As an Executor, Do I Really Need a [Lawyer, CPA, Bookkeeper, Realtor…]

One of the common questions of a new executor as they get into the details of managing an estate is, “Do I really need the services of a . . . 

  • Book keeper
  • Tax advisor (CPA)
  • Lawyer
  • Realtor
  • Estate [seller of property/junk]
  • Appraiser
  • Investment advisor
  • Administrative assistant
  • Business manager
  • Executor Support Assistant

The answer to this question is occasionally a resounding “YES!” (with qualifications). But generally, it is also influenced by how large and complicated the estate is, your own area of professional expertise, and the amount of time you have to spend on it. Note that the average executor spends 570 hours to close an estate (from beginning to end). LINK TO ???

Let’s take the easiest one first:

Lawyer

This is where we’ll go with a resounding “yes!” Hopefully, an estate lawyer drew up the will of the person (the “testator”) for whom you are serving as executor. Then it can be helpful for that lawyer to answer questions about the will, interpret certain language to you, and give you some more helpful background about what the testator’s thinking was in drafting the will. Also, in some jurisdictions a lawyer is required in order to probate the will, so there are aspects of the law you may not be able to negotiate even you had no other job and plenty of time to navigate it. 

What you probably don’t want to do is hire a friend who is, for example, a family law lawyer, but who wants to “do you a favor.” Nor do you probably want to pay a $400/hour lawyer to sit on the phone with a financial services firm on hold for an hour and a half. I had a lawyer who offered to file the estate tax return for me. It turned out to be a mistake—and probably would be for you, too, unless they have a CPA (certified public accountant) on their staff.  In which case that might be very efficient. 

It is interesting to note that Executor Support will only work with a client who has a lawyer, although we will help you find one if you don’t already have one.

Finally, this is one area of the estate where you really don’t want to make a significant mistake. These can be very costly, taking more time and money to unwind than if you paid for solid advice in the beginning. Mistakes of this kind can also open you up to personal liability due do your role as fiduciary. The latter means if something goes wrong, you will be held to the highest standard of taking care of the assets for the heirs. It assumes no self-dealing and being diligent in all aspects of managing the estate. 

Tax advisor (CPA)

Do you do your own taxes? Are you good with numbers? Do you have the time to learn the differences between estate and personal tax law and to learn the software? Are you excellent with record keeping? If the IRS disputes some records, do you have the time to spend with an IRS agent (or more likely one of their computers)? If the answer to any of these is “no,” you probably do want a CPA.

Still, the decision depends somewhat on the size and complexity of the estate, whether the testator had their own CPA (which can save you a lot of time), and how much time you have. Unless it is a very small estate of, say, less than $100,000, you probably want a CPA to guide you at least in the beginning with what records you need to collect and to actually prepare or at least review all tax returns. Tax laws on estates and trusts can be complex and differ from personal tax law. Note that there are decisions you make “up front” that can save you taxes at the other end. Also, the faster you are able to close the estate (including tax preparation), the fewer tax returns you will need to file.

Bookkeeper

If you do have a CPA look over your work, you know how to balance a checkbook and calculate capital gains on securities sold, keep excellent records, and love (or are at least willing do) documentation and have the time, this might be one place to skimp. On the other hand, in my first two estates I did the accounting (I have some background in a related field) and I would probably never do it again. Sometimes the CPA works with a bookkeeper who charges a rate reasonable enough to do both.

Realtor

I’ve sold or bought roughly a dozen houses in my life. Only two did I do without a realtor—only because I had a buyer come to me before I put it on the market. In those cases, I hired a lawyer to take care of the transaction. A six percent commission may sound like a lot to pay the realty brokers, but there are dozens of ways they can save you this money by: increasing the number of people who see or consider the house, getting a better price, being an intermediary when something gets off track (this happens somewhere in most transactions), leading you through the process and keeping the transaction on time. There are good articles on how to choose a broker and books (note the volume of pages difference) on how to do it yourself. Should you have the rare circumstance as I did where a broker is not needed, make sure you have a lawyer experienced in this field. 

 Estate sale company

This is probably another place you can skimp if you have the time and love running the equivalent of a garage sale with more moving pieces. Personally, I wouldn’t. 

Investment advisor

If the estate holds any significant assets, make sure they are well managed. For a portfolio of securities, I recommend a CFP (certified financial planner) working on an hourly basis. A key decision is whether you sell any stocks soon after death when the basis is established on which estate taxes are paid. What if the value of the securities plummets with the market in the first year of an estate? Are you prepared? Will you still have money to pay taxes, debts and all bills? Will heirs be disappointed? It may be good to have a CFP standing between you and other heirs and you and the IRS. 

Administrative assistant

If you’re as bad as me on details, you may want to have an assistant organize all the records, due dates, etc. If you don’t have the time or skills, consider stepping aside as executor to give the job to some who can. Or seek the support from our firm, Executor Support. That’s what we do.

Appraiser

Frequently, you will need the services of an appraiser for expensive jewelry, art, instrument, or other items you need to value to satisfy the court system. I also advise always getting an appraisal on real estate, as well as an up-front inspection by a well-recognized firm. The former can help in negotiating price and take risk off the table for the buyer (they know up front whether a lender is likely to support their offer price). The latter reduces risk to both parties, since there is less likely to be a last-minute disappointment and renegotiation of price.

Business manager

If the estate includes a business, make sure it is well run and that you trust that person implicitly. Or hire someone to do so—especially if the deceased person was the one doing this before death. Hopefully, they had a succession plan.

Executor Support

Ah, time for a shameless advertisement. I like to think of our role at Executor Support as one of serving alongside you, supporting you, and serving as “general contractor” of these many moving pieces—making sure everything gets done on a timely basis and in a way that supports positive relationships. Our goal is to take 75% of the burden off of you and get it done in 75% of the time. (We are also happy when we exceed goals.)