Is it a good idea to act as executor and POA for someone I don't know much about?

It used to be that people felt honoured to be chosen as someone's executor. I have always thought that frame of mind to be a bit naive, really. Being an executor is a lot of work and is generally thankless. It doesn't feel like much of an honour once you're out there, in the trenches! Recently a reader wrote to me to ask about taking on the job:

"An elderly friend of mine has asked me to be executor of her estate and Power of Attorney. I have only known her for 2 years and do not know her family at all. I know she has one daughter who she doesn't get along with. I don't believe she has a large estate as she doesn't own the home she is living in but resides in a senior's complex. Because I know very little about her I am nervous about taking this on. I am a senior myself and do not want to take on anything that may cost me financially as I only have my pension. I really would like to help my friend as she is not doing well but not too sure what all this would involve. I guess my question is 'Would it be a good idea to act as executor and POA for someone I know very little about but would like to help?"

Your heart's in the right place, but I understand  your concerns. Estates can be messy business, and nobody wants to get drawn into another family's drama.

Acting as an executor should not cost you financially. You don't have to use your own money and you are not personally responsible for her debts. If there is not enough money in the estate to pay all of the bills, the creditors cannot come after you, assuming that you have not done anything unlawful with the funds. Some bills come in pretty quickly, such as the funeral bill, and this might happen before you have access to estate funds. In that case, you would take the bill to the bank where your friend has an account and ask the bank to pay the funeral home directly. Assuming there are enough funds in the account, banks are quite willing to provide this service.

It does sometimes happen that executors pay for things themselves (for example, the probate fee at the court) but that is usually voluntary, and done just to keep things moving. If you do that, you can reimburse yourself from the estate.

Acting as executor can expose you to personal liability. As a general rule, executors who take reasonable care and act honestly don't have a problem, though unruly beneficiaries can take an otherwise normal estate to ridiculous places. If you cause any financial losses to the estate due to your fraudulent or negligent actions, you could be required to repay those losses personally.

Perhaps a good place to start would be to find out more information. Decisions are always easier and better if you have more data. Casual conversations about related topics are fine, but perhaps you and your friend should sit down together and exchange detailed, factual information. Take a look at the workbook I designed (click here) that has space to record everything from bank accounts to passwords to family to the names of your friend's doctor and pharmacist.

Having this kind of information on hand is absolutely essential so that if you act for your friend in the future you do not miss things or make mistakes.

Recording this info will achieve a number of things. It will create a valuable resource for future use, of course, but it will also give you a good idea of what you'd be getting into. Sometimes people can have quite convoluted financial affairs that we know nothing about. You'd have a chance to ask your friend whether she already has her will and POA done, and if they are up to date (she may have asked you to act because she is having new ones drawn up). She may or may not be willing to show you the actual will, but she should be willing to describe her general estate plan. If you do get to see the will, check to see what it says about paying you as executor. You don't want to have to fight with your friend's family to get the compensation you are entitled to.

You might find out about things your friend may have had no reason to mention, such as an unsettled lawsuit, a timeshare in Florida, a joint account with a grandchild, a safe deposit box full of Canada Savings Bonds, unfiled taxes for the last 20 years, or a dozen other things.

I would also suggest that you ask your friend to be frank with you about why she does not get along with her daughter. I hope you will be sensitive in asking the question because that sort of discussion is not always easy for a parent, but you need to know whether the issue between them is likely going to impact your ability to be an effective representative for your friend.

Consider what resources you will need to access, such as a local lawyer who could help you with the estate. You will likely also want an accountant to prepare your friend's tax return. Being an executor often involves a lot of trips to the lawyer, land registry, court house, and bank, so getting around to all of those places should be taken into consideration.

Because your friend is of modest means, she may not be willing (or eligible) to name a trust company as her executor and POA. Many people appoint their children but it appears that is not a good choice for her either. It's great that she has a friend like you who is willing to consider helping, but you are smart to do some homework to see what's involved. While you are on this site, search "executor's duties" and you'll find lists of the tasks that most executors have to do on most estates.