Executors can inherit an unholy mess

By Liz Pulliam Weston

There's a downside to being reliable and good with money. Sooner or later, someone will ask you to be an executor or a trustee.

You may think you're just being asked to handle the details of an estate or trust after this someone dies. But you could be setting yourself up for aggravation, bureaucratic red tape, years of work, angry battles with family members and even lawsuits.

"I think people would be shocked to know what's often involved," said wealth expert Blanche Lark Christerson, a director in Wealth Planning Strategies Group for Deutsche Bank Private Banking in New York City. "Somebody's really not doing them a favor by asking them to be a fiduciary."

You may be the one who has to call the sheriff when the ne'er-do-well relative cleans out Grandma's house while the rest of the family is at the funeral. Or the person who has to fend off late night calls from a spendthrift sister who's convinced you're unnecessarily tying up "her" money. Or the one who has to search through a packrat's home just to find the will and any valuables among decades of old magazines and saved string.

Navigating family feuds

You also may be called to referee family battles when the will or trust isn't clear enough about who gets what.

"Often the most difficult part is not dealing with the money or the lawyers or the courts," said Columbus, Ohio, attorney William J. Browning of the National Academy of Elder Law Attorneys. "It's the personal property. I've had people fight over Tonka toys."

An executor's job typically lasts from a few months to two years. (If you're asked to be a successor trustee for a living trust, your function will be much like that of an executor.) Executors' duties include:

• Locating and valuing the dead person's assets.

• Finding and paying any creditors.

• Filing estate tax returns if the estate is large enough.

• Making sure the remaining property and money are transferred to the person's heirs according to the terms of the will or living trust.

If you're asked to be the trustee of an ongoing trust, by contrast, your job could go on for decades. You'll be in charge of investing the money in the trust, making distributions and filing tax returns. Of the two jobs, attorneys say, the trustee's job is often harder and has the potential for more conflict.

Many states have raised the bar on fiduciaries by allowing them to take more risk when investing trust money -- which leaves trustees vulnerable in two ways. If they don't take enough risk, beneficiaries can sue them. If they take too much and lose money, beneficiaries can sue them.

What? They might sue me?

"If you're held to have mismanaged the trust, then you're held personally responsible," Christerson said. "You're required to make the trust whole out of your own pocket."

Executors can also be sued. Plus, an executor who screws up an estate tax return can be held personally liable for any additional estate tax that's owed.

That doesn't mean you should necessarily say no. Many people with very small estates have little choice other than to ask family or friends because there isn't enough money to pay professional fees. Even many people with larger estates would prefer to have someone they know serve as overseer rather than turn the duties over to an impersonal bank or other professional fiduciary.

Video: Good will hunting

You have to weigh the potential problems, attorneys say, against your sense of responsibility to the person making the request.

Look for the big red flags

"It's . . . a labor of love," said attorney Denis Clifford, co-author of self-help legal books including "Plan Your Estate." "The question is, do you care about the people involved?"

Most of the time, Clifford insists, things go fine. Very few wills or trusts are contested in court -- fewer than 3%, according to attorney Browning -- and a competent lawyer can help guide you through the details of your duties.

"You pay money to a lawyer and every once in a while you sign something," Clifford says. "Then you deal with people who come to you and ask why it's taking so long."

Continued: Warning signs

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