Common Estate Management Mistakes to Avoid
Being asked to be the executor of an estate is a big deal. People you love (and some you don’t) are counting on you to create order in a tough time. Often the person asked to serve as executor is trusted, but inexperienced with this type of undertaking.
There is a very long list of ways one could mismanage an estate, and if the only thing on the line were reputation, that would be very different. But probate and disbursements are governed by law, which makes this an area that needs accuracy and compliance. As a result of many factors, estate management solutions are often needed to prevent mismanagement.
Things that can go wrong include:
Not Officially Recording the Will
After a death, the most recent known will must be submitted to the court so that the executor can be certified by the court. This must happen before anything else, so it’s important to find the most recent will quickly and schedule an appointment with the probate court.
There is an order to events with disbursements. Until the creditors have been paid, none of the estate assets can transfer hands. This means that beneficiaries must be patient, and the executor of the estate cannot buckle under pressure. It’s their legal obligation to hold all assets until the last creditor has been paid, and then disburse the remaining assets next.
Not Finding & Protecting Assets
It’s the executor’s obligation to identify, locate, and protect the assets of the estate. This can take some research, and you may need to pay storage facility fees, or retrieve things that are in someone else’s possession. It’s the estate manager’s duty to take care of these things so that they lose no value between the passing of the decedent and their eventual disbursement.
Flunking at Finances
Many times estate manager’s mismanage funds. One easy way to do that is to fail to collect debts owed to the deceased, like back pay, social security, or pension income. All of that must be collected and taxes must be filed on it.
Most states also allow executors to receive “reasonable” payment from the estate for their services. What this amount is will be decided for you by the court. Keep impeccable recordkeeping, and don’t mix estate funds with any other funds. You cannot live on property owned by the decedent without paying market rent.
Giving Stuff Away
Many times the small things that aren’t mentioned specifically in a will are given away. This goes for things that you assume won’t be mentioned specifically in the will, too. They tend to go casually to friends and family members who might like them. This may seem okay, but it’s not. Assets of the estate can only go to named beneficiaries, or legal heirs. If you disburse outside of those groups, you may owe out-of-pocket money to the beneficiaries, who are the legal owners of that property.
There are far more opportunities to bungle being an executor than we can outline here. If you need guidance or estate management solutions, we’re here for you. We offer probate and trust administration services to make sure that your bases are covered and the process is carried out smoothly, legally.
Filed under Probate Tips