In this issue, we will discuss the basic duties and responsibilities of an executor.
An executor is legally responsible for sorting out the finances of the decedent. It is the executor’s job to make sure that debts and taxes are paid and that what remains in the estate is distributed properly to the heirs of the estate. The executor must carry out his/her duties diligently, impartially, and honestly. An executor who fails to do so may be held personally liable.
Each state has its own requirements of who can serve as an executor or administrator but generally, they are close relations. The position of executor is a paid position and each state provides its own rules for executor compensation. However, because executors are usually close family, many executors forgo their compensation.
The executor’s duties include the following:
1. Determine Whether Probate Is Necessary
Many assets will transfer to beneficiaries by operation of law such as assets held jointly or assets that have beneficiary designations such as life insurance policies. If all of the decedent’s property falls into this category probate may not be necessary. Additionally, the decedent may have transferred all his/her property to a revocable trust which similarly do not need to be probated. If, however, the decedent owned assets outright which do not automatically transfer on death, probate will be required and you will need to file a petition with the court to be appointed as executor. It is advisable to work with an attorney to probate the estate.
2. File the Original Will With the Local Probate Court
The executor is in charge of locating, reading, and understanding the will to determine who will inherit the decedent’s assets. Generally, only an original will can be probated.
3. Notify Banks, Credit Card Companies, and Government Agencies of the Decedent’s Death
The executor should notify the decedent’s bank and credit card companies of the decedent’s death. The Social Security Administration should also be notified.
4. Set up a Bank Account for Incoming Funds and Pay Any Ongoing Bills
The executor must set up an estate account with a bank in order to transfer the decedent’s assets to that account for ultimate distribution to creditors and heirs. The executor should pay the decedent’s mortgages, utilities, and other bills that still need to be paid throughout the probate process.
7. Maintain the Property Until It Can Be Distributed or Sold
The executor must find, protect and preserve all the decedent’s assets until they are distributed. This includes any real property owned by the decedent until it is distributed to heirs or sold.
8. Pay the Estate’s Debts and Taxes
The executor must pay the decedent’s debts if there are sufficient assets in the estate to cover them. The executor must also file income tax returns from the first of the current year until the date of the decedent’s death. A Federal estate tax return will also need to be filed if the estate is large enough and state and federal estate taxes may have to be paid if the decedent’s estate exceeds the estate tax exemption in the year of the decedent’s death.
9. Distribute Assets
The executor must distribute the decedent’s assets pursuant to the will’s directives. If there is no will, state intestacy laws apply.
10. File an Inventory of the Estate’s Assets With the Court
Once the executor knows all the assets in the estate and distributes them pursuant to the will the executor must file an inventory of the assets with the Surrogates Court.
Since each estate varies in size and complexity, an executor’s job may be simple or very challenging to carry out and responsibilities may very well go beyond the 10 basic duties in this list. Consulting with an attorney is certainly recommended.
If you have any questions, please contact us.