A recent survey of 1,201 randomly selected adults in the United States underscores just how burdensome the task of settling an estate is. The survey, conducted by EstateExec, a provider of online software for estate executors, found that on average it takes almost 16 months to settle an estate, with 80 percent of all estates being settled within 18 months. Larger estates, those valued at over $5 million, can take almost three times as long.
Over that time period, it takes the executor an approximate average of 570 hours of effort to settle the estate. The more valuable the estate, the more effort required, the survey indicates. Executors, who are usually close family members appointed by a will or a court, felt that the settlement process is neither particularly difficult nor easy to understand, with those surveyed rating it a three on a difficulty scale of one to five. More specifically, according to EstateExec Founder Dan Stickel, some of the tasks that executors typically find difficult include how to find all the assets, handling estate loans, calculating appropriate executor compensation, wrestling with conflicting heir requests and priority of claims on the estate.
Executors for estates valued at over $5 million actually found the process easier to understand than their counterparts, largely because of reliance on professional help.
As expected, the higher the value of the estate, the higher the legal and accounting fees. The average estate spent $12,400 on fees, according to the survey. Executor compensation also seems to be directly correlated to the value of the estate, with the general trend being the larger the estate, the higher the compensation. The average reported executor compensation was $18,000, although the report notes that respondents weren’t required to provide the amount they received, if any (40 percent provided an amount).
The survey highlights just how prevalent family conflict is during the estate settlement process. This revelation confirms that, unfortunately, such conflict is common even among your typical family next door and not just something reserved for the high profile, high-net-worth battles we hear about in the news. Forty-four percent of respondents said they had experienced or were aware of family conflict during the settlement. Some of the comments from the respondents weren’t pretty: More than one reported conflicts that resulted in family members not speaking to each other till this day—one such conflict was over football season tickets. Accusations of family members stealing from the estate was also a common theme. Another cautionary tale: One respondent had to reopen an estate after stock was discovered years later that should have been distributed during the settlement process.
A Job Not To Be Taken Lightly
Though most executors are generously rewarded for their efforts, these statistics illustrate the large commitment that the job requires of them. It also serves as an eye opener for clients who are in the process of choosing an executor, to be more aware of what a potentially burdensome task they’re asking of a loved one. The reward may be worthwhile for some, however, factors such as time and emotional strains should be carefully considered before appointing or accepting the role.
One piece of advice for your future executor clients? “Be meticulous and keep good records, because you may need to prove your good faith efforts to the court or to other heirs, given that family disputes are so common,” says Stickel. “Even better, keep everyone apprised of the situation as you go, to try to head off misunderstandings and suspicion, and let them know from the beginning that it takes 16 months [in an average case] to resolve everything,” he continued. Honesty is the best policy, I guess.