How to Hire an Executor. For your loved one’s estate or your will.

E306 What Information Are Heirs Entitled To

E306 What Information Are Heirs Entitled To?

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What information are heirs entitled to, and how often can they request it? There is a delicate balance for executors to keep heirs in the loop without draining their time or estate resources in constantly responding to inquiries.

Executor vs. beneficiary rights

Executor vs. beneficiary rights

Why is it important to balance executor and beneficiary rights?

If heirs demand too much, an overwhelmed executor may make errors with actual estate decisions, or grow weary. On a more emotional level, the executor may begin to resent the decedent for putting them through this.

On the flip side, if the executor ignores or stonewalls the heirs, the heirs may resent the decedent for his choice of executor. Disgruntled heirs may pointlessly sue the executor at the end during the accounting process.

The best way to strike a balance is to address their respective legal rights.

The Accounting

The Accounting

The main legal requirement of the executor is the accounting. Note that the accounting comes at the END of the estate. The accounting records every dollar in and out during the executor’s tenure. The executor presents the accounting to heirs, the court, and possibly creditors.

Unlike some other states, New York generally has a “give them enough rope” approach, where the executor has tons of autonomy and authority. But with great power comes great responsibility: the executor is personally liable for any “mistakes” at the end.

There is no statutory legal requirement for providing the heirs with constant updates, just the accounting at the end. But, real world expectations outside of the statutory limitations means giving periodic updates to the heirs.

Periodic updates

Periodic updates

It is best practice for executors to update heirs during the big milestones, such as selling the real estate or successfully filing the tax return. Sometimes those milestones are far apart, so at the very least, the executor should update the heirs every 6 months or even quarterly. It is important for executors to set expectations in the beginning of how often the heirs will hear from them.

If the executor doesn’t update the heirs, a judge may not be happy. When heirs get frustrated, they can file a motion to compel accounting with the court. The judge won’t normally grant such a request 6 months into the estate. But, if the judge finds out that the heirs haven’t been updated in those 6 months, maybe he will be annoyed and approve the request.

Executors should also update the heirs because they may want to buy-in from the heirs regarding major decisions along the way. It would be bad if the heirs found out months later that mom’s house was sold for a certain amount. Keeping the heirs informed eliminates unpleasant surprises and lessens the chance that they will sue the executor for decisions they disagree with. The executor doesn’t have to ask the heirs for permission to do anything, but keeping them in the loop gives the heirs a say in decision-making.

If you want to find out what is required of an executor, I suggest reading my book, “How to Hire an Executor.” A non-professional executor may get overwhelmed by all of the questions and requests from heirs and may not know where to draw the line. Something to consider is hiring a professional executor to deal with your heirs instead of placing the burden on a family member or friend.

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E302 Minimum Estate Size for a Professional Executor

E302 Minimum Estate Size for a Professional Executor

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What is the minimum estate size that a professional executor will accept? A few prospective clients have called asking, so we’ll review bank executor minimums, our minimums, and some exceptions.

Bank executor estate minimum size requirements

Bank executor estate minimum size requirements

Typically, bank minimum sizes are high. In New York, it has been as high as 5 million or 2 million liquid assets held with the institution. In most cases, the bank wants an estate with mostly liquid assets. It’s too much of a pain for them to deal with real estate, etc. They also want those liquid assets held at their bank. The bank generates fees and they get to have those assets invested in their products.

Our estate size requirements

Our estate size requirements

We generally try to fill the niche between folks who have an estate large enough to need our services, but not large enough to use a bank as an executor. Generally, we’ve set the bar as low as $250,000, and we do not have a liquidity requirement. However, we do want to make sure there are enough liquid accounts to fund estate expenses. Usually $50,000 in liquid assets is plenty to cover estate expenses.

You’ll need to make sure the account with liquid funds does not have beneficiary designations. If you name a beneficiary on an account, that account will go directly to the beneficiary. This means the executor won’t have access to the account to pay for estate expenses.

These requirements may not be hard for many clients to meet, but we have run into some problems in the past. The biggest issue is beneficiary designations. Naming beneficiaries on an account means that the account will not go through probate. If there are only a handful of small accounts in your name alone (no beneficiaries), it’s not really worth it for a professional executor to do all the work and deal with all the taxes and creditors without much compensation. Compensation is based on the size of the estate.

