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

E221 Will My Executor Serve?

When deciding whether or not to appoint me as their executor, many Solo Agers have asked: “Are you bound by contract to actually be my executor after I die? Is it guaranteed? If not, then what’s the point of researching and vetting and choosing you as my executor?”

Nomination as Executor

Naming me (or anyone) as executor in your Last Will and Testament is a nomination, not an actual appointment or contract.

Nomination as Executor

Why doesn’t the law make the appointment of an executor binding? Because a lot can and will happen between now and when you die.

For example, your executor could die, they could become a felon (felons are not legally be allowed to be the executor), or they could move out of country. Let’s say you name your younger sister, who is a career woman and a go-getter. But in the time between writing your will and when you actually die, she could have personal or family duties which leave her with no time to take on the burden of being an executor. Or maybe your executor just simply doesn’t want to do it.

Perhaps you’re a Solo Ager and you appoint your best friend, then you have a falling-out and no longer communicate. In that case, they most likely will not want to serve as your executor.

That’s why you should have a backup (or alternate) executor, and that is why it is important to understand that it is a nomination and not an actual contract. There is a large time gap between nomination and actual service that no one can predict.

Can an executor decline to act?

 

Can an executor decline to act?Yes, so choose someone most likely to accept (and will most likely do a good job carrying out their duties as executor, of course). You can’t guarantee that anyone, even a bank or a professional executor, like myself, will accept.

Who is most likely going to accept and who is most likely to decline? Some factors in making that decision are:

  1. Age – you should choose to nominate someone who will outlive you or at least be able-bodied after you pass. Choosing an executor that is much older than you now, could be problematic.
  2. Time – someone who has time, such as someone who will be retired or a professional executor.
  3. Ability – professional executors are familiar with banks, brokerages, real estate, and everything needed to administer an estate. Most lay people are not familiar with the process, and struggle carrying out their duties. As we’ve discussed before, being an executor is hard work.

It’s important to remember that choosing an executor is not an easy process, and a lot of thought should go into it.

So far, everyone who’s asked this question has been satisfied and continued on to name me their executor. Let me know if you have more questions in the comments or by email, and I’d be happy to answer them.

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E218 Bitcoin Letter of Instruction to Heirs

E218 Bitcoin Letter of Instruction to Heirs


Every bitcoin estate plan must include a simple, easy-to-understand letter of instruction to your heirs or executor. If you don’t, all of your hard-hoarded bitcoin may disappear.

Explain Bitcoin to a Child

Explain bitcoin to a child

Keep it super simple! Write the letter like you are explaining bitcoin to a child. Do not give the whole history of bitcoin, block chain, sound money, etc. Just write enough to get them past this treacherous stage: handling new and complex assets while grieving.

In your letter, write about:

  1. High-level concepts;
  2. Major pitfalls to avoid when working with cryptocurrency; and
  3. Immediate to-dos or checklist.

Bitcoin vs Banks

Most of your heirs understand banks and brokerage accounts. So, explain how bitcoin is different. Explain that cryptocurrency can be lost forever if handled wrong, unlike dealing with a bank. There is no password recovery.

Bitcoin vs banks

If your heir is a little more financially savvy, explain that bitcoin is like a bearer instrument. Bearer instruments are certificates where whoever holds them owns the money. (Cash is essentially a bearer instrument). When you give someone your bitcoin keys, that person has complete no-consequence access to your funds. No one will check their ID or verify their signature.

Where You Store Your Bitcoin

In your instruction letter, explain where you store your bitcoin keys. You should have a rough inventory of what you’re holding so your heirs know what to look for. Most bitcoiners have a little bit on an exchange (Coinbase, Binance, Gemini, etc.). You may also have some hot wallets online (apps, browser extensions, etc.). Lastly you may have cold wallets, which are not connected to the internet at all (hardware or paper certificate).

It is important that your instructions are in a letter, not in your will. Your holdings could change, and you won’t want to update your will for every change.

Where you store your bitcoin

Next, explain how the heirs can access the items on your inventory.

Exchanges are simple to explain, because they are more similar to banks than anything else. You heirs will send the death certificate and letters from the court and the exchange will turn over possession to the heirs.

