When someone passes away with a Will (also called a “Last Will and Testament”), they will name a person or an entity to serve as the executor of their probate estate. The executor’s job it is to ensure the provisions of the Will and certain other affairs of the decedent (e.g., taxes or debts) are properly handled and the named beneficiaries receive their inheritance.
Executors can be anyone from a trusted family attorney or CPA to a close relative. If you’ve been named as an executor of someone’s estate, you may feel honored that your loved one trusts you enough to carry out their wishes. However, there are some challenges associated with this role that you may not be expecting.
Here are just four executor challenges you may face if you’ve been tasked with serving in this role under someone’s Will.
1. Disputes with beneficiaries
While it is the executor’s job to secure all of the assets of the probate estate and distribute them according to the decedent’s wishes stated in the Will, beneficiaries may try to start claiming heirlooms and other valuables even before the funeral.
It’s important to try to prevent this from happening whenever possible, such as changing immediately changing the locks on the decedent’s residence or arranging for valuables to be placed in a storage unit. While a Will grants the executor the right to disperse the assets to the beneficiaries in accordance with the decedent’s wishes, it is not immediate, and this can be very difficult for the beneficiaries to understand. Often, they believe the executor owes them some duty, but the executor’s responsibility is to the decedent, not to them.
2. Time/travel commitment
While it may be an honor to be chosen as the executor of someone’s estate, many people don’t take into consideration how extensive the time and travel commitment can be. On top of tracking down necessary information from investment firms, life insurance companies (if there is no named beneficiary or to determine if there is one), banks and mortgage servicers, the executor could be faced with the challenge of sorting and valuing the contents of the person’s home, storage unit, and/or safe deposit box.
If you’ve been named executor, you will also likely have to:
- Visit the county courthouse where the decedent resided to record financial information.
- Make trips to the post office to mail registered letters.
- Make phone calls to the firms and financial institutions if your loved one had debts to settle.
- Hire a CPA to help with filing a final income tax return or a death tax return for the estate.
- Hire a realtor (and obtain an appraisal) to list the decedent’s residence for sale if it is deemed part of the probate estate for any reason (note: In Virginia, real estate generally passes outside of probate directly to the heirs of the deceased unless the deceased has a surviving owner under the deed or has provided under the Will for the residence to be given to a named beneficiary.
If your loved one owned assets outside of Virginia, particularly real estate, you may also have to coordinate with officials in those jurisdictions as well.
3. Personal liability if debts and tax obligations are not met
There are strict laws in place to enforce the responsibilities and timelines for executors, who are personally liable for carrying out their duties. For example, if you misrepresent the value of any of the estate’s assets, the IRS or beneficiaries may hold you accountable for any discrepancies.
If the beneficiaries you’re working with are impatient about receiving their portion of the inheritance, it may be beneficial for you to explain upfront that no one can receive their share of the estate until all creditors have been paid and any taxes owed have been settled.
4. Out-of-pocket expenses
In addition to the time and travel that is often required, most executors don’t take into account the out-of-pocket expenses that often accrue while completing their duties. While an executor is allowed to reimburse himself or herself for such out-of-pocket costs, there can be some delay in getting reimbursed if the major assets are no cash but, rather, real estate, or some are type of asset. In addition, if the probate estate is ultimately too small, the also is not likely to be the option of seeing compensation from the estate for the services of executor, and any such compensation must be approved by the Commissioner of Accounts.
Regardless of whether think you will not be entitled to compensation, keep track of your time expended in serving as executor, as well as all of your out-of-pocket expenses, such as postage fees, gas and any other travel expenses. Out-of-pocket costs take priority over all debt obligations (including legal fees and CPA fees) should be reimbursed to you if you advance your personal funds to pay for them; only your time is at risk of not being compensated.
Get help with your Virginia probate case and overcome common executor challenges
While the American Bar Association and IRS do provide guidelines to help people better understand the breadth and depth of the executor’s duties and tax responsibilities, the Virginia probate process, which we’ve outlined here, can be overwhelming for anyone to understand and take on.
My Legal Case Coach offers a comprehensive Probate Case Forms Packet as well as 1-to-1 virtual coaching services to help answer all of your questions and assist you in completing the necessary forms for each step of the Virginia probate process.
Schedule a free 15-minute consultation with a licensed Virginia attorney to discuss your circumstances and learn how we can coach you through the process.