A problem for New York clients is that many co-ops do not allow the ownership shares to be moved into a trust or have a beneficiary designations. This creates a need for a professional executor, even if your other assets are in trust or have named beneficiaries.  If you must have an executor to deal with your co-op, then you must make sure you leave at least one account of sufficient size (with no beneficiary designations) to go through probate.

Again, your executor needs enough liquid assets to cover fees, clean out costs, and other costs to sell your co-op. If you don’t leave sufficient liquidity, a professional executor will not accept. You don’t want to waste your time researching and choosing an executor who won’t accept based on your low liquid assets.

What if my estate is too small?

What if my estate is too small?

We do make exceptions for our clients and try our best to help.

One helpful tip is to add language to your will or trust setting a minimum fee. Even if your estate is below $250,000, you can state that you want your executor to receive at least a certain amount. That way, you are guaranteeing that your executor gets paid even if the size of your probate estate is small.

Even if your estate is small, you should still leave sufficient accounts without beneficiary designations so that your executor has funds to work with. And don’t just leave that one perfect account, because that leaves little margin for error. If you forget and start spending from that account, then your executor may not accept due to low liquid assets.

Lastly, if you want a professional executor to administer a small estate, do your best to minimize the drama. If you think there will be conflicts with heirs or a contested will, you may want to consider a revocable trust. Also, do a decent job of record keeping. Your executor won’t want to deal with a huge forensic accounting problem for a small estate. In summary, make sure your estate is cost-justifiable for your professional executor to accept.

You can learn more about choosing a professional executor in my book, “How to Hire an Executor.”

Feel free to send questions via comments or email. We will do our best to answer them either directly or as the subject of a podcast.

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E296 How to Sell Probate Real Estate with Bad Neighbors

E296 How to Sell Probate Real Estate with Bad Neighbors

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We’ll discuss a recent case study of how bad neighbors can harm probate real estate sale, and how to deal with them.

Bad neighbor blames estate for water leak

Bad neighbor blames estate for water leak

I am the professional executor for an estate with real estate that needs to be sold. During this process, we’ve had a neighbor with complaints.

First, the neighbor blamed our unit for a water leak. He had water damage in his unit, and he thought it was coming from us. Water damage can lead to mold issues, so we took the complaint seriously. We responded immediately and gave him access to a plumber.

The real estate is in a co-op building, which, as we discussed before, are a different animal! In this situation, the co-op manager appreciated our fast response to the problem.

As it turns out, the bad neighbor was blaming us for no reason. It had nothing to do with our unit, and the water issue was completely internal to his unit.

Bad neighbor blames estate for insects

Bad neighbor blames estate for insects

Second, the bad neighbor blamed us for a sudden infestation of bugs in his unit. His theory was that when we cleaned out our unit, something was shaken which caused bugs to move to his unit. We took the complaint seriously again and responded by giving him access to an exterminator of his choosing.

When selling probate real estate, you need to try to get along with the neighbors and building management. Getting off on the wrong foot with building management can make things very difficult for the executor. Even though we felt that the neighbor was not being truthful (as we saw no indication of bugs in our unit), we responded promptly. Again, the co-op manager appreciated our fast response to the problem.

It turns out that the bad neighbor cried wolf again. The neighbor’s hired exterminator was so dismissive of the neighbor’s theory that he didn’t even bother to spray our unit. Even though the cost of spraying would have been low, the exterminator said there was no point.

Despite all of this, the bad neighbor threatened to block our probate sale by lobbying the co-op board to not allow our unit to sell. However, the co-op saw that the neighbor lied twice and that we had been cooperative throughout the process. Thankfully, we did not need to worry about the board preventing our sale.

Bad neighbor sends us a “buyer”

Bad neighbor sends us a “buyer”

Those were the last of the complaints, but oddly enough, the bad neighbor sent us a buyer. He suggested selling to someone, so we looked into it.  The bad neighbor “vouched” for an “investor,” which is odd because investors usually don’t do well with co-op rules.