Wallets are a little different. A good solution for a hardware wallet is to give a clone wallet to an executor or heir and give the PIN to someone else. Or you can split up a seed phrase and pass phrase among different heirs and they must collaborate to access your bitcoin.

Bitcoin letter of instruction example

If you’re reading this, I’m either dead or incapacitated. If I’m not dead or incapacitated, PLEASE STOP READING NOW.

This letter is about my Bitcoin and other cryptocurrency, and how to access them. I won’t even try to explain everything about Bitcoin here, but I want you to know enough to not get robbed or lose everything.

Some important high-level concepts:

(1) Cryptocurrencies can be lost, forever! There’s no FDIC, or bank customer support to stop payment or reverse a bad transaction. Once it’s gone, it’s gone.

(2) There’s no password reset or “recover lost password.” If you lose the passwords (known as seed phrases, I’ll explain below), Bitcoin and other cryptocurrencies are gone forever.

(3) Bitcoin and other cryptocurrencies are “bearer” assets, like cash. Whoever holds it, owns it. So if you hand someone the seed phrases, it’s like handing them an untraceable bag of cash.

Nervous enough? No worries, Just follow these instructions, and you should be fine.

On Exchanges

I hold some Bitcoin and other cryptocurrencies on the following exchanges:

– Binance.com/Coinbase.com/Gemini.com

This is the easy part: just ask my executor or probate lawyer to contact the exchange with an original death certificate and letters testamentary, and they’ll give further instructions on how to transfer my Bitcoin and other cryptocurrencies.

Now it gets harder.

On Hardware Wallets

I also hold some Bitcoin and other cryptocurrencies on hardware wallets. What’s a hardware wallet? It looks like a large USB thumb drive, and my passwords/seed phrases are securely stored inside the device. You need my PIN code to access my hardware wallet.

My hardware wallet (and duplicate copies) are located:

– Describe locations

You should automatically receive an email with the PIN within six months of my death (I set up a “Dead Man’s Switch”). Just remember: anyone who has both my hardware wallet and PIN has full, irreversible access to the Bitcoin and other cryptocurrencies inside.

Seed Phrase

If you cannot find or access any of the hardware wallets, you can still recover my Bitcoin and other cryptocurrencies using my “seed phrase.” This string of 24 ordered words is the secret password to control the funds, even without the hardware wallet device.

I’ve given the first 12 words to these trusted people: Bart, Lisa, and Maggie

And the second 12 words to: Moe, Larry, and Curly

Contact whoever you need to complete the 24 word seed phrase. And remember: whoever has the full 24 word phrase has full, irreversible access to the Bitcoin and other cryptocurrencies inside.That’s it.You probably won’t be able to navigate all this without some help.But at least you now know how to find and protect the hardware device and seed phrases while you figure out the rest.

Also, consider choosing an executor who understands bitcoin custody. If you want to learn more about how a professional executor can help , check out my book, “How to Hire an Executor,” available on Amazon. I don’t have a Bitcoin chapter yet, but you’ll get a sense of how choosing a professional can make things easier, especially for something complicated like an estate that includes Bitcoin.

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E217 Executor Dies During Probate

E217 Executor Dies During Probate


What happens if the executor dies during probate? It depends on how far along you are in the probate process.

Probate Court Process Just Started

If no one has been officially appointed yet, you either restart the court process or amend your original papers.
Probate court process just started
For example, Matt’s dad died and his mom hired a lawyer to start probate to appoint her as executor. But before it was finalized, she passed away. The court allowed Matt to amend his mom’s papers to name him as executor instead. This saved Matt a couple of weeks in the process, rather than starting over from scratch.

What Does Administrator DBN Mean?

If the executor has already been appointed, then you must ask the court to appoint a new executor. Unfortunately, getting the administrator de bonis non (dbn) swapped in is about as time consuming and complex as getting original letters.
What does administrator dbn mean?
The Latin term de bonis non administratis means, “goods not yet administered.” Once appointed, the administrator dbn is substantially the same as any other executor.

