The legal principle serving as your guiding light throughout your role as executor(rix) is called fiduciary duty. A fiduciary is someone who takes custody of property on behalf of someone else. This is exactly what you’re doing as an executor(rix), because you are in charge of the estate’s assets while they are being organized and prepared for distribution to someone else, the beneficiaries. You have a duty to those beneficiaries to be prudent when it comes to their money. Does that mean you have to be a financial wizard? No. You’re pretty much covered as long as you’re honest, reasonable and diligent.
The first step is often to hire an attorney to help you administer the estate. Many times the drafting attorney is an obvious choice, but keep in mind you are not obligated to hire him or her. If you have experience with a different attorney you trust, you may want to use him or her. Your comfort with the attorney should be a factor in selecting one.
Once you have an attorney, you can feel reasonably assured that (s)he will guide you through the rest of the decisions that have to be made concerning the estate’s administration. This doesn’t mean you’re off the hook though, because lawyers are expensive and it’s not fair to the beneficiaries for you to take an executor(rix)s commission and then spend the beneficiaries’ money on an attorney expecting him or her to do all the work for you. Your attorney is there to provide legal services, not to run errands for you. You should ask your attorney to explain how to handle the parts of the process that don’t require legal expertise. This is part of being diligent
Honesty may not be the first thing that comes to mind when assessing the role of an executor, but it’s a big part of it. Some executors like to play fast a loose with the difference between estate and personal expenses. Make sure you know the difference or ask your attorney if you don’t. It may feel like a drag to keep good records and reconcile the estate bank account, but if you don’t and something doesn’t add up for someone, you may be asked to use your own money to deposit any amounts that are missing from the estate. Remember you’re being paid for the job and keeping good records is part of that job. Similarly, you may have to hire an investment advisor for the estate’s investments or contractor to prepare a piece of estate-owned real estate for sale. If you do, you may be tempted to give a friend in that field or trade a sweetheart deal paid for with estate assets. If you do, you’re asking to be sued by the beneficiaries. Instead, especially if it’s a big job, obtain bids (i.e. estimates) from three providers and keep documentation of those bids/estimates in the estate file along with a memo explaining the business rationale (i.e. not I owed so and so a favor or I wanted my relative to earn the fee) behind your decision.
Although not necessarily part of discharging fiduciary duty, I also recommend an executor(rix) be patient. Being an executor(rix) can be frustrating. It’s not unusual for messy estates to take more than a year to resolve and there are often setbacks along the way. A lot of managing stress includes managing your expectations. If you begin your role as executor(rix) believing you can insist on the estate’s administration being done very quickly, it’s likely you’re going to be disappointed. By contrast though, if you enter it with the understanding that estate administration is a complex process that often takes on a life of its own and adopt the attitude that you will allow it to run its natural course, you will be much happier throughout the process.
Common sense will also be incredibly helpful throughout your role as executor(rix). If you’ve already made the wise decision to hire an attorney, make sure you use him or her for advice about decisions that crop up along the way. That’s what (s)he’s there for. If you begin making decisions on your own and they turn out to be poor ones, there’s only so much your attorney can do to fix them. One issue that comes to mind is spending large sums of your own money to administer the estate before Letters Testamentary have been issued. If you do that, you’re going to have trouble reimbursing yourself before they are and sometimes that can take a while. You may have to scrape some money together on your own to retain a lawyer, but once you do, make sure you discuss with him or her which estate expenses can wait until after the Letters Testamentary have been issued and you can begin spending estate assets on those expenses. Ask your attorney to help you see the big picture of estate administration, so you can plan ahead.