Agreeing to serve as the executor of an estate is like taking on another part-time job in addition to whatever work you do and your responsibilities for your family. The testator whose estate you handle will likely have made arrangements to compensate you with some property from the estate, but such reimbursements are often a pittance compared to the amount of work involved.
When you take on the responsibility of carrying out someone else’s estate plan, you take on some risk as well. There are a few important steps you can take to minimize your financial and legal vulnerability as an executor.
Secure and inventory property as soon as is reasonably possible
When someone dies, family members may try to take certain assets out of the home before estate administration begins. Jewelry, deeds and family heirlooms are all at risk of misappropriation before you even begin your job.
To avoid accusations that you took any property and to protect as many assets as possible for the beneficiaries of the estate, you should secure the property and inventory it as soon as you have the authority to take such actions.
Handle all the financial liabilities before handing out property
One of the biggest risks an executor has is personal accountability for certain unpaid taxes and debts. You don’t have to repay everything that the deceased individual would not have repaid with their own assets.
However, any property that you distribute before taking care of outstanding financial responsibilities could be held against you later.
Document everything that you do
Did you call the electrical company and get the bill put in the name of the estate’s trust? Keep a note about that. Did you pay the mortgage for the month? You want to retain the statement and voided checks that prove you have handled financial responsibilities for the estate.
It’s also crucial to maintain records about any assets to distribute, both to creditors and to beneficiaries or family members. Having each family member sign a receipt or documents affirming that they received specific property will protect you from claims that you didn’t give people their inheritance or otherwise mismanaged the assets in an estate. The more documentation you have about the actions you take, the easier it will be for you to push back against claims of incompetence or misconduct.
Learning about the risks involved in estate administration can protect you from mistakes that could cost you money or your role as executor.