Being named an executor of a will is a big responsibility. While an honor, most individuals selected know nothing about what they need to do in their new role, according to a US News article, 4 Tips to Be a Better Executor.
An executor must deal with the estate of a deceased person—including identifying and valuing their assets, paying debts, and disbursing the assets according to the decedent's will. He or she also needs to ensure that the assets are protected during this period.
Here are a few things to know about the role of an executor of an estate:
You're a fiduciary. A fiduciary is the person who's liable if they don't do their job right, which means that the person named as executor has to follow the wishes of the will on behalf of another individual. Any deviation requires approval from the probate court.
You may be required to get some help. In some states, the executor must have an attorney—with exception in certain situations—because he or she is representing other heirs and has some duties to creditors. Wills need to be probated, and an attorney can help the executor with this the process. An attorney can also help answer any legal questions you may have.
Executors additionally need to have state-specific information because probate laws vary. In addition, having an attorney helps if there is any contention—like a person who claims they have a newer version of a will or who argues that the person named executor is incapable of doing the job.
Also, with a large estate, the executor may also want to engage other professionals—such as an accountant to complete the deceased's final tax return, a real estate broker to sell any property in the estate, or an individual who specializes in collectibles to help the process go smoothly. These professionals are paid from proceeds of the estate.
You’re in charge of paying any estate debts and taxes. As executor, it is your responsibility to pay outstanding mortgages, car payments, and property taxes. Be sure to look through bank statements and checkbooks as hints to what has been paid and what may still need to be paid.
Income tax should also be filed. Also, check if there is a federal estate tax due. Whether there is or not, there may also be a state death tax you may have to pay.
The estate should be secured ASAP. Change the locks on the house and collect the keys to any vehicles. Until property and/or vehicle(s) are either sold or distributed, executors should also maintain these—which goes beyond simply keeping them safe.
Most of all, inform heirs and creditors quickly. Executors need to create a legal notice to creditors through publication.
The creditors of the deceased have a limited time to make a claim, or else they are barred. Don't pay claims until they've been properly authenticated. You can also negotiate claims with creditors—even after you've determined them to be valid—in order to retain more assets for the heirs.
Proper communication with the beneficiaries is crucial. It's important to reach out to the beneficiaries to keep them in the loop throughout the process, which may take six months or more. Heirs may even ask when they will get their money or property. Inform them that they will get their distributions when you, the executor, has made the determination that the proper debts have all been paid.
However, a partial distribution of the estate may satisfy heirs while the estate is being settled, which may include passing out small, tangible items that don't require a separate appraisal. These items can be distributed easily and quickly, but executors first need to ensure that there are assets remaining to pay creditors. Document everything concerning the will, which will help with any disputes.
Generally, a fiduciary should be transparent and communicate with the beneficiaries, but it's not a democratic process: you're in charge.
You may also hold the role as a trustee. While trustees and executors are two different positions, it’s not uncommon that the same individual gets appointed both roles. Note that either or both positions do not have to be accepted, but taking on the job of a trustee can last as long as decades.
However, a benefit of playing the role as both the executor and the trustee is that you can receive separate compensation for both services.
To learn more on this topic, check out Idaho Estate Planning’s Trusted Trustee workshops or tune it to Attorney Mark Wight’s Senior Matters Radio podcast regarding trustee responsibilities.
Other duties and responsibilities of the executor:
- Obtain a copy of the death certificate.
- Terminate leases, business interest, credit cards, and notify other authorities (e.g., Social Security Administration) about the passing.
- Open an estate bank account.
- Keep records of everything you’re doing.
- Do your research, and ask questions when you’re confused.
- If you aren’t up for the job, allow the courts to find someone to take your place.
To learn more about the elder law and other estate planning subjects, contact Idaho Estate Planning to schedule a consultation. Remember, good planning is no accident.