’t ask the executor if they are interested in and capable of the position while the designated executor may be reluctant to decline the request.

I am reminded of a story where the decedent was a single father of minor children and only had a brother as a close family member. The decedent named his brother as the executor because he felt the executor needed to be a family member. The brother was also named the guardian of the children for the same reason. The problem that wasn’t considered, however, was that the brother didn’t know how to manage his own affairs let alone someone else’s. The result could have been disastrous for the decedent’s children because they were the beneficiaries of the estate. Fortunately, responsible and close friends of the family intervened. 

Depending upon the size of the estate and the complexity of the decedent’s life, the executor’s role can be a thankless job. Before naming an executor, the testator should understand the role, think about the qualities of the person who can handle that role and then discuss it fully with the person desired so that everyone understands what is needed and the expectations.

Executor Mistakes
One of the most frequent mistakes we see is executors who fail to adequately communicate with family, friends, heirs and loved ones of the decedent. People generally want to be kept up-to-date, and to understand reasons why certain things have been done or not done. This can go a long way towards ensuring peace and family harmony at a very emotional time. As a simple example, in the absence of specific directions, the executor has the power to distribute the assets as he or she sees fit. Yet, certain beneficiaries may have particular interests in specific assets such as heirlooms and collectibles that the executor may not be aware of. If the executor unwittingly distributes that item to another heir who is not as emotionally tied to the item, that can easily create acrimony. The easiest solution would be to simply sit down with the heirs, determine their preferences, and have a discussion.

Another common occurrence is simply dissatisfaction over the length of time required to finalize the estate, especially if one of the heirs is also the executor. This may be caused by the ignorance of the other heirs with the estate probate or administration process, and perhaps a feeling that the executor is taking advantage of his or her position to profit over the other heirs. The easiest way to resolve this is to have regular update meetings with all interested parties in the decedent’s estate. Providing a regular summary of what has been done with the estate and the rationale behind it will allow for reasonable and amicable discussions to be had before tempers flare.

Failing to hire and bring in the experts as quickly as possible can also become a major headache for executors. Experts can include an estate attorney and a CPA as well as the decedent’s financial advisor, business and real estate appraisers, and insurance professionals, among others. As an example, imagine if an executor valued the decedent’s home based upon values seen on a realtor’s page or an Internet search. Is that value based upon comparable sales? Does the Internet site know that the house was recently renovated? Does the Internet site know that an investor is buying up the block to build an apartment building or shopping mall? Does the Internet site know that there has been significant criminal activity in the area recently? Of course, the answer is no in all of those hypothetical questions. The only way to get a real value of the property is to engage a local appraisal company that is familiar with all of these issues. 

Executors are sometimes pressured to make distributions too soon. They often are also family members and heirs to the decedent’s fortunes and succumb to the demands made by fellow heirs expecting an inheritance. Money has a habit of changing the attitudes of a lot of people, but an executor’s job isn’t simply to distribute wealth, but to make sure that all debts and liabilities are discovered and resolved satisfactorily, whether through payment in full or at negotiated discounts, and to handle and close out other affairs that the decedent may have had to handle day-to-day. Distributing assets too soon may result in insufficient assets to pay off creditors. That may leave the executor personally liable for the debt, so clearly, adequate reserves must be maintained to ensure the payment of all of the decedent’s debts, prior to a complete distribution of the estate.

The list of duties of the executor is very long. It ranges from dealing with attorneys and the court system to probate the will and transfer assets; finding and marshalling all of the assets which requires going through all of the decedent’s personal belongings, records and documents, and dealing with various institutions such as banks, brokerage houses, insurance companies and the decedent’s employer; determining the value of the assets which may involve dealing with various appraisal concerns, as well as safeguarding those assets, such as guarding and boarding up a home until it can be disposed of; dealing with all of the decedent’s creditors, including the hospital that the decedent may have been treated at and the funeral home, to the more mundane utility or cell phone bill; continuing business ventures while the estate process is proceeding, managing rental property and landlord-tenant affairs; winding up the last affairs of the decedent, such as turning off utility service, selling the home, and closing out credit cards and various Internet-based accounts; dealing with CPAs and the tax authorities to file tax returns and clear any tax situation such as income and estate taxes; and finally, dealing with heirs who may be grieving, and predators seeking to take advantage of the death.

Many of the duties of the executor may also involve personal responsibility and liability. As you can see, this isn’t an easy job. In many cases, no one is going to be thanking the executor, but rather finding fault with the executor’s actions. That’s why a thorough understanding of the job is required and the person must have the capabilities and fortitude to tackle this major responsibility.

Victor Ngai, JD, CLU, ChFC, is assistant vice president, advanced planning, for The Guardian Life Insurance Company of America.