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Managing an estate may not be the labor of love you think it is. Read on to learn why.
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Thoughtful estate planning is a key part of managing one’s personal finances. And for many Americans, picking an estate executor from among one’s family or close friends seems like a natural move. Not only might a close relative know how to contact heirs, they may have a better idea of your wishes and family dynamics. However, pressing the “easy button” when choosing an executor may have some negative consequences for both your estate and your executor.
Emotional whiplash
Losing someone close to you is a jarring experience. Adding estate administration on top of that experience can be downright painful.
The work of an executor begins almost immediately following one’s death. Even before assets can be distributed, death certificates must be collected to arrange a funeral, collect life insurance proceeds, grant access to retirement and bank accounts, and even to ensure a surviving spouse keeps their access to Medicaid. This can be a lot of work for an executor who just lost a close friend or relative, and can add a great deal of stress during an already difficult time.
Every family has its quirks, and an executor who is familiar with the politics at play in a family may not be the blessing you think. Estranged relationships and mismatched expectations around bequests are just some of the complications of estate management. As an executor, especially an executor who is also an heir to the estate, balancing the wishes of a decedent with the continuing relationships between surviving family members can be nearly impossible.
A many month process
From start to finish, settling an estate typically takes between nine months and two years. That time can increase substantially depending on the state or states that property was owned in, and the overall complexity of the estate.
One time-intensive part of the estate execution process is tracking down and receiving access to a decedent’s assets. A decedent may have life insurance policies, retirement accounts, real estate properties, pension plans and more scattered across many financial institutions. Not only does an executor need to find these assets, but they also must apply for access to manage the assets in order to eventually distribute them. As those who commonly deal with financial institutions will tell you, this requires some patience.
Executors can also expect to manage debts owed by the decedent and taxes owed by their estate. Settling debt can be a lengthy process, as creditors have a window, six months in many states, to come forward and collect what they are owed. Additionally, valuing the estate and figuring out estate taxes, if any, can take time, and often the assistance of an accountant. These steps can take even longer in the case of assets and debts in multiple states, or when dealing with hard-to-value property.
Working with a professional
For many Americans, engaging a professional to manage their estate may make sense. An attorney or trust company can offer experienced and impartial estate management services, relieving loved ones of the time and emotion that come with settling a friend or family member’s estate. An estate attorney can help you understand the pros and cons of designating an executor and help you make the right choice of executor for your situation.
When choosing an executor of their estate, many opt for a close family member or friend. However, it may be difficult for an appointee to manage the emotionally-complex and time-intensive process of settling an estate. Having an informed discussion with both your estate attorney and any potential executors can help set your loved ones up for success, even if you aren’t around to see it.
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