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Saturday, May 14, 2011

Executors are forever

A while ago I had a question on this blog from a reader who looked after his father's estate almost forty years ago when his father died. Recently an asset came to light that nobody knew about at the time his father died.

This situation could happen to any one of us who acts as an executor. Your executorship doesn't have an expiry date or a time limit. The reader in the situation described here is just as responsible for dealing with the newly-discovered asset as he was for the house and the bank account at the time his father died.

Once you start acting as an executor for an estate, you keep that job until you die, lose mental capacity or are dismissed by the court. Most people never take the step of being dismissed by the court because there is no reason to do so. That step is generally taken if the executor needs to step down for some reason (such as severe illness) or there is an estate dispute that causes the judge to remove the executor.

If an asset comes to light later - even if it's not forty years later - your job as executor is probably going to be harder than it would have been if you'd been able to deal with all of the assets at once. Beneficiaries of the estate may have died or moved away. You may have to file additional court documents. There may be tax implications for an asset that has been gaining in value for several years.

And of course beneficiaries may be ticked off at you for not giving them their inheritance back when they feel they should have received it.

If you've passed away yourself by the time this asset comes to light, your own executor will have to deal with it, in addition to dealing with your estate. Bet they'll be happy about that.

The moral of the story? Check every reasonable lead you have when tracking down the assets of the estate. It's better to spend ten minutes sending a letter that comes back with a negative answer than not to send the letter and years later spend hours or days backtracking.

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