Author Topic: Advice on being an Executor  (Read 771 times)

zoro

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Advice on being an Executor
« on: October 17, 2020, 03:19:25 PM »
My MMM friend told me his wife has a terminal illness. I talked with him about restructuring his estate to avoid capital gains taxes. He did - when they were at the lawyers office doing that he called and asked me to be his executor after his wife passes. No kids etc. He is super frugal likely with an 8 figure estate  - only distant relatives who will get big payouts but most will go to charity.

Has any one done this? - are there things i should ask for now i.e. address and location of will. lists of assets and accounts etc.

I hope I never get the call, but I want to make sure I handle things properly for him. Any advice would be appreciated thx.

dandarc

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Re: Advice on being an Executor
« Reply #1 on: October 17, 2020, 03:35:28 PM »
8-figure estate and no children in the picture? He should hire an executor. Yeah its expensive, but why saddle a friend with this?

zoro

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Re: Advice on being an Executor
« Reply #2 on: October 17, 2020, 03:41:06 PM »
yes that's fair. He wont hire someone as he is super frugal. We've invested in a few things together, and he knows we think in a similar way about money. I know it is a lot of work, but he also knows I will do it right.

reeshau

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Re: Advice on being an Executor
« Reply #3 on: October 17, 2020, 03:45:40 PM »
No personal experience (yet) but you might look at the Nolo Executors guide.  The content is broken up into time slices:  things to do before, things the first week, first month after, etc.  There are some forms as well, including with questions to ask your friend.

https://www.amazon.com/Executors-Guide-Settling-Loved-Estate/dp/1413324800/

ObviouslyNotAGolfer

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Re: Advice on being an Executor
« Reply #4 on: October 17, 2020, 03:46:25 PM »
Be ready for all sorts of relatives (who wouldn't give this person the time of day while alive) to crawl out of the woodwork looking for their cut. I've seen this many different times with different families. And I know it will happen in my family when my poor old aunt (who is being helped exclusively by me) dies.

jeninco

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Re: Advice on being an Executor
« Reply #5 on: October 18, 2020, 08:57:09 AM »
Make sure his estate pays you "reasonable and customary" rates, or something like that. It's a job, you should get compensated for doing it.

terran

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Re: Advice on being an Executor
« Reply #6 on: October 18, 2020, 09:06:38 AM »
I'd be looking for some liability protection. You don't want these distant relatives dragging you in to court on your time and dime trying to get a bigger cut.

iris lily

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Re: Advice on being an Executor
« Reply #7 on: October 18, 2020, 02:51:05 PM »
I'd be looking for some liability protection. You don't want these distant relatives dragging you in to court on your time and dime trying to get a bigger cut.
is that a thing? People do this?

K_in_the_kitchen

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Re: Advice on being an Executor
« Reply #8 on: October 18, 2020, 03:01:39 PM »
I would say no. I'm never doing to be executor over an estate ever again.

I administered my grandmother's estate, and DH administered his dad's. His dad's was super easy with only the three adult children as heirs and most of it going directly to them from retirement funds. My grandmother's wasn't exactly hard, but it was more complicated and took a lot longer to distribute funds, and dealing with the heirs was awful. Also, I was appointed joint executor with another heir, which made everything harder, and then I did all of the work but only got half of the compensation.

I'm listed as executor and successor trustee on my dad's paperwork. In 2012 when he remarried the first time I told him I didn't want to do it, and he ignored me. I told him again earlier this year since he was seeing his lawyer anyway, and he says she told him not to change it -- they'd rather I say no when the time comes and it will go to the next person. That person said he would do it, but he doesn't know what I know. And what happens if he isn't around?

My parents did a living trust in the early 2000s. I think they were badly advised. The only asset of any value was the house (I'm serious -- they were in credit card debt, went into overdraft every month, and had no savings or retirement savings), and yet they have a complicated trust. When my mom died the trust became irrevocable and a bypass trust was supposed to be established, but it wasn't. The way the trust is worded, if the house is sold there are only two options -- divide it between the main trust and the "family pot" bypass trust, or use the net proceeds for a new house. I totally get that my parents didn't want either of them to be without a house. My dad recently sold the house and used the proceeds to pay off credit card and car debt, pay for a wedding and honeymoon, etc. His lawyer did tell him the net proceeds were supposed to go into another house, but he decided the net proceeds would be after he got out of debt, paid for his wedding and move, and tithed a full 10%. If he does buy a house, he'll have to hold it jointly with his new wife (likely set up as percentages depending on how much they each contribute). When I asked what happens if he dies before the new wife that his lawyer said if he dies first his heirs can put a lien against the house and get the money when the current wife sells or dies. (And as an aside, his lawyer recommended a prenup to navigate both of them already having adult children and his now new wife refused.)

