Estate administration isn’t always a simple matter of the distribution of assets to the heirs. Anyone who has ever served as an executor in Florida is familiar with the numerous steps in between the time the will is created and the actual execution after the testator’s death. Even with a small estate and a very clearly written will, unforeseen probate issues and expenses can arise.
In most states, persons serving as executors or personal representatives are entitled to a percentage of the estate. However, this sum may prove to be inadequate payment for the sheer amount of time involved. Additionally, an executor’s compensation counts as income, meaning future tax responsibilities.
A will executor may have to spend time looking for witnesses and beneficiaries. Additional complications and paperwork will be necessary if beneficiaries live outside the U.S. Handling matters for an underage or incompetent beneficiary can be simplified if the deceased created trusts for these individuals. A trustee will be appointed to manage the assets and sign necessary forms. Trusts are also useful for property situated in two or more states, so that the executor will not have to open separate probates in each state.
The will may be contested for any number of reasons, and the resulting dispute can often be both emotionally and financially draining. It can drag on for years, sometimes decades, with mounting attorney fees and court costs. Estate administration can be greatly simplified if the testator consults with an estate planning attorney as part of an overall review. The estate can be assessed as to its value and contingencies dealt with ahead of time.
Source: Daily Finance, “The Hidden Costs of Settling an Estate”, Geoff Williams, February 23, 2014