How to choose an executor or trustee requires some thought and analysis. An executor is the person or company that handles your estate after you die.
Whether your estate is held in a trust or is passed by your will, you need an executor or trustee to take care of the winding up or distribution of your estate. It is a big responsibility to be in charge of someone’s estate, so it is important to pick someone who can deal with both the personal problems in the family as well as the business problems that come with passing the estate.
Why You Should Have An Executor
We know from years of observation that often things don’t go as planned when someone dies. It may be that the sale of a piece of property is tied up. Someone could sue the estate. There could be a health issue for one of the heirs. Whatever the problem, the executor will need to deal with it. That “it” will take a toll in both time and energy. As you make your choice, remember that you need someone who can take the time to deal with these and other issues.
While the executor is dealing with those unplanned items, the heirs will be anxious to collect their money and move on. However, the executor or trustee will have to take time to do things properly because the executor is required to settle the affairs before any distribution can take place. He can’t cave to the heirs but will still need to make the heirs happy while winding things up. When you choose an executor or trustee take this into consideration. Pick someone who can get along with the heirs.
What Could Happen To Real Estate Investments
In our condo units in Florida we see this problem pretty regularly and it always costs the estate. When someone dies, nobody thinks to pay the condo fees. Before long the executor or trustee begins to get past due notices from the condo association.
The family begins to jump at the bit for money and the condo is sold quickly at a loss to appease the heirs. Last year a $400K+ condo next to us sold for $70k and the outstanding condo fees. If you choose an executor or trustee who can’t deal with the heirs or who has poor business sense it can cost your estate three fourths of its value.
Think of Your Heirs
When someone dies, all the final expenses must be paid and the affairs wound up. Six months ago, a neighbor of ours died. We saw the son outside the home the other day and stopped to say hello. He told us he was the executor trustee and he was still trying to empty the house.
There is a “For Sale” sign up, but the son said that they will need to pay for some renovation before they can get a decent price. It sounded like the kids were all working with the trustee to ensure that they would get a better inheritance. This all-too-rare exception may be how your heirs will act if you set up proper expectations and a good trustee or executor.
The important thing is to choose an executor or trustee who can take charge of your estate and solve the problems that arise. Remember to pick someone who can deal with both the personal problems in the family and the business problems that come with passing the estate. You have worked hard to get your estate. Make sure you protect it for your heirs.