Being asked to be an executor is an honor you might want to pass up.
Settling an estate typically involves tracking down and appraising assets, paying bills and creditors, filing final tax returns and distributing whatever's left to the heirs. At best, the process is time-consuming. At worst, it takes hundreds of hours, exposes you to lawsuits and thrusts you into the middle of family fights.
Before you agree to take on this role, be clear on what's involved.
• You could be doing it for many months. A survey by EstateExec, an online tool for executors, found the typical estate took about 16 months to settle and required 570 hours of effort. The largest estates, worth $5 million or more, took 42 months and 1,167 hours to complete.
That doesn't necessarily mean the executor has to put in that many hours, said CFP Russ Weiss of Doylestown, Pa. An executor can use some of the estate's funds to hire an attorney and other help that could be more efficient than trying to figure everything out on their own.
• You might have a tough time finding assets.
Even with help, executors should expect to spend many hours finding documents, inventorying assets and debts, arranging appraisals, communicating with financial institutions and government agencies, managing property and keeping careful records. If the estate includes a home, the house may have to be readied for sale. The less organized the estate, the more time it may take to track down assets.
• You could be sued. Executors have a fiduciary duty to the beneficiaries, which means the executor is required to put the beneficiaries' interests first. The fiduciary duty comes with potential legal and financial consequences. Executors can be held personally responsible for mistakes and other problems. For example, one child may remove items from a parent's home that are bequeathed to another child. The heir whose items were taken could sue the executor for failing to secure the home.
Executors also may have to make judgment calls, such as whether to spend the estate's money to fix up a house for sale and if so, how much. Unhappy heirs can sue over those decisions, as well.
Given everything that can go wrong and the time commitment, people should think carefully about whether they really want the job before agreeing to be an executor, said CFP Kate Gregory of Huntington Beach, Calif., who has settled both her mother's and her husband's estates.
Gregory said she would agree to serve again only if a family member asked, and only if there wasn't likely to be a lot of conflict among the beneficiaries.
E-mail: email@example.com. Twitter: @lizweston.