Your client is the executor. Now what?

If you have a client who is the executor of an estate, how can you help them in their role?

Before discussing how you can help an executor, it’s essential to understand that the role of an executor comes from loss. You are not only your client’s technician when it comes to helping them with the financial aspects of the estate but also their grief facilitator. Here are six ways advisors can help clients who are serving as executors.  

Let them know they have a choice 

It is an honor to be selected as an executor. It signifies that the person who requested your client to fulfill their final wishes had faith in your client to complete their legacy. However, sometimes grief is too much to handle, making even simple tasks challenging. 

If your client doesn’t feel up to being an executor, let them know there are always other options. The executor can always find another person, whether that means they resign as the executor, assign multiple executors or hire professionals to assist.  

If your client is unsure about being an executor, here are some questions to ask them:

1. Are there potential conflicts or disagreements among beneficiaries and heirs that may make your job harder?

2. Do you have the time and availability to fulfill the responsibilities of distributing and closing the estate? 

3. Do you have a professional (attorney, financial advisor, tax) and personal (friends, family members) support network?

4. Are you aware of the tax and legal implications of being an executor?

The process of changing executors is common and relatively simple to complete. However, the executor must make a clear decision and notify the proper authority. They can face legal implications if they are unsure, if they draw out the decision and if they don’t fulfill their responsibilities.

Providing emotional support

Has your client decided to be the executor? Great! However, just because they chose to be an executor doesn’t mean everything is smooth sailing from there. Deciding to become an executor means their journey has only just begun. 

Most financial professionals aren’t trained in performing therapy. However, we can offer a safe space to share stories. Use open-ended questions that invite their story, and then follow their lead, allowing clients to open or close the door as they please. If your client decides to close the door, at least you have differentiated yourself by raising the topic most people would ignore.

Invite your client to address their fears. For example, ask, “What keeps you up at night?” or “What worries you about the estate process?” Naming and writing down the fear can help clients feel less threatened and think more clearly. Then brainstorm ideas to create a safety plan.

Developing a safe space so clients can share stories and address fears will build a trusting relationship so clients feel safe to come to you when their executor journey creates roadblocks.  

Help them find professional support

An executor’s role is to carry out the terms of the will. However, in an ideal scenario, an executor is more of a delegator, directing tasks to professionals to complete the detailed work. Closing an estate may require an executor to hire several different kinds of professionals:

• An estate attorney to guide them through the process and protect them from potential legal implications. 

• A tax professional to file a final tax return and trust tax return.

• A real estate professional and estate liquidator to appraise and sell assets.

If you don’t have a list of professionals, contact your network for referrals so your client can find the most relatable options. Putting in the legwork to support your client can pass the load to trusted professionals and decrease the load of your client’s role as executor. 

Sorting through the estate

The first step in any estate process is to take inventory of all the assets. Some assets, such as a personal residence, might be easy to realize, while hidden accounts, safe deposit boxes, jewelry and credit card bills might be harder to find. Before your client runs around trying to marshal all the assets, help them brainstorm what assets their loved one had. Create a spreadsheet with the assets, title on the property, the value at date of death, the value of the deceased person’s share, and whether the item is liquid or illiquid. 

Once the estate is sorted, you can help your client:

• Determine how much liquid cash is available to hire professionals and pay expenses.

• Consolidate accounts as needed.

• Evaluate which assets need to be appraised.

• Determine the potential estate or inheritance tax. 

• File final and trust tax returns.

• Review the deceased insurance policies.

• Analyze an “in case I die” file.

Sorting through the estate can be complicated; significant errors can be made without proper due diligence. Helping your client will ensure that assets get consolidated and distributed correctly. 

Advocating for your client

When an estate process is overwhelming, executors often forget about themselves. As advisors, it is our job to help clients prepare for obstacles outside their view. Here are some things to look out for. 

Depending on the state’s executor rules, the executor can typically take 1%-3% of the estate value or an hourly wage for their work. When the executor’s duties are complete, the executor will receive a 1099-MISC to report their income. Calculating how this amount may affect their taxes or government benefits (e.g., Social Security) in the year they receive the money is essential. 

Closing an estate requires keeping detailed records, filing forms and meeting deadlines. Working together with the attorney and the accountant can help the executor meet these deadlines and have access to documents in a timely manner.  

Being an executor can come with complicated family relationships and a surplus of money they didn’t expect. If your client hasn’t already, now is the time to consider updating their estate plan, determine how to use their inheritance and renew their goals. 

Advising beneficiaries

Now that you have helped the executor divide the assets among the beneficiaries, it can be a good opportunity for you to build a relationship and advise the beneficiaries on their options. It is important for beneficiaries to understand how their inheritances will affect their future financial plans, estate plans, investment profiles and income tax liabilities.

If a beneficiary may act as an executor for your client in the future, it is a good idea to establish a relationship before your client dies. Here are some tips to get the conversation started:

• Take them out to eat, or invite them into the office.

• Be genuine, not salesy.

• Build a personal connection by developing common ground.

• Send them a toolkit with financial tips and information about your organization.

Being an executor is emotionally and technically tasking work. By offering a helping hand, you’re making an executor’s workload much lighter.