The buyer turned out to be an inexperienced kid (late teens, early 20s) who apparently saw on Tik Tok how to flip probate properties. The kid offered a wildly high offer, which is unlikely to actually close at that price. As we’ve discussed before, if a wildly high offer does go through, it’s because the buyer nickel-and-dimes the price down to the asking price. This strategy is used to get the buyer’s foot in the door by making an attractive offer and thus eliminating the competition. (link to E291 What is a Strong Offer on Probate Real Estate?)

In this case, the heirs had been tracking the situation and understood that this buyer was recommended by the bad neighbor. Therefore, they were not bamboozled into demanding that we accept this “high” offer, like they might have been if they did not know the back-story. The bad neighbor actually helped us with this bad buyer. If we didn’t know who sent him, it would have taken more time and research to know to reject the offer.

This is a situation where a professional executor can help buffer and deal with curveballs. An inexperienced executor may get bullied with empty threats of blocking the sale, etc. Professional executors know what to look for and can help the heirs avoid the stress of threats. We continued to address the false alarms and adjusted our treatment of the bad neighbor accordingly.

To learn how a professional executor can help you avoid probate headaches, check out my book, “How to Hire an Executor,” available on Amazon.

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E293 How to Find the Will

E293 How to Find the Will

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How do you find the original will after someone dies? We’ll cover where to search, how to get access, and what happens if you can’t find the original.

Did the attorney keep the original will?

It is common for an attorney to hold the original will. If you have a copy of the will, the lawyer’s name is usually written on it. You can look for the name on the backer, or maybe he was a witness or the notary.

If you don’t have a copy, check the decedent’s contacts app or rolodex for any attorneys. Don’t overlook the attorneys who don’t do estate planning; you never know what leads you will get. You can also ask the decedent’s CPA or others who may have referred the decedent to an estate planning attorney. Eventually, one of these contacts should lead to the attorney who holds the original will.

New York petition to search the home

New York petition to search the home

If you determine that the will must be in the decedent’s home, you need a court order to enter the home. Thankfully, court is pretty quick in issuing this kind of order, unless the will is contested. Typically, it shouldn’t take longer than a couple weeks to get the order.

When you enter the building, you must be accompanied by a police officer or building management. The reason is that an order to search the home is different than acting with full executor powers. You will be limited to searching for documents such as the will, life insurance policies, funeral arrangements, etc. If you find the documents, you must immediately turn them over to the court.

The procedure for searching a safe deposit box or a storage unit is substantially the same. To enter a safe deposit box, you’ll be accompanied by the bank officer. It’s better for everyone involved that there are witnesses. You don’t want to be accused of anything.

What happens if the original of a will is lost?

If can prove that the will was not in the decedent’s possession when she passed, then it is possible to ask court to probate the copy. Perhaps the attorney or the CPA says they had it at the time of her passing.

However, if the decedent must have had the will, the law assumes that the decedent intentionally destroyed/revoked the will. This is the legal assumption, even if it’s not what really happened. In this case, you must move on with administration, which is the process in which the default inheritance laws are applied.

So, do your best to find the will!

If you are young and you have a will, it may not help to tell your executor where it is; you could live for many more decades. But, if you are older or terminally ill, it is a good idea to let your executor know where to find your will when you pass.

To learn more, check out my book, “How to Hire an Executor,” available on Amazon.

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E289 Why You Need a Local Executor in New York

E289 Why You Need a Local Executor in New York

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Most people correctly assume you need a local executor in New York, but they may not know exactly why. Let’s review a few real-world scenarios and reasons why you need an executor local to New York.

KYC requirements

KYC requirements

KYC stands for “know your customer,” and this applies to banking requirements. Banks take steps to make sure the customer is who they say they are. This helps prevent fraud, terrorism, and money laundering. Often banks require meeting the executor in person to close an account or open the estate account – they have to physically see the authorized person sign the opening and closing documents.

This may seem hard to believe, since you can open a bank account via text, app, website, etc. in minutes nowadays! However, in probate, an executor represents someone else (the estate or the heirs). Going to the bank in person is usually required and very inconvenient for an executor who lives far away.

The process also applies to brokerages or any regulated financial institution.

