Should executors send funds by check or wire? This could apply to expenses or payments to the heirs at the end. As a professional executor, I’ll explain why we almost never send wires, only checks.
Successful checks vs wires
If everything goes well, wire transfers are faster (even faster than overnight checks). Wires are more convenient for the recipients since they don’t have to go to a bank to deposit a check. Wires are more prevalent in Europe and most other countries; some don’t even know what checks are anymore. I haven’t had anyone ask me to pay their inheritance by Venmo or PayPal yet, but I feel like that day is coming.
Again, wires are faster and more convenient IF everything goes right. So, let’s look at what happens when something goes wrong.
Lost checks vs wires
If you have a lost or misplaced check, you stop payment. Then you wait and re-send the check. It’s not easy to do, especially for large sums like inheritance checks. But it can still be done.
Have you ever tried to reverse a wire? During a real estate closing, we had to wire funds from one closing to another. There was one wrong number in the wire, and it was gone! It took about four days for us to come back to the table to finish the settlement.
In other situations, it has taken months to reverse a wire. We’ve even had situations where the money has simply disappeared (neither the sending nor the receiving bank knows where it went).
We had a case involving heirs in Africa who demanded a wire transfer of the funds, since they did not have the infrastructure in place to receive a check. It was a six-figure amount, so we did a small test of a few thousand dollars to see if it went through. The funds ended up missing, even though it was through a very reputable source. To this day, that money is still gone. The heirs changed their tune about checks once the “test” transfer got lost.
Checks are also better for a paper trail. For estates, we need to account for every penny. That is usually easier with a paper check that can be signed and photocopied. There’s still a piece of paper involved in a wire transfer, but there’s not always proof that it hit the account. Sometimes the only confirmation you get is when the heirs say they received the money.
Even though the use of checks sounds archaic, there is too much downside to justify the convenience of a wire. When it comes to an estate, there are no gold stars awarded for speedy payments. The executor could be held personally liable for a missing wire.
As professional executors, we have the experience to know how to avoid these mistakes. To learn more on what a professional executor can do, check out my book, “How to Hire a Professional Executor”