Have you been named to be an Executor (or Executrix) in someone’s Will? If so, do you have any idea of what you’ve signed up for? At a high level, you probably know that it means going through all of the deceased’s worldly possessions and distributing them the way they wanted. But it is more than that. I’ll let a fictional friend, Sandra, describe her experience of being an Executrix for a cousin.
The Big Picture
Basically, Sandra had three major tasks in order to take on the responsibility she signed up for. First, she had to obtain official authority to act in this role. Next, she had to document everything about her cousin’s assets and any debts he had. After paying any bills that were outstanding, she then had to follow the instructions in the Will to distribute what was left to the people or organizations her cousin requested. While that may not seem like a lot of work, it can be quite a bit of work. In fact, Sandra took off work for a couple days that first week so that she could spend full-time getting a lot of the initial tasks out of the way.
Prepare The To-Do List
Sandra sat down with a spreadsheet and started documenting all of the tasks she had to do for this role. This was because she was going to have a lot of balls in the air with different tasks in various states of completion. Some things would be awaiting her time to work on them and get them started. Others, she would start and then would have to wait for someone else to get back to her with the information she needed. Some tasks would require a back-and-forth with an organization to complete. Knowing the status of each of these along with who is responsible for the next step meant keeping track of all of that in her spreadsheet.
Sandra In Charge
The first thing Sandra did was to obtain the authority she needed in order for everyone else to recognize her position as the person handling her cousin’s estate. To do that, she needed to submit the original Will to the Register of Wills in the county where her cousin lived. Then she was able to obtain a Letter of Testamentary which stated that she was authorized to act on behalf of the estate. She also worked with the funeral home to obtain 10 or so copies of the death certificate. This was the other document needed as it would prove to others that her cousin had passed away and was no longer living.
Almost every organization she worked with would require a copy of one or both documents so she had those ready.
The Expert Team
Since Sandra was not a tax, legal or financial expert, she introduced herself to the people her cousin had been working with before he died. Fortunately, he had used a memory banc book to document where he kept everything as well as the names of his tax preparer, the attorney he used, and his financial advisor. Sandra was so thankful that she didn’t have to try to dig around in his office to figure that out.
And since he had everything documented in one place, Sandra didn’t need to spend a lot of time trying to figure out what all he owned, where he had accounts, and how much was in them.
For those who have not put this together, it can be very time consuming. She would have had to look through all his files to figure out what was a bank or savings or checking or brokerage account and try to track that down to see if it was still active and if so how much was in it. Then she would have to figure out if he had put any beneficiaries on the accounts or whether it would default to the estate. If the paperwork was old, it might even be detective work to figure out who was acquired by who in order to follow the money trail and find who actually holds the money now.
Fortunately, none of that was necessary. By using the Memory Banc workbook, all the details Sandra needed were all in one place. She could even log into his social media accounts, download his information and let them know to close the account or change it to a “memorial” account.
Sandra had two things going for her as she went through this process. First, she was a very good organizer and keeping track of things was no problem for her. Second, she had the time flexibility to be able to make phone calls during the daytime to many of the organizations she needed to work with. For those who aren’t as good with those skills as Sandra, a daily money manager can be brought in to help with many of these tasks. Often, the daily money manager’s costs can be part of the estate expenses, so it isn’t an out-of-pocket expense for the executor of the estate.
Sandra’s next major task was to take all of the paperwork associated with her cousin’s estate and create a detailed inventory of everything he owned. This required Sandra to reach out to the various companies holding money in his name to get the value of the account on his date of death. Fortunately, his financial advisor already knew this would be needed so he already had a report ready for Sandra to use.
In addition to documenting the value of all of the assets, Sandra went to a bank and opened an estate checking account. This would provide cash to pay for things associated with the estate. Since her cousin already had a checking account in his name that still had several thousand dollars in it, she was able to transfer that money to the estate account, since he had not specified any beneficiaries for the checking account.
Sandra had to take over the daily money management of the estate, since her cousin owned a house and it still had utility bills and other regular expenses. She used the checking account to pay these, and also contacted all of the utilities as well as any other regular vendor to have them retitled in the name of the estate with her address so she would get the bills sent to her. Because not all of the family were on good terms with each other, Sandra engaged a locksmith to change the locks on the house just in case anyone with a key decided they wanted to make a clandestine visit to the house and remove items.
After reading the Will, she knew who the beneficiaries were going to be, so she contacted each of them to let them know they were going to be receiving some portion of his estate. Good communication kept them in the loop the whole time and reduced any possibility that someone would contest what Sandra was doing.
Distribution and Closing
Once Sandra knew what the total value of the estate was, and she had paid all the bills, it was time to distribute to the beneficiaries. Her cousin’s financial advisor was very helpful and took care of distributing her cousins investments to the beneficiaries as Sandra told him to.
Sandra took care of writing checks for the amounts they were due from other accounts that had been distributed to the estate checking account. (For example, her cousin had a lot of treasury notes, so she notified the federal government to cash them in and deposit the funds into the estate account.) Once she had distributed to the beneficiaries, she had them sign letters indicating that they had received their full amount. Sandra didn’t want any problems later!
With that, Sandra was almost done. She still needed to file the final accounting paperwork with the state and officially close the estate. She used her cousin’s attorney to help with that piece. She also needed to provide financial accounting information to her cousin’s tax professional so that he could file the last year’s taxes as well as any estate tax forms.
It Is Quite The Job
Being an executor or executrix of an estate is not a simple task in most cases. In fact, I know of several people who have been named as executor that have not done their fiduciary duty and let estates languish without finishing the job. This is where a daily money manager can really assist and take a lot of the burden off of the executor.
It isn’t a job for everyone, so if you are named in someone’s Will to do that task, make sure you know what you’ve signed up for.