Being the executor of an estate is not a task to take lightly. An executor is the person responsible for managing the administration of a deceased individual’s estate. Although the time and effort involved will vary with the size of the estate, the responsibility of the same, it is a fiduciary position require diligence and a duty of loyalty and carry with it liability to the estate or the beneficiaries for failure to perform in accordance with the law.
The executor is the person named in the will that the decedent wanted to administer his/her estate. The person named in the will does not have to accept the position of executor even if so are named in the will. That person can decline to serve or nominate someone else to do so like a professional fiduciary. If there is no will, then an administrator is appointed by the court which can be either a relative or a private/public fiduciary nominated by a relative or beneficiary. The average estate administration takes nine to eighteen months.
The Executor needs to locate documents such as title to assets, bank statements, investment accounts, and of course the Last Will and Testament and a death certificate. The Court relies on the diligence of the Executor to provide a complete asset listing in the form of what is called an Inventory and Appraisement.
Hire An Attorney
The Executor is are not required to hire an attorney, but mistakes can cost big money. Personal liability exists if something goes wrong with the estate or the payment of taxes. The attorney for the estate makes sure that everything gets done properly and on time.
File a Probate Petition With The Court
If there is a will, the court will grant the Executor letters testamentary. If there is no will, then the Administrator will receive letters of administration. Letters are a court order that is an official acknowledgement by the court that someone has been appointed to administer the estate. When letters are received from the court, this officially begins the work as the Executor/Administrator.
Notify interested parties
Notify the beneficiaries of the will, if there is a will, as well as any potential heirs (such as children, siblings, or parents who may or may not be named in a will). In addition, the Executor will have to place an advertisement for potential creditors in a newspaper near where the decedent lived.
Manage the decedent’s property
The Executor will need to prepare a list of the deceased’s assets and liabilities, and must collect any property in the hands of other people. One of the Executor’s jobs is to protect the property from loss, so the need exists to assure that the property of the estate is kept safe. Next, the Executor will also need to hire an appraiser to find out how much any property is worth. In addition, if the estate includes a business, best efforts to make sure the business continues to run is also required.
Pay Creditor Claims
Once the creditors are determined, payment of the decedent’s debts from the estate’s funds takes place. The executor is not personally liable for those debts. The estate usually pays any reasonable funeral expenses first. Other debts include probate and administration fees and taxes as well as any valid claims filed by creditors.
File tax returns
The Executor will need to make sure the tax forms are filed within the time frame set under the law. Taxes include the decedent’s final income tax return, estate tax returns and estate fiduciary income tax returns.
Keep accurate records
It is very important to keep accurate records of everything that takes place. That includes receipts such as tax refunds, sales of real estate, liquidations of investments etc. along with payment of all legitimate expenses such as mortgage payments, utilities, taxes etc.
File the final accounting with the court
Once the major work of the Executor is done, the Executor will then file the final accounting with the court which details everything that has taken place during the probate proceeding. Beneficiaries have a right to review the accounting and object if they do not like it. Once the final accounting is approved by the beneficiaries and the court, the Executor will then distribute the assets to the beneficiaries. Once that is done, the Executor will file receipts signed by the beneficiaries that they acknowledge receiving their bequests and then a request for final discharge will be submitted to the court for approval by the judge. All this can be a lot of work, but remember that the executor is entitled to compensation, subject to approval by the court. Keep in mind that the compensation is counted as income, so you will need to declare it on your income taxes.