Executor Of Estate: Definition And Duties
When we die, we take nothing with us. This means that we tend to leave behind a whole mess of paperwork, financial assets, debt and other possessions for someone else to figure out what to do with.
That someone else is what’s known as an executor.
If you have a will, you have the ability to appoint an executor who will carry out the terms of that will and make sure all your other affairs are taken care of after you die.
It’s a big responsibility, and not one that should be given (or accepted) lightly.
What Is An Executor?
An executor, sometimes known as a personal representative, is the person designated to ensure that the contents of a decedent’s (the person who died) will – which represents the final wishes of a deceased person – are carried out. Executors work for the estate from the time of passing until probate is complete.
What is an estate? In this context, we aren’t talking about a large manor in the countryside. Your estate is everything you own: bank accounts, cars, homes, investments, personal belongings, cash and the like.
How Does An Executor Work?
An executor manages and protects the estate assets, pays debts and taxes, and transfers assets to the heirs (the people entitled to collect an inheritance or asset). They’re in charge of handling estate administration.
You don’t need to have a high net worth or large estate to require a will and an executor. Even if you have only a few assets, having a plan for those assets and any debts or liabilities you’re responsible for can make the process easier for your loved ones after you pass away.
If you don’t have a will, you’ll have died intestate, which means all your assets will be divided up according to the law in your state. Instead of having an executor, the probate court will appoint an administrator – usually a family member. The administrator will serve essentially the same function as an executor.
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Choosing An Executor
You get to choose who you want to be your executor, though many states have laws that bar certain people from serving as an executor, such as a minor or a former felon.
You might choose a spouse, child, grandchild or other relative or loved one to be your executor. If you have a more complex situation, you might enlist the help of a company that does this professionally.
Now that we know what an executor is, let’s talk about what you need to know if you’re appointed as the executor of someone else’s estate.
What Are An Executor’s Responsibilities?
If you’ve been appointed as the executor of a loved one’s estate, you probably have a lot of questions.
First things first: Just because you’ve been appointed doesn’t mean you have to accept the job. While it’s a big honor to know that the deceased thought highly enough of you to put you in charge of their earthly affairs, it’s also a big responsibility with a lot of work involved.
Even if things go smoothly, the process can take months to complete. If the deceased had a large estate or heirs who don’t get along, it could potentially take years. If the deceased owned property in more than one state, you may need to go through more than one probate process.
When a person names an executor in their will, they also have the option to list a backup executor in case the primary executor is unable or unwilling to take on the role. If you decide not to take on the role of executor and a backup has been named, they’ll be next in line.
If no backup is listed, the probate court will appoint someone as executor. This will usually be the next-closest heir or relative.
If you decide to accept the role, you’ll need to get started on the process of settling your loved one’s estate. Here’s what that will look like.
1. Obtain The Death Certificate
You should request at least 10 certified copies of the death certificate. The funeral home you’re working with can typically get these for you, or you can reach out to your state’s vital records office.
Why so many copies? You’ll typically need to provide an official copy of the death certificate to do things like close bank accounts and file insurance claims. You can’t just make your own copies of the original, either. They need to be certified copies.
You may have to pay a fee for these copies. Some states charge less than $10 per copy, while others could charge more than $30, though additional copies may cost less.
The Centers for Disease Control and Prevention has an online tool that will tell you how much these types of records cost in your state and where you can go to obtain them.
2. File The Will
One of your biggest responsibilities as executor will be to file the will with the county’s probate court. If you believe the estate needs to go through probate, you’ll also need to file a petition for probate.
At this time, you’ll ask to be officially named the executor of the estate. You may also need to provide a certified copy of the death certificate.
If you believe that you have been named as the executor of the deceased’s estate but don’t have the will, you’ll need to locate it. Ask family and friends if they know where it is, or contact the lawyer who prepared the will. You may need to go through the deceased’s files to try to find it.
