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Gray Matters: Serving as executor is no easy task

The request may come from your closest friend or a relative: “I want you to be the executor of my estate after I die.”

Initially, you may be honored that your friend trusts you enough to give you this monumental responsibility.

But before you say yes, know what you would be getting into.

“As an executor, the first thing you worry about is that you instantly have a target on your back,” said Kevin Spencer, a Dallas lawyer who specializes in estate and trust litigation. “And, because you are a fiduciary, everything you do in that capacity is scrutinized by the highest standard in civil law and has to be done in the best interest of the beneficiaries of the estate.

“If you have a misstep or do not do something you are supposed to do, they can sue you for breach of fiduciary duty. Then, the burden shifts to you, and you have to prove that what you did was fair to the beneficiaries.”

An executor’s job is to administer the estate of the person who died. That includes:

• Collecting and managing assets.

• Paying taxes, debts and expenses.

• Distributing what’s left to beneficiaries named in the will.

“The job of executor is complicated,” said Michael Wald, estate planning attorney at Underwood Perkins PC in Dallas. “The probate code imposes many duties on the executor.”

This doesn’t mean you shouldn’t take the job. But it does mean that you should ask several questions before accepting.

• Do you have the time? “An estate can take 18 months to settle, sometimes longer, during which time you are on the hook for all actions of the estate,” Wald said.

Of course, that depends on the complexity of the estate.

Tom De Napoli served as executor for his sister’s estate after she died of cancer in 2007. He said his executor duties took time away from his job as a marketing executive.

“It became all-consuming,” he said. “At one point, I had to step out and do this full time.”

But De Napoli wouldn’t have had it any other way.

“My sister and I were very close,” he said. “For me it was an honor, a bit of a duty and one that I always said, no matter how good I did it, she would have done it better for me.”

All executors are entitled to a fee, though “most don’t take one because they are either a surviving spouse or a loved one in the family,” Spencer said.

“However, some estates require a lot more work that takes executors from their jobs or other means of livelihood, which justifies them getting paid, even if they are close to the family,” he said.

• Do you have the skills? “Understand that you must account for all income and expenditures of the estate, down to the penny,” Wald said. “Everything must balance, so unless you are good with numbers and records, this job may not be for you.”

De Napoli, who has a business degree and a law degree, confirmed that.

“You’ve got to find where the assets are and then have to take them into your control – meaning the estate’s control – and you have to then make sometimes-tough business decisions,” he said. “For us, it was marshaling in those assets and then doing an inventory. You have a certain amount of time that that inventory has to be given to the court.”

Because of the complexity of the job, if you do agree to become executor, consider hiring an attorney to advise you.

• What’s involved? Do you know how complex the person’s estate is? If someone trusts you enough to want you to be their executor, he or she should trust you enough to share this information with you.

Spencer said you should ask the person making the request:

• What types of property do you own? Real estate? Personal property? Mineral/oil and gas interests? Is there intellectual property?

• Where’s the property located? Nearby? Is there property in other states or countries?

• Do you own and operate any businesses that I will have to assume control over and pay employees, taxes and other expenses? If so, how do the businesses operate? How many employees do they have and who runs them? Who handles payroll? Who deals with clients?

• Do you have an accountant, attorney or any professional adviser who can handle the transition smoothly?

• Do you have any debts? “Is the estate solvent or insolvent?” Spencer said. “Are there any outstanding lawsuits or potential lawsuits? Does anyone possess property that I will have to pursue?”

• Any family conflicts? This is critical. If family members don’t get along, that will make your job as executor that much harder.

“When you step into these shoes, you’ve got to think about those families and whether there’s dysfunction there because that could make your life a lot more difficult than it needs to be,” De Napoli said.

In the case of his sister’s estate, family conflicts sparked litigation, which has since been resolved.

Be prepared for family members who may protest if they feel they’re being treated unfairly in the will.

“Understand that when there is money or sentimental property involved, people act emotionally, not rationally,” Wald said.

Remember that you’re obligated to carry out the wishes of the deceased.

“The executor doesn’t have the power to alter the will or how assets are distributed,” Spencer said. “That would be a breach of your fiduciary duty.”

But if family members reach a settlement agreement, “you can divvy up the estate however the parties agree,” he said.