To complicate things, at the time my mom died the mortgage balance was under $60k, and when my dad sold it it was $180k (property values were approximately equal because she died near the height of the real estate bubble. It could be argued that my dad added $120k of debt to his half of the house (since half the value and half the debt belonged to the family pot trust). Oh, and he conveniently "forgot" to put the house in the name of the trust when he refinanced a couple of years ago. That's not a problem if you have a revocable trust, but again, his wasn't. He knew about this issue because when my mom first died he said he wasn't allowed to refinance because of how the trust was set up. That he didn't put it in the name of the trust didn't actually remove the property from the trust because the property itself is specifically mentioned by address in the trust, with specific rules established, and that became irrevocable when my mom died. They did put the deed in the name of the trust when they established it, thus funding the trust.

This is the information that made me say no way, I'm not doing it. I can't do anything about what he did wrong with his trust, but I'm not going to take the heat for it from my siblings after he dies. I'm not even confident the "net proceeds" won't be spent and not put into another house, he's already fixing up his new wife's current house. I love him dearly but I don't expect nor want a dime from his estate -- which is privileged I know since we don't need it and my siblings do (or at least two of them do). Sometimes the heirs can petition the court to allows changes (giving my dad more leeway), but at the time he sold the house there was no way everyone would be on board. It's unfortunate, but families are like that sometimes.

So no way, no how -- I'm not doing it. They can be mad at me for not telling them now how badly it was mismanaged, but I won't have liability because what I know now isn't something I could or can do anything about. When some started sniffing around the proceeds from the house (already) I had to explain that I'm not the executor or trustee at this moment -- my dad would have to die for that to happen. And yes, I did have one who started demanding things of me.

Our plan puts our oldest as executor, but there are only two of them, we are still married, and they are both biologically our children. If things were to change in the future we would set it up to be executed by a paid professional.

terran

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Re: Advice on being an Executor
« Reply #9 on: October 18, 2020, 09:33:36 PM »
I'd be looking for some liability protection. You don't want these distant relatives dragging you in to court on your time and dime trying to get a bigger cut.
is that a thing? People do this?

Of course they do. Any time you hear about a will being contested that's what's happening.

Hula Hoop

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Re: Advice on being an Executor
« Reply #10 on: October 19, 2020, 02:22:31 AM »
This is making my nervous.  My dad named me (eldest child) as the executor of his will.  He remarried about 10 years ago and I'm not close to my step-mother, who is from a different country that I've never visited.  Additionally, she is 20 years younger than dad and has no income so there is no way she would be able to cover the costs of living in the place where they live now (NYC) if my dad were to pass away. I'm really not sure if she realizes this or how practical she is about money.  She will get my dad's pension and a third of his assets so should be able to set up in a cheaper city or in her home country with no issues.  I'm just nervous as I don't really know her that well and there has been some friction in the past.  It's difficult to talk about practical issues with her as she seems to have some cultural issues about talking directly about money.  My dad has tried and she gets really upset.

Should I ask my dad if he could just hire a professional?  What kind of professional would do that kind of service?

iris lily

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Re: Advice on being an Executor
« Reply #11 on: October 19, 2020, 11:25:27 AM »
I'd be looking for some liability protection. You don't want these distant relatives dragging you in to court on your time and dime trying to get a bigger cut.
is that a thing? People do this?

Of course they do. Any time you hear about a will being contested that's what's happening.

But are they suing the executor individually, or the estate? So, the estate does not cover attorney fees for the executor?

terran

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Re: Advice on being an Executor
« Reply #12 on: October 19, 2020, 03:50:57 PM »
I'd be looking for some liability protection. You don't want these distant relatives dragging you in to court on your time and dime trying to get a bigger cut.
is that a thing? People do this?

Of course they do. Any time you hear about a will being contested that's what's happening.

But are they suing the executor individually, or the estate? So, the estate does not cover attorney fees for the executor?

Even if it's the estate the executor still needs to show up to court and deal with it. If they claim the executor did something wrong then it would be the executor. A large estate that's mostly going to charity with distant relatives inheriting small amounts just sounds like a recipe for disgruntled people trying to get more money. I'd want more assurances that I wasn't taking on a giant mess than someone calling me up and asking me to be the executor in such a circumstance. Like sitting down the guy and his lawyer to go over what executor's responsibilities will be and what's being done to ensure the executor won't end up fighting with heirs. I'm not saying don't do it, I'm just saying know what you're signing up for before agreeing.