Even if you don’t think your loved one’s estate will need to go through the formal probate process, you’re still required by law to file the will with the local court. The decedent may have made an estate plan that avoids probate – for example, assets may be jointly owned or in a trust. If the estate is small, it might go through an expedited process.
Once you file a petition for probate, a hearing will be scheduled to allow heirs and other interested parties to object to the will or the appointment of the executor. As executor, it’s your job to notify these people that the probate process has begun and that they’re named as beneficiaries in the will.
You’ll likely be required by law to send notice by first-class mail, or deliver the notice of probate in person. You may also be required to file proof with the court that you served notice with all the beneficiaries.
If you don’t know how to contact a beneficiary, you may have to publish the notice in a local newspaper. You may also need to publish a notice in the newspaper notifying any potential creditors of the decedent’s passing.
During the hearing, you will officially be designated as the estate’s executor and issued letters testamentary.
Letters testamentary is a legal document certifying that you are legally authorized to act on behalf of the estate. This is what gives you the ability to carry out the wishes expressed in the will and settle the deceased’s estate.
You can use this to prove that you have the court’s permission to do things like pay the estate’s debts or distribute assets to heirs.
When you become an executor of an estate, you take on what’s called a fiduciary duty to that estate. This means that you have a responsibility to act in the best interest of the estate and its beneficiaries.
You can’t use your position as executor to self-deal or play favorites. You have to first make sure that all creditors are paid and then distribute the remaining assets according to the will. If the will says that a cherished family heirloom goes to your cousin, you have to give it to your cousin; you can’t decide that it should go to your sister instead.
3. Notify The Government, Friends, Family And Others
As we’ve already mentioned, the executor is required to notify creditors and beneficiaries or heirs when the will enters the probate process. You may also want to notify any other friends and family who don’t yet know about your loved one’s passing.
If the decedent had been receiving any government benefits, such as Social Security, you’ll need to contact the appropriate agencies to let them know the person has died. You should also notify the Post Office to have the deceased’s mail stopped or forwarded to your address, and work with the local Department of Motor Vehicles to have their driver’s license canceled.
You’ll also need to contact insurers to terminate policies that are no longer needed. Close out financial accounts such as credit cards or bank accounts. Cancel accounts or subscriptions the deceased had, such as a cell phone plan or a Netflix subscription.
You may also want to consider contacting at least one of the major credit reporting bureaus (Equifax®, Experian™ and TransUnion®) to see how you can get a death notice added to the decedent’s credit report. This will prevent identity theft (yes, it happens, unfortunately). Typically, if you notify one credit agency, they’ll let the other two know.
This part of the process is where your certified copies of the death certificate will come in handy, as many of these institutions and entities will need an official record to move forward with closing the decedent’s accounts.
4. Open An Estate Bank Account
Opening a temporary bank account in the estate’s name can be super helpful when it comes to getting the estate settled, making sure certain bills and debts are paid and depositing any payments that are made to the deceased.
Moving all the estate’s funds into one centralized place will make keeping track of everything much easier on you. It’ll also help you avoid mixing estate funds with your personal funds, which can create issues or the appearance that you’re mishandling assets.
5. Appear In Court
You’ll have to go to the initial hearing where the court permits the probate process to move forward and appoints an executor.
Additionally, litigation surrounding the probate process could mean more time spent in court. This can happen if heirs can’t come to an agreement, or if an interested party believes that the executor isn’t correctly performing their fiduciary duties.
At the end of the process, there will be a final probate hearing to close the estate.
6. Pay Debts And Taxes
The estate is responsible for settling any debts and paying final taxes. This generally needs to be done before beneficiaries can receive their inheritance.
No one else is responsible for the deceased’s debt unless they co-signed the debt or they’re a surviving spouse who is equally responsible for that particular type of debt under state law.
Your responsibility includes both paying ongoing bills, such as a mortgage or utility bills, as well as paying off any debts that need to be paid in full. Remember, this is all paid out from the estate, not your personal funds.