When Estate Is Almost Complete

If the executor has already gathered the assets, completed tax returns, and only accounting is left, the court may allow the executor’s executor to close the estate.
When estate is almost complete
Let’s say that Matt’s mom did almost all of the work and right before her husband’s estate was done, she passed away. Matt is his mom’s executor. As his mom’s executor, he can come in and finish up the accounting as the executor of the executor. This is a niche situation that the court allows when there is almost nothing left to do for the estate. But most of the time, the court will demand that an administrator be appointed.

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E207 Hire a Professional Executor for your Insolvent Estate

E207 Hire a Professional Executor for Your Insolvent Estate


Going through probate is a grueling 1-to-2-year process. Would you want to go through all that if you don’t even get anything out of it?

If you think the estate may be insolvent, consider hiring a professional executor.

What’s an Insolvent Estate?

What’s an insolvent estate?

An insolvent estate is when the decedent’s debts are greater than the assets. For example, the mortgage, credit card debt, and medical bills are greater than the value of the house and bank accounts.

There are also situations where the estate is close to being insolvent and you don’t realize it. Examples of this are Medicare clawback and unseen taxes. If you received medical care paid for by the government, the government will want the money back when you die. This could leave your estate with a large bill. Additionally, the IRS will look over your taxes carefully to be sure they didn’t miss anything.

Who Must Probate the Estate?

Who must probate the estate?

Many family members and heirs ask: am I required to be executor? The answer is no! You can decline or not act at all. Although, some may feel like they are dishonoring their deceased loved one by leaving the estate as a mess.

If you think the decedent is close to having an insolvent estate, you have options.

One not-so-great option is to let the state take over. There’s a state office (sort of like the public defender, but called a public administrator) that can step in. But, the interest in the estate and the incentives might not be the same as a person who you hire to help.

Instead, Hire a Professional Executor for the Estate

Instead, hire a professional executor for the estate

A better option is hiring a professional executor. You won’t have to do the stressful work yourself and you don’t have to feel bad about abandoning your loved one’s estate to the public administrator.

Even if the estate is NOT insolvent, you now have a relationship with the hired executor. This helps to make sure you get your inheritance. If the estate IS insolvent, then you can relax knowing that a professional is there to wrap up the estate.

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E201 Should I Name a Trust as Beneficiary of My Accounts

E201 Should I Name a Trust as Beneficiary of My Accounts?


Another question that we receive often is “should I name a trust as beneficiary of my estate?” In a recent case, Rhonda reached out to us, because she wanted the benefits of a trust (avoid probate, reduce chance of a “will contest,” etc.), but she was not quite ready for the headache of a full-blown trust setup. In her particular situation, naming her trust as beneficiary makes sense. If you are considering this doing this, here are a few things you should consider.

How to Name Trust as Beneficiary

How to Name Trust as Beneficiary

A full-blown trust has to be set up and funded. It can be a nominal amount, even as little as $10. It has to own things and you will need to convert your banking accounts, houses, and related items from your individual name to the trust name. It may be quite a bit of work in some situations. For example. if you live in a co-op, this can be a lot of work to change your deed. You will likely need board approval, and this will take time and work. If changing your banking, you will need to go to the bank and open new accounts in the trust name. You’ll then need to change any direct deposits and withdraws once the new account is open.

In Rhonda’s case, instead of changing all of her accounts now, she is leaving them in her name and changing the beneficiary of the accounts to a trust. For example, when you have life insurance, you can name a person or multiple people as beneficiaries. However, instead of naming a person, you can name your trust to be the recipient.

In her situation, her trust will be unfunded until she passes. Upon her passing, the trust will be funded using the beneficiary designations.

To name a trust as a beneficiary, there are three basic steps. You must create the trust document, you then fund the trust (even a nominal $10), and finally, you name a beneficiary. Usually, you can obtain change of beneficiary forms for your accounts to change the names. The result: you have a hollow, but ready, trust on standby, which is ready to accept funds as beneficiary upon your passing.

Pros of Your Trust as Beneficiary

Pros of Your Trust as Beneficiary

One of the pros for taking this route is that, in theory, you get to avoid the costs and headache of probate. Probate is generally not easy and takes a long time. If there is a beneficiary on an account, then the account does not need to go through probate to be liquidated. You simply need a death certificate and a copy of the trust to withdraw the funds. Having a trust also reduces the chance of a will contest. If there is a wayward heir, they can contest the will if it is probated. If you do not probate, it’s much harder. You essentially create a challenge barrier with a trust.