Selling New York real estate

Selling New York real estate

First, we’ll talk about the physical logistics such as the cleanout, renovations, and choosing the broker. It may be possible to do these things remotely, but it’s better to be there in person to oversee that nothing is breaking and that the renovations are up to par. Someone should be there to make sure the personal effects are sent to the heirs properly. Similarly, would you buy a home by video, or would you like to see it in person?

Choosing a broker in person is important to help get a sense of whether they understand the nuisances of the particular unit and type of neighborhood.

When it comes to New York real estate, there is a good chance you will be dealing with a co-op. We’ve talked at length before about New York co-op rules. Some of the co-ops require, above and beyond New York state law, that the executor be a New York resident. Co-ops are their own little kingdoms with their own set of rules. It is really tough for an outside executor to understand the co-op rules if they are not familiar with New York co-ops.

Also, real estate closings in New York are not conducted remotely or by FedEx. We still sit around a table for 3 or 4 hours in-person and then sign the papers furiously at the end. Antiquated, yes, but it’s how it’s done.

Dealing with local bureaucracies

Dealing with local bureaucracies

Until recently, ordering death certificates online didn’t exist or at least didn’t apply to New York City. You had to go down to the Health and Human Services Department and stand in line. To get it done quickly, you better know the lady behind the desk!

Similarly, while you can technically order court documents online, it is actually easier if you have someone get them in person. For example, to order a certified copy of a file, you need to know the page count, because they charge per page. How do you get the page count unless you go to the courthouse and see the file? Calling and asking how many pages are in the file isn’t going to happen.

We know that these seem like odd examples, but these are real life situations. That being said, my book, “How to Hire an Executor,” is definitely a good idea if you are thinking of appointing an out-of-town executor.

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E285 How Professional Executors Manage Tax Clearance Delays

E285 How Professional Executors Manage Tax Clearance Delays

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Every executor faces the tax risks unless they get proper tax clearance, which can take a LONG time. Here’s how we’ve seen that plays out with professional executors, non-estate attorneys, and amateur executors.

Professional executors set patient expectations

Professional executors set patient expectations

We advise heirs from the beginning that this will be a long process! This probably turned away many prospective clients who thought I was crazy for saying it could take years and decided to go with an attorney who told them it would take only months. (I’m pretty sure it ends up taking years for those attorneys, too). I’d rather be warned that it could take years, than to expect the over-promised and under-delivered “few months”.

We keep reminding our clients over the months that it is a long process. People don’t want to hear it, but at least they’re not wondering what’s going on.

An example of how long things can take: We filed an application for tax clearance for Mr. M.’s estate in September 2020. The IRS just responded via a computer-generated letter in July 2022 (almost 2 years later!). The IRS hasn’t even granted the tax clearance yet; the letter just acknowledged that they received our application.

This is why we set up the expectations in the beginning, because there’s nothing we can do about the government.

General attorneys react

General attorneys react

General attorneys can be very reactive if they have not had experience in this area. Many potential clients call us in similar situations where things are going slow, asking if their attorney is doing something wrong.

The potential client is dealing with the same set of facts that we deal with, except that his attorney has not set any expectations and is communicating with the heirs.

In order to get a case, some attorneys tell prospective clients that “probate” takes a few months. What they mean is that’s how long it may take to get letters testamentary. They don’t tell the client that getting letters is just step 1 of the 3 stages of probate.

Similarly, once the house is sold or accounts are collected, non-specialist attorneys tell the heirs that payout is imminent. But the inexperienced attorney comes to realize that to protect their client (the executor) from personal liability to the IRS, they must first get clearance.

Then the attorney has to break the news to heirs who thought they were about to get a check that it may be a LONG time. It’s all about expectations and being able to see a couple steps ahead; not just react to the situations as they come.

Friends or family executors get blindsided

Friends or family executors get blindsided

The previous situation isn’t great, but it’s not as bad as when an amateur executor gets blindsided. Sadly, amateur executors (friends and family) often don’t even realize they must get tax clearance first. Then they get hit with the personal tax liability.

For example, Ms. V. was the executor for her uncle’s estate, and she didn’t know to get the tax clearance. She just paid out the funds quickly to happy heirs.

Then IRS sent her a letter informing her that the estate owes $20,000 in taxes.

She had to try and recoup the funds from the heirs. Mrs. V. reached out to the heirs and waited patiently for the checks. How many checks do you think came in? None.

Some people might say, “Oh, my family wouldn’t do that to me.” Well, some heirs may want to help out, but in some cases, they’ve already spent their inheritance.

Unfortunately, the IRS doesn’t care who pays the taxes, as long as they get paid. Executors are personally liable. So, Mrs. V. had to come up with a way to get $20,000 to pay the IRS. To this day, I do not know if she took out a loan or if she was able to recoup the money from the heirs.

Having an amateur executor is probably the worst situation. They don’t know to how set expectations, and they end up getting into messy situations. This is a good reason to check out my book, “How to Hire an Executor.”

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E280 Someone Died, But No One Wants to be Executor

E280 Someone Died, But No One Wants to be Executor

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We often get hired when someone has died, but no one wants to be the executor. Sometimes there was a will with nominated executors who don’t want to serve. Other times there was no will, but none of the next of kin want to do the job. So they hire us as the professional executor.

Being executor is too much work

Being executor is too much workMost folks who’ve been an executor before avoid doing it again. They know first-hand how time-consuming it can be. Generally, we’re referring to people other than surviving spouse or children. The job is a bit easier for surviving spouse or children, because there is a lot of shared knowledge and possibly even shared assets.

Other relatives or friends who have served as an executor before know how time-consuming it can be. Or perhaps they’ve heard enough horror stories from friends. (Plus, if you’ve heard our prior podcasts, you know how difficult it can be!).

Too old to be executor

Too old to be executor

Some nominated executors simply feel that they are too old to be an executor. This doesn’t necessarily mean they’re incompetent. Perhaps they were nominated many years ago when they were younger, but now they know that being an executor can be stressful. Perhaps now they are used to low-stress retirement life, and they don’t need any new stress. No need to increase that blood-pressure medication!

Also, in terms of logistics, being an executor requires a lot of legwork, doing things in person, running around town for real estate, waiting in line at banks, going to the courthouse, etc. This may not seem appealing when you expected to relax in your old age. There are also tasks that can be done electronically, and an older person may not be very tech-savvy.

Can I be estate executor if I live far away?

The executor may live out of state or abroad, but it could cause some issues. The main issue is that the executor may be unfamiliar with local customs and laws.

For example, if you are an executor residing in Colorado for a New York estate, you will be bewildered by how NYC co-ops work

Perhaps an executor from Europe assumes that wiring funds to the heirs works best. You would be shocked to find out that wiring could be a huge mistake.

For the same reasons as an older executor, there’s too much legwork to get done from afar. The number of flights alone would be cost-prohibitive and a pain. Unfortunately, many probate documents need original, wet signatures. We have sent documents overseas, and even one document in one envelope can cost $150!

So, if neither you nor your family members want to be someone’s executor, remember that there are folks like us out there who can handle it. Declining to serve as an executor is very common, and there is no reason to feel guilty about it. You might be better off remembering your loved one fondly instead of remembering the frustrating estate work.

If you fit into the criteria above, please check out my book “How to Hire an Executor” available on Amazon.

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E275 US Professional Executor for Federal Transfer Certificates

E275 US Professional Executor for Federal Transfer Certificates

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Many non-US heirs need a professional executor to get federal transfer certificates.

What is a federal transfer certificate?

It is an IRS document, specifically, Form 5173. It is used to confirm through the IRS that there is no estate tax due, or it’s already been paid. The certificate allows the financial institution off the hook for taxes.

In absence of this, they can be liable! For example, lets’ say E*Trade has a brokerage account for a decedent who was a non-resident, non-citizen. If any tax was owed, but E*Trade releases the funds prior to the tax being paid, then E*Trade owes the IRS those taxes. This transfer certificate is the IRS’s way of letting E*Trade know that it is safe to release the funds to the executor or heirs. Because of this liability, banks and brokerages will not release the money without this certificate.

When is a federal transfer certificate required?

First, the decedent should be a non-resident alien (NRA). Second, the decedent’s assets must be US assets: stocks, real estate (but not bonds, cash, checking account, etc.).

The executor must send the certificate to the financial institution, or else the bank cannot and will not release funds.

If estate is large enough that it requires a federal estate tax return (706NA), just file the return instead using the federal transfer certificate. After filing the federal estate tax return, you will receive a closing letter from the IRS stating that they agree with your return and that the matter is closed. You can take the closing letter to the bank, and they will release the funds without the federal transfer certificate. You do not need to do both.

Recently, we’ve found that some institutions interpret to mean that if there there is a US professional executor (as opposed to a foreign executor), then no federal transfer certificate is needed. Hurray! Right? Unfortunately, this is usually not the case. Even if the law has changed, most financial institutions have not caught up. They are still requiring federal transfer certificates.

But, even if a federal transfer certificate isn’t required, the US executor is personally liable for estate tax. For that same reason, I, as a professional US executor, will not release the funds until I have filed the estate tax return. I will apply for the tax clearance anyway, so it’s really just a similar situation with the same result. Somebody has to make sure the taxes are paid so it doesn’t come back to hurt them later on.

How to get a federal transfer certificate

How to get a federal transfer certificate

There are detailed instructions on the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/transfer-certificate-filing-requirements-for-the-estates-of-nonresidents-not-citizens-of-the-united-states

The application information for the federal transfer certificate is substantially similar to the estate tax return (706NA).

The IRS website says it can take 6 weeks to 6 months to respond to the application for certificate. However, as we know, it has been taking much longer these days. We have discussed previously about the numerous IRS delays, and as a result, the turnaround time is  unpredictable. It could take years, unfortunately.

We trying to set the expectations as realistically as possible. Even if we file immediately, it won’t move the IRS any faster. This can be very frustrating, especially for the heirs.

If you want to learn more about professional executorship, especially if you are in another country, my book “How to Hire an Executor” will help shed more light on the topic.

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E271 Non-Professional with Probate Real Estate

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Today we describe some real-world examples of mistakes made by non-professional executors dealing with probate real estate.

Making it personal with tenants

Often times, a non-professional executor is a family member or friend who has too much history with the tenants.

Making it personal with tenants

For example, one of our executors helped the decedent in her final years and felt that the tenants were taking advantage of the decedent (late paying rent, not cleaning up after themselves, poor property upkeep, etc.). So, when the decedent passed, the executor has lots of bones to pick with the tenants: where the tenants parked, the condition of property, etc.

If tenants want to be difficult, they can make probate very difficult. As we’ve talked about before, it can be very hard to get rid of bad tenants in probate, so picking a fight isn’t helpful. For the sake of probate, it’s often best to let it go and move on.

In our example, the executor got into huge fight with tenants and the tenants called the police. A huge production was made, and we had to spend months in litigation to get them to vacate.

When a professional executor is involved, he or she doesn’t have that blood-boiling history with tenants. A benefit of hiring a professional executor is that we don’t get emotionally invested.

Knowing what renovations are worth doing

Knowing what renovations are worth doing

In the past, we’ve discussed certain renovations that almost always make sense (Episode 254: Best Renovations to do Before Selling Probate Real Estate) These include a fresh coat of paint, cleaning out the home, etc.

We recently had an executor who believed the decedent’s home was fine to sell as-is. Let me tell you that the place was not fine. But the executor had the position that if “it was good enough for my aunt to live there, it’s good enough for buyers.” Perhaps it was something sentimental to her that the house looked a certain way, but that’s not what buyers are looking for.

Because of this, the executor declined even a basic paint job. It is almost certainly going to be a struggle to sell.

Choosing the right broker

Choosing the right broker is tricky, even with a normal sale. You need to pick the right fit for the property and the right demeanor as a seller. Of course, it’s even harder in probate.

Choosing the right broker

Even if you find an excellent broker for the neighborhood, you also need someone who understands probate issues. For example, I am dealing with a situation where neither the buyer’s broker nor the seller’s broker understood that the seller was in probate. So, the day before closing, they said they “need something called Letters Testamentary before we can proceed.” Only then did they learn that the heirs were not in agreement, so there was no property to be sold! It was a huge waste of everyone’s time.

That was an extreme situation, but there are many other nuance situations where if you don’t have a broker experienced with probate, time and money are wasted.