As we’ve noted, you’ll typically be required to notify creditors of the death. Once creditors have received notice, they have a certain amount of time to submit a claim.
If the amount of debt owed is larger than the value of the estate, the court or state law determines how the debts should be prioritized. You may want to consider enlisting the help of a lawyer.
Then, you’ll also need to make sure the estate tax obligations are fulfilled. This may include filing an income tax return for both the decedent and their estate. Because tax situations can be complex, we recommend speaking with a tax professional about how to handle the estate’s taxes.
7. Distribute Assets
Once all the estate’s obligations are taken care of and creditors can no longer make claims on the estate, you can begin to distribute the assets as outlined in the will. You may need the court’s permission before you can begin this process.
Be sure to get receipts from the beneficiaries acknowledging they received their inheritance.
8. Consider Working With A Professional
Being an executor involves a lot of navigating an often-confusing legal system and dealing with complex financial and tax situations.
Hiring an attorney or lawyer to help you through this process can save you time, headaches and possibly even money. You may also want to consider consulting with a tax professional to make sure you’re following all the applicable tax laws in regard to the estate.
Payment for professionals used to settle the estate can be taken from the estate’s funds, so you won’t pay out of pocket if you use these services.
What An Executor Can’t Do
As we’ve discussed in this article, an executor must protect the deceased person's assets and cannot ignore the terms in the will, act in favor of themselves or against the interests of the beneficiaries according to their fiduciary duty. Understanding the obligations of an executor is imperative, but knowing what you can’t do in the role is just as essential.
Here's a list of some actions you cannot take as executor:
- Carry out the will before the decedent passes. The executor does not have the legal right to make decisions and manage the person’s estate in any aspect before they’ve passed away.
- Manage the estate before being approved by the court. When the will appoints you as the executor, you must have the approval and legal authority to administer the estate. If there is no consent from the probate court, the bank will turn the executor away, preventing you from accessing the deceased person's financial accounts and investments.
- Sign an unsigned will. The document will remain unsigned if the decedent does not sign their will before they die. Even as the executor, you don’t have the authority to sign on the deceased person's behalf. Instead, the estate will be managed according to that state's laws.
- Change the will’s terms or beneficiaries. An executor cannot legally remove a beneficiary from the will or change any provisions in it. The beneficiaries and the will’s terms are there permanently due to the request of the deceased person. Removing them or trying to change the will is a violation that can lead to your being removed as the executor.
How do I best decide whether to act as an executor?
Unfortunately, there are no easy answers to this question. This is a time-consuming job to take on, and only you can know for sure if you’re up to it.
If you know or anticipate that you’ll be listed as a loved one’s executor, it’s best to work with them during their lifetime to gather as much information as you can about the estate. Find out the location of important documents and how to access vital accounts.
Preparing at a time when you can still ask them questions about their financial affairs can make the process a lot easier.
Does the executor get paid?
Estate executors are generally entitled to payment for taking on that responsibility. Payment comes out of the estate’s funds. The amount you’ll be paid will depend on your state’s law, and may be calculated as a percentage of the estate.
Some executors choose not to accept payment, particularly if they’re one of the beneficiaries of the estate, since executor payment is considered taxable income while inheritance generally isn’t. However, acting as an executor requires a great deal of work, and there’s nothing wrong with accepting payment if you choose to do so.
What expenses incurred by the executor are reimbursed?
If you incur any out-of-pocket expenses as part of your duties as executor, those are generally eligible for reimbursement.
The Bottom Line
If you’re named executor or thinking of accepting that appointment, it’s essential to understand your duties and limitations, because you’re handling the highly sensitive contents of a loved one’s estate. If you’re looking to name an executor on your will, be sure you’re choosing someone trustworthy, as they’ll oversee all estate planning and managing your finances after you’ve passed.
Looking to read up more on estate planning? Visit our Learning Center today.
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