There is also a phycological connection. Changing all of your accounts out of your name and into a trust name may feel as if it’s not yours. If that is an issue for you, then this option may be a good way around that feeling.

Cons of Your Trust as Beneficiary

This way of doing a trust does not protect you from court-appointed strangers (known as guardians) controlling your funds during your life. If everything is still in your name and you become incapacitated or someone can assert that you are in cognitive decline, then a guardian can be appointed to control your funds. However, if everything is owned by the trust, then a court-appointed guardian can not access those items. Only the trustee of the trust, as chosen by you, can control what happens. Not only does a full trust prevent a court-appointed stranger from controlling your assets, but they most likely won’t bother with you, because there are no funds for them to control.

Cons of Your Trust as Beneficiary

In general, Anthony is not really a fan of naming a trust as a beneficiary, because in his experience, people generally do not do a good job tracking their beneficiary designations. We see very often where people forget to change their beneficiaries after relationship ends and people die. It is very easy to forget, even if you are really well organized. The designations are not conspicuous and are not usually listed on the statements, so people do forget. Bottom line – people do not remember.

Another reason that Anthony doesn’t suggest this route is that honestly, doing it this way does not really save as much time as you would think. It is actually very similar to what you will need to do with your assets when you create a full-blown trust. In either scenario, you will have to submit forms and provide documentation, which is almost the same process in both situations.

Naming a trust as your beneficiary is a good steppingstone as first step to a fully funded trust. We suggest you talk out your wishes and situation with an experienced estate planner to determine the best route for you.

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E200 Why You Can Feel Safe Hiring an Executor

E200 Why You Can Feel Safe Hiring an Executor


Instead of appointing a family member to administer an estate, you can hire a professional executor. We often get asked if this is a safe and better route. In a recent case, Sean contacted us to discuss this option. In his particular situation, he is from a blended family. His mother died and she is survived by three adult kids and a stepfather who was separated from his mother for a long time before her death. In his case, he is facing some possible trust issues. For example, the family could tentatively agree to equal shares, but the stepfather could claim full spousal status and kids could try to disqualify the stepdad (there is certainly an argument that he is not a spouse).

If the stepfather acts as the executor, the children may not be completely trusting. Similarly, if the children are the executors, the stepfather may have trust issues. With this complex family dynamic, an independent professional executor makes tons of sense. However, some of the heirs in Sean’s case were a bit concerned about handing over the reins and control of the entire estate to a stranger. Being apprehensive is completely understandable, but here’s why it still makes the most sense.

What is an Estate Accounting?

What is an Estate Accounting?

A professional executor will file a full accounting to close the estate. An accounting is an official record of all books. Everyone gets to see line by line every single dollar and cent that came in and went out of the estate. We are talking full transparency and disclosure. Every heir will get to see everything that happened without any questions. It’s all there in black and white. Professional executors do this not only to put everyone’s mind at ease, but it is also for their protection. Professional executors can only be released from liability from what they disclosed, which is why we disclose everything.

To put it bluntly, no matter how hard they try and how meticulously organized they are, amateur executors such as family members, friends, and neighbors keep terrible estate records. For example, in order for the estate to draft and file an estate accounting, our office has to work with the executor to gather all documents and records. Most of the time, many things are missing and there is a bunch of back and forth to find the missing documents. It costs the estate money to gather these docs and find the items that were never obtained or missing.

Usually, non-professional executor accountings are mediocre at best. On the contrary, professional executors will provide the estate with a clean and solid accounting. It’s not that we are more organized, it’s that professional executors are keenly aware of the risks of liability. We know that if we mess up, the courts will come down on us. We also know the end game, so we know how to start gathering and keep track of finances immediately upon starting the case. We are working the whole time towards producing a line-by-line accounting of all of the funds.

What Does an Executor Bond Do?

What Does an Executor Bond Do?

An executor bond is an insurance against the executor for the benefit of the heirs. So, if the executor makes a mistake, loses something, or is an outright thief resulting in the heirs not receiving what they should have, then the bonding company will pay the claim. With a bond in place, the worse that will happen is that you, as an heir, get to file a claim against the bonding insurance company to get the money. It will then be the job of the insurance company to recover the funds from the executor, and not the heirs.

