While it is often an honor to be named an executor of an estate the experience can become difficult and sometimes expensive if you are not prepared.
An executor has many responsibilities including figuring out estate assets, paying any outstanding debts and distributing the remaining assets as dictated in the estate plan. While that sounds simple enough, the path to success is full of potential pitfalls.
This was the message of a recent Wall Street Journal article entitled "The Biggest Mistakes Executors Make."
The article lists the following common mistakes made by executors:
- Paying Bills Too Soon – Many executors pay bills as soon as they come in. This can be a mistake as some debts, such as to the government, should be paid before other debts to ensure that there is enough money to cover higher priority debts.
- Investing Estate Assets – Some executors think they can invest assets to increase the value of the estate. While that is good in theory if the investments increase in value, the executor can be held personally liable if they do not.
- Mishandling Real Estate – Real Estate must be handled carefully. Houses should not be sold too soon or too late and it makes a big difference whether or not there is someone still living on the property.
- Losing Personal Property – Executors should conduct an inventory of valuable tangible assets to make sure they are properly stored and not taken away by someone else.
An estate planning attorney can be helpful with guiding an executor through the process.
Reference: Wall Street Journal (Jan. 31, 2016) "The Biggest Mistakes Executors Make"
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