For example, we have an executor who hired the dreaded “friend” broker. Friend brokers can be great, but this is not the time to repay favors to a friend via estate work. Estates are complicated already. The second problem was that the broker was from out of state and didn’t understand local customs. Third, the broker listed the home at a high price. In probate, you want to sell fast, but listing at a high price psychologically pegged the executor’s mind to that unrealistic number. A probate-experienced broker would avoid that situation. High prices turn away buyers who know the area and know that the seller has unrealistic expectations.

When an offer finally came in, the out-of-state broker prepared a binding contract and had the executor sign it. (In New York, a lawyer usually prepares or reviews the contract, because there are a lot of nuances that can cause disadvantages and risk). As a result, this executor unknowingly made some big concessions and promises she didn’t need to make.

These are things we’ve seen a lot lately. We share these scenarios to help you avoid future problems and consider the importance of hiring a professional executor. If you are interested in learning more, please check out my book called, “How to Hire an Executor,” available on Amazon.

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E270 3 Bitcoin Wallets Executors Overlook

E270 3 Bitcoin Wallets Executors Overlook

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When someone passes away, it is the executor’s job to gather the decedent’s assets. What are the Bitcoin wallets executors may overlook? We’ve discussed how to look for common bitcoin key storage (Episode 253 3 Steps When a Bitcoin Owner Dies), such as hardware wallets, software wallets, and seed phrases. But a professional bitcoin executor will also find these others.

Wallets on nodes

Wallets on nodes

Think of a node as your own server on the bitcoin network. Bitcoin is a digital currency, and the way it travels through the world is through nodes. Nodes are intentionally inexpensive and meant for individuals to be able to afford and maintain. Nodes are meant for the individuals to be the backbone of the system, not big companies.

If a professional bitcoin executor sees the decedent was serious about bitcoin, privacy, and decentralization, the executor knows to look for a node. These nodes can even be on a Raspberry Pi or an old laptop, as long as there is sufficient memory space. Why look there? Because these nodes will often have a wallet inside them.

Lightning channels

Lightning channels

On a high level, the lightning network is a second layer on top of the main bitcoin network. The lightning layer relies on “channels” between lightning nodes.

Say you use Vemno, and you are hanging out with your friend for dinner. Maybe you owe her $5 for the drink and she owes you $10 for dinner. Venmo is not actually transmitting money back and forth each time you do. Venmo keeps a tally of what is moving back and forth between you, and at the end of the day/week/month, it totals a net amount of dollars to be transmitted from your bank to your friend’s bank (or vice versa). Think of it like an abacus where you move the beads back and forth. Here, the main network is the banks and Venmo is the connector/second layer. Venmo has to hold some money to make sure those transactions happen.

Similarly, if you and I transact with bitcoin, we’re not going to send bitcoin to each other every time. We could set up a lightning channel between us. Let’s say we regularly send $100 between ourselves, so we probably have a channel with about $500. That $500 is locked into the lightning channel between us.

Upon my passing, my executor should close the channel and find out what is owed you and to my estate. A professional bitcoin executor will recognize a lightning wallet, and search for node to close channels to release channel funds.

The example of $500 may not seem like a lot of money. But, if the channel was established a while ago, and bitcoin has gone up in value, it might have a significant value.

Hopefully I got this right. If you are more technically savvy in cryptocurrency, please feel free to correct me!

Alternative exchanges

Alternative exchanges

We’ve talked about the main exchanges before. Nowadays, even non-Bitcoin enthusiasts have heard of Binance, Coinbase, Kraken, and other large exchanges.

There are even more alternative exchanges that focus on privacy, international exchange, etc. They may not even be companies, but decentralized software. A professional bitcoin executor will also recognize alternative exchanges and know how to recover funds on alt exchanges such as Bisq or HodlHodl.

This topic is constantly evolving, and we will try our best to keep you up to date. Please send us your questions and we will do our best to respond!

If you want to learn more about professional executors, please check out my book, “How to Hire an Executor.”

Request your free consultation

reCAPTCHA is required.

Sign-up for your free consultation using the form above, and I’ll be happy to email you a free chapter from Anthony’s best-selling book “How to Hire an Executor.”

 

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