When a person makes out his or her will, they typically name an executor of their estate. The executor is the person under the law who is responsible for ensuring that a deceased person’s wishes are carried out according to the will they leave. The executor also must comply with all legal requirements for settling the estate.
When someone passes away, their estate is made up of all the property they own anywhere in the world. Claims that a deceased person has at the time of death (a pending lawsuit, for example) are also potential assets of the estate. The estate also includes all the debts of the deceased person. These include debts that are already owed, such as a mortgage or a bank loan and certain debts that are not yet due at the time of the decedent’s death, which can include pending lawsuits or rents that have not yet come due.
The executor of an estate has certain responsibilities that are determined by state law and others that are determined by the terms and instructions of the decedent’s will.
After the death of the person making the will, the executor must first locate and read the will. The original will is normally required to be submitted to the probate court in the county where the deceased person lived at the time of death. It is normal for an executor to get assistance from a qualified probate attorney at the beginning of the process to be sure that the will is properly filed with the proper court.
The executor is responsible for notifying the persons named in the will as beneficiaries of the estate of the passing of the decedent and providing a copy of the will to beneficiaries. If there are any persons who are not named as beneficiaries of the will but who would normally be heirs of the decedent if the will did not exist, they should be provided notice that an estate has been opened and the name or court where the probate is proceeding.
An executor is also responsible for giving notice to all known creditors of the decedent, including banks, credit card companies, and the like. Notice is also required to be given to the Social Security Administration, as well as some governmental pension funds.
The executor uses the papers provided by the probate court to open a proper bank account for the estate to handle any incoming cash and to hold certain cash assets while the estate is pending. This account is also typically used to pay the ongoing expenses of the estate, such as utilities, mortgages, property insurance, and the like until the estate is settled.
The executor determines what the decedent's assets were at the time of death as well as any pending claims. The executor also determines all debts legally owed by the estate and possible legal liabilities the estate may owe. This information is normally compiled in an inventory that is filed with the court.
The executor must keep all the property of the estate safe until it is ready to be distributed according to the instructions of the will and the law. This includes any real estate that was owned by the decedent.
The law sets out the procedure for any creditors to make proper claims against the estate. The executor determines what claims, if any, should be accepted and which should be challenged. The probate court determines whether any challenged claims must be paid.
The executor must file appropriate final income tax returns and federal and state estate tax returns when applicable. Any tax obligations of the estate are paid before creditors or beneficiaries receive payment or property.
When all claims and taxes have been settled, and all other legal requirements have been met, the executor is responsible for distributing the assets of the estate according to the instructions of the will. Each beneficiary is expected to sign a receipt for their inheritance which is filed with the court. In the event of any disagreement regarding distribution, the court will determine proper distribution under the will.
The first person most people consider as executor is their spouse, one of their children, or another family member. In the event there is not a close family member as an option, one may look to a trusted friend to act as executor. