MoneyDo: Consider What You’d Do If You’re Named An Executor, Personal Representative Or Trustee In An Estate Plan


So, you’ve been named as an executor, personal representative or trustee in a relative’s estate plan. Now what? What does that mean? What will you need to do when your relative passes away?

People in this situation often seek guidance because most of us only go through this process once or twice in a lifetime. It’s an emotionally trying time when a loved one’s dies, and the settlement process can be more burdensome than many of us are prepared to handle.

Today’s MoneyDo is: Consider What You’d Do If You’re Named An Executor, Personal Representative Or Trustee In An Estate Plan.

This advice is meant to be an introductory reference guide; however, every situation is unique, so please engage additional experts – when the time comes – to help guide you.

If you’ve been named an executor, personal representative, or trustee, your primary responsibility will be to settle financial affairs after your relative has passed. In doing so, you’ll have a fiduciary duty to do what’s in the best interest of your relative’s beneficiaries, while satisfying all legal obligations.

In short, that means you need to identify, collect, and manage assets while ensuring all debts, expenses, claims and taxes are paid prior to making any distributions to named beneficiaries.

The nature of the assets and ownership may be complex. Remember the entire process will take time and effectively communicate that to all parties. There’s no good rule of thumb, but the process from start to finish could take 6-12 months, so make sure beneficiaries understand they won’t receive their inheritance within weeks of a death.

Remember, open and honest communication with all the interested parties and beneficiaries will help make sure everyone understands and is accepting of the process. Lack of communication is where most family issues and distrust begin to form.

First, locate your relative’s estate plan documents. Along with a death certificate, the estate plan documents will be necessary to demonstrate that you’re the proper person to take control. Consult with an estate planning attorney to help guide you through the process, as additional legal documents may be required as well.

Next, read through the Will and/or Trust. Familiarity with the will or trust is essential, as since it will outline your responsibilities and who the beneficiaries are at the end of the settlement.

Begin to inventory and determine what assets are involved, along with debts, ongoing expenses – and who the ultimate beneficiaries are that will receive an inheritance.

As you start to get a good handle on the assets, you’ll need to begin making decisions about what to do with them. Personal property will need to be divided up among the named

beneficiaries. Many trustees start to consolidate investment and cash assets into a few accounts to make it easier to track and close accounts as they go. Investment accounts, real estate or collectibles may need to be sold to generate liquidity to pay expenses or to equitably divide value.

Tax returns through the date of death will be required and the post-death trust or estate will likely also have a separate income tax return that needs to be filed. Estate tax returns are only required if the value of the overall estate is above the estate tax exemption, currently $11.4 million per person in 2019.

As you to start to wind down, make sure all debts, expenses, claims and taxes have been paid prior to making final distributions to the named beneficiaries. You may want to consider obtaining receipts, so the beneficiaries acknowledge that they have received the full share or amount they were entitled to under the document to avoid future disagreements that may arise.

There are a lot of more detailed nuances that need to be addressed beyond this overview, so if you find yourself in this situation, be sure to contact your advisor and attorney for more detailed guidance.