To get a bond you need exceptional credit, especially with large estates. Generally, they want 750+ credit scores. It is tough for some amateur executors to get a bond for this reason. As a professional executor, we have never had a problem getting a bond and have never had a claim against a bond. If not required, very often, we will get a bond anyway to put the heirs at ease. In some cases, the courts simply require them of the executor, regardless of experience.

When you work with a professional executor and request for them to be bonded, make sure you are ok with the payment of the premium. This is the amount that will be paid annually to the bonding company by the estate. The premium fluctuates depending on the size of the estate and the bond amount. We can certainly get a quote beforehand and you can decide if it’s worth the annual payment.

Are Co-Executors a Good Idea?

Are Co-Executors a Good Idea?

“We have too many cooks in the kitchen.”

In Sean’s case, one of the questions the family asked was if we can have one family member and one professional working as co-executors. They wanted to know if co-executors are a good idea. The short answer is no. It boils down to too many “cooks in the kitchen.” When you have too many people involved with what is really a one-person job, then it becomes more complicated.

You will need each executors’ original signatures on all documents and authorization for all decisions. So, all the benefits of hiring a pro as a centralized decision-maker with experience to move the estate along properly and quickly is being thrown out the window. There are situations where executors are required to do things in person, such as opening the estate bank account. Both executors would need to go the bank together, and this may be challenging to coordinate, especially if one executor lives out of town or out of the country.

It also complicates the financials. You will have two people keeping financial records differently, that you have to merge together at the end. Collecting and combining two executor’s documents will take substantially more time and the estate will bear the cost.

While we do not advocate this route, if it’s the only way the family will be on board with a professional, then we can explore it. For the right family, we are willing to do it. We recommend that you speak with the professional and research what goes into administrating an estate before deciding on the co-executorship route.

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E190 When Does the Executor Tell the Beneficiaries?

E190 When Does the Executor Tell the Beneficiaries?


When does the executor tell the beneficiaries? Once the court process starts, which is usually shortly after death.

We often get this question when our Solo Ager clients name me as executor in their will.

When does the executor notify beneficiaries?

No, the executor does not notify the beneficiaries upon you signing your will. This is a common concern. An executor only notifies the heirs after death.

When exactly? Usually during the court probate process. But sometimes informally before probate.

Example: if you best friend and beneficiary is working with me to coordinate funeral arrangements, it may naturally come up during conversation that she’s named in the will.

Otherwise, the executor notifies all beneficiaries by mailing them a formal court document.

mail boxes

What does an executor have to disclose to beneficiaries?

All beneficiaries in the will receive the same court form, which lists:

  • The names of all beneficiaries
  • A general description of what each beneficiary receives

For example: the form will not specify that Jane received your diamond ring, and John received $10,000. Instead, it will say something like “Jane received items of tangible personal property” and John “a cash bequest.”

Generally, the executor does not send beneficiaries a copy of the full will. However, he must send the will to any beneficiary who also happens to be a distributee (next-of-kin).

Note: if you have a trust-based estate plan, rather than a will, then the notification requirements are different. You can keep information as private as you like. 

Who else does the executor notify?

family-tree-blank

In New York probate court, the executor must send notice to your closest surviving family, even if you disinherited them in your will.

Your executor must serve a court document and a certified copy of the will on each surviving family. So any disinherited heir will definitely be aware they were cut out.

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E189 Can an Executor be Out-of-State?

E189 Can an Executor be Out-of-State?


No, it’s not a good idea to have an out-of-state executor. Although it’s technically legally allowed, in reality an out-of-state executor causes tons of problems.

Banking Problems

Opening the estate account

You probably think opening a bank account is a piece of cake. And you’d be right, if you were opening an account for yourself, personally.

bank kyc

But banking for an estate is a different animal. But an estate account has tougher “know your client” rules, and the executor often must meet with a banker in person, at a branch, to open an estate bank account.

Troubleshooting problems

When you have a problem with your personal bank account, these days you have limitless customer support options. Website, email, live chat, tweets, or call or walk in.

But with estates, you usually must walk into a branch and speak with a banker to get that missing statement or re-issue that 1099. And that can be a pain for an out-of-state executor.

Selling Real Estate

Clean out

Yes, cleaning out the home or apartment is part of the executor’s duties. For an out-of-state executor, this can mean several trips in and out of New York to supervise the clean out.

Closing

source: https-::www.c21redwood.rocks:blog:tag:highland-title

New York is one of the few states where most real estate closings are in-person, with all parties sitting around a table for a few hours.

Yes, it’s sometimes possible to close with an out-of-state executor by signing and FedEx-ing the documents. But if any problems popup (as they often do with estate sales), it’s better to close in-person, so the lawyers can troubleshoot any problems in realtime, and avoid an aborted closing.

Minor stuff (mail forward, etc.)

There are countless small executor tasks to get the home ready for sale. Forwarding the mail, small repairs, returning extra keys, conversations with the super, etc. All much easier to handle with a local, New York executor.

Travel restrictions

travel restrictions

Sometimes an executor simply cannot legally enter the US:

  • Unable to get a visa
  • Immigration problems
  • Quarantine or other travel restrictions

If any of these apply, the heirs may be better off hiring a New York professional executor, rather than a non-New York person.

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E185 How to Name a Bank as Your Executor

E185 How to Name a Bank as Your Executor


Want a professional executor, but prefer an institution such as a bank or trust company? Here’s what to expect.

The application process

Like all other bank interactions, you must complete lots of forms and paperwork. It’s a lot of documentation, it may feel like you’re applying to college all over again.

And just like applying for college, you may feel like you’re applying for acceptance. Banks do not accept all executor nominations, and they have internal committees to decide which estates they will serve.

Bank minimums

The lowest minimum I’ve seen is $1 million liquid assets, and it usually must be invest with the bank. But more usually the minimum will be in the range of $2-5 million, liquid and invested.

Trusts only

Anecdotally, we’re beginning to hear that banks prefer to accept trustee appointments, and not executorship.

Some financial institutions flat-out reject clients who ask them to serve as executor, even when that client has millions invested with them.

Apparently some banks have acknowledged that being an executor is tough work, and perhaps not worth it for them.

Customer (higher) fees

Most states have laws that set the executor’s compensation. But banks will usually ask you to sign a contract with it’s own fee schedule. Higher fees, of course.

Banks have many advantages (“immortality,” private client perks such as fine dining, tickets, etc.), just be aware of what it entails.

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E184 Why is Being an Executor Difficult_ The Statistics

E184 Why is Being an Executor Difficult? The Statistics


Here are the results of a survey and statistics to illustrate why folks think being an executor is so difficult.

Is being an executor difficult?

The average executor doesn’t think the job is particularly difficult to understand. But, they do think carrying out the role can be difficult.

statista

Source: https://www.statista.com/statistics/281604/difficulty-in-being-an-executor-of-an-estate-among-wealthy-americans/

Based on a survey by Statista, non-professional executors feel the most difficult parts of serving as an executor or trustee of an estate are:

Commitment of time required

Many tasks seem simple, and would be if you were doing them for yourself (closing a bank account, getting financial records, etc.). But many executors realize how difficult those tasks are with an estate.

Insufficient legal or financial knowledge

Yes, you can hire an attorney or CPA to advise on most matters. But what executors really want to know is: what are my chances of getting sued if I make the wrong decision?

Filing tax returns

Executors must get tax clearance, to avoid being haunted by the IRS later. This can frustratingly take months.

Managing disagreement among heirs

This is particularly awkward and stressful if it’s your own family. Thanksgiving gets even more awkward!

How much time does it take to be an executor?

According to a survey by EstateExec.com, the average non-professional executor spends 570 hours to settle an estate.

executor_effort_chart

Source: https://www.estateexec.com/Docs/General_Statistics

How long is 570 hours?

  • 71 full workdays
  • 14 full work weeks
  • 3 1/2 months of work

Make sure you’re ok with this level of disruption to your job or leisure time, before accepting executorship.

How long do estates take to settle?

On average, 16 months. In our experience, 16 months sounds low.

settlement_duration_chart

Source: https://www.estateexec.com/Docs/General_Statistics

Also be aware that it’s not a steady stream of work. Rather, there will be bursts of hectic activity, with long gaps of waiting in between.

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