Losing a loved one is difficult. Aside from the overwhelming grief that comes with loss, many families are often faced with executing the deceased’s final wishes. To make fulfilling their wishes easier, sometimes people, before their death, will name an estate executor.
While it’s an honor for someone to entrust you with carrying out their final wishes, if you’re a business owner who has been named executor of an estate, you may want to first consider whether you’re up to the task.
“Being an executor is a lot of work,” says Northwest Bank Trust Officer Lisa Arnoczky. “You should understand what it entails before you agree to take on the responsibility because the process of settling an estate can take up to a year. Business owners need to prepare to be in it for the duration before getting involved.”
Smart Business spoke with Arnoczky about what you should expect after you’ve been named the executor of someone’s estate.
What does being named an executor of an estate mean?
Being named executor of an estate means you help carry out the deceased’s wishes laid out in their last will and testament. Family members are usually tasked with this request because they’re closest to the deceased.
If you’re familiar with the decedent’s finances, handling their affairs after their death should be a fairly seamless event. However, if you’re not familiar with them, you could be faced with duties you may not know how to carry out, like untangling their investments, locating family members who may be entitled to an inheritance, finalizing their income taxes, navigating the legal system and paying off their final debts.
You should give these duties some careful consideration, especially as a business owner. Before taking on the role, ask yourself: Do you have the manpower available to step in while you handle your loved one’s final affairs? Will your business suffer if you take on the responsibility of being executor? The answers should give you a sense of whether you’re really able to take on the task.
Are executors personally responsible for outstanding debts of an estate?
If you run your own business, the possibility of taking on more debt can be overwhelming. Under normal circumstances, however, executors aren’t personally responsible for the decedent’s debts. That’s not to say there aren’t some exceptions.
In cases where estate assets won’t cover all of the deceased’s financial obligations, some debts must take priority. Each state specifies which creditors have priority. If you don’t follow these rules, you may end up personally liable for that debt. You may also run the risk of being sued if one of the decedent’s beneficiaries tries to contest the will.
If I’m named executor, do I have to serve or can I decline?
If you’re named as executor and don’t wish to serve, you can decline. Usually, wills appoint an alternate executor if the primary executor is unable or unwilling to serve. If all the named executors wish to decline the responsibility, they can petition the court to name a bank as the executor.
I’m busy running my business but still wish to serve. Can I seek outside help to settle an estate?
Absolutely. In fact, it’s highly recommended. Your loved one doesn’t want you to jeopardize your livelihood or monopolize your time when you have a business to run. To keep your business top of mind while still serving in an executor capacity, you can enlist the help of professionals like the trust department at your bank, an attorney and an accountant to help navigate the financial and legal tasks. The fees for these services are generally paid from the estate.
Serving as executor of an estate can be a demanding and complicated job. Not everyone is suited for the task. You know your business better than anyone else and will ultimately know whether or not taking on the responsibility of being an executor is right for you. ●
Only Deposit Products Offered by Northwest Bank are Member FDIC. Nothing in this article should be construed as legal or tax advice. You should consult an attorney or tax professional with any legal or tax questions.
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