The Executor’s Song: Part 3, Performing Triage for the Estate

by | May 13, 2001

Publisher’s Note: This is the third in a series of personal finance columns on the subject of being the executor of an estate. These columns are based on my own personal experiences in this regard. Individuals should consult a professional advisor and take their own circumstances into account. While my primary objective is to show […]

Publisher’s Note: This is the third in a series of personal finance columns on the subject of being the executor of an estate. These columns are based on my own personal experiences in this regard. Individuals should consult a professional advisor and take their own circumstances into account. While my primary objective is to show my readers how to maximize the value of the estate, I will also try to prepare my readers for the unimaginable difficulties faced by the executor.

In part 1 of this series, I indicated that the executor’s first task is to reduce expenses as soon as possible, because in death revenues (e.g., salary or social security) cease immediately but expenses continue indefinitely. In effect, the executor must perform a sort of triage on the estate to stop the bleeding, i.e., preserve the estate, and to pave the way for an orderly disposition of assets.

But triage is not just about stopping expenses. It is equally important to generate some revenue for the estate as soon as possible, because within a month of your loved one’s death you will likely be faced with $10,000 to $15,000 in funeral related expenses. I’m not just talking about the funeral home here, which accounts for about half to two-thirds of the total expense. I’m talking about the cost of opening the grave, the cost of having an open house after the funeral, the cost of perpetual care, the cost of a monument, etc. And that assumes that the plot is already bought and paid for. If that is not the case, the immediate post-mortem expenses can easily exceed $20,000. Yes, it costs one heck of a lot to die, my friends.

In addition to the funeral related expenses, you will need to immediately remit funds to a probate attorney, and there will be hundreds of dollars in other miscellaneous expenses.

It will take time to free up monies from the deceased’s checking and brokerage accounts, and you will probably need money to cover expenses before you can liquidate these accounts. Some creditors will wait, of course, but some will require immediate attention. If you are very fortunate and if you are willing to do so, you may have enough cash of your own to advance these expenses. But most people are not that fortunate.

So adding to the stress of losing a loved one is the stress of having to raise cash quickly.

So how do you go about eliminating expenses and raising some immediate cash from the estate?

Here are a few suggestions: Cancel anything that isn’t required anymore — the deceased’s health insurance, phone service, newspaper subscriptions. Canceling these policies and services has two benefits — it stops the expense immediately, and you will receive refunds for the unused portion of the service / policy very quickly. Within a few weeks, you may be getting refunds for several thousand dollars.

You can also raise cash by selling personal property — furniture, cars, collectables, etc. And once the cars are sold, you can cancel the deceased’s car insurance, thereby eliminating another big expense.

In my situation, we were able to generate $11,000 of income for the estate in the first three weeks after the date of death, before any checking or brokerage accounts had been liquidated — enough to satisfy creditors in need of immediate payment. More importantly, we eliminated more than a $1,000 in monthly expenses by acting quickly.

Here are a couple of other things you should do immediately in the triage phase:

  1. Put the deceased’s properties up for sale. The sooner you get them on the market, the sooner you will sell them and eliminate all of the ongoing expenses associated with the properties (taxes, insurance, maintenance, etc.). These ongoing expenses can amount to thousands of dollars a month, so time is of the essence. Remember — you have an obligation to the heirs of the estate to preserve as much of it as possible. You won’t be able to actually close on a property until the will has been probated, but you can list the property immediately in most cases.

  2. Request a dozen copies of the deceased’s death certificate. You or your probate attorney will need these to liquidate checking accounts and brokerage accounts, to sell real estate, and to collect life insurance. If the deceased is a second parent, you should obtain a dozen death certificates for the first parent as well. Here’s why. Often, the second parent doesn’t change ownership on checking accounts, brokerage accounts, and real property from joint ownership to sole ownership when the first parent passes. It’s either too much trouble, or it just never occurs to the surviving parent to do so. You may therefore need death certificates from both parents to liquidate assets, even if the first parent passed many years ago. The funeral home can obtain death certificates for you at a small premium. It’s worth the cost as it saves you the trouble of figuring out how to obtain them.

  3. Submit a change of address for all of the deceased’s properties to the post office. This is essential so that you can begin to receive all of the deceased’s bills, financial statements, etc.

Note that all of this wheeling and dealing is happening before the estate is officially “open for business”. As executor, you must therefore keep meticulous records of any revenues that are received and any expenses that are incurred so that they can be duly recorded once the estate is officially opened.

This triage process will take a few days. Sadly, much of it should be done before the deceased has even been buried.

Once the triage process is complete, you are ready to take a more organized approach to your responsibilities as executor, and that is the subject of my next column.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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