Death is only the beginning

Whether you’re spiritual or a movie fan, the reality of ending our time here on this planet is that one’s death is just the beginning of a whole other process.  It’s always difficult to absorb the impact of a loss, regardless of how expected, or unexpected, it might be. And, in some cases, that loss is a double whammy when you find out that you are executor of someone’s Last Will and Testament.

When we’re putting a will together and naming an executor, we often think about who is nearby and responsible enough to handle the task. What we don’t often clarify with that person is if they fully understand the job ahead, usually because we don’t know what’s involved ourselves so let’s go over some expectations.

Right off the bat, being an executor is a time commitment. The average estate will take at least six months to settle, with a year being the norm, and my client record being 7+ years (I’m not sure if it’s even finished yet). That clock starts at the moment of someone’s death which is when the executor is responsible for: finding any estate planning documents (assuming they exist), determining what the funeral and burial arrangements will be, and generally being the point of contact regarding any questions about the immediate issues (like who’s taking the pets and babysitting the house while everyone’s at the funeral – a popular target for break-ins). This is the first couple weeks of the “estate year.” Some of these early tasks can be farmed out so I encourage people to do so because the next steps generally can’t (without incurring some significant costs).

Next up, handling the immediate data & details.  This includes finding and reviewing all the financials – where are the assets and do they have beneficiaries, are there any obligations from a previous divorce or separation agreement and getting a handle on the ongoing expenses and debts, including canceling the credit cards, letting the various service providers know of the death and stopping any unnecessary expenses (subscriptions, memberships, cellphones, etc…). Many of these issues can be handled while the executor and their attorney are deciding how to settle the estate. Probate is not required for assets that have a beneficiary listed, trusts, life insurance contracts, and Social Security death & survivor benefits. This is often the time when little surprises come to light like a basement full of unopened QVC boxes, closets (or whole rooms) that barely contain some hoarding tendencies, or financial lapses, either intentional or not.

For most people, we’ll be engaging with an attorney to petition for probate (you’ll also want to probate an estate if there is any hint that one or more of the beneficiaries might be unhappy with the eventual outcome). This is a somewhat complicated process and I generally recommend using an attorney, but I’ve known people to tackle this on their own. As with taxes, it really depends on how well the executor is able to read and follow instructions and how much time they have to spend. As part of the process, every person named in the will gets a copy of the will so you, as the not-yet-deceased, might want to double check your own document to make sure you are comfortable with everyone knowing everyone’s business (bequest wise). This is another reason to consider using an attorney – it helps to deflect some of the surprise / anger / angst when people read the will.

Now that we’re in probate land, the fun starts. Being an executor means taking on a fiduciary responsibility which is done formally with a notice to the IRS. In some cases, depending on the industry that the executor works in, their employer may need to be notified and additional disclosure material filed. The estate will need an employer identification number, which will be used to open the estate bank account. In addition to cleaning up the various accounts, an executor is responsible for making sure that the last tax returns are filed, which can often mean rooting around and finding the old tax returns for reference. This could also mean actually filing returns for previous years if those weren’t completed.  In addition, a complete inventory of the estate’s assets needs to be filed within 9 months so add more time on the commitment clock.

Here’s a little-known fact – remember earlier when I said that the average estate will take at least six months to settle? A creditor has up to 7 months to file a claim against an estate so, unless this is a small estate with absolutely no chance of any outstanding debts, there’s your minimum time frame.  During this 7 months, the executor is running around doing paperwork, getting ready to file the taxes, helping to settle anything with a beneficiary on it, transferring assets into the estate if there isn’t a beneficiary, checking “unclaimed assets” websites for any state that the deceased lived in, and generally trying to put on a brave face while hiding the bottle of adult beverage in the file box with all the documents.

Once all of the above is said and done (and this list is by no means all inclusive), the estate can be closed, either informally (all the beneficiaries agreed and participated) or formally (someone was uncooperative –back to court we go). At this point, the last of the proceeds are distributed to the appropriate parties, including any executor fee, and everyone goes on with their lives (some vowing to never, ever, do THAT again…).

For all but the smallest estates, an executor can expect to spend a minimum of 70 hours of that year working on estate business. A messier estate and that number can easily double or triple. So, as you review your own documents, have a conversation with your executor and make sure they know what they are agreeing to. If they aren’t sure they will have the time, consider beefing up the account that doesn’t have a beneficiary on it so your executor can pull in some help.

With some solid planning, you can exit this world knowing that your executor won’t be softly cursing you under their breath months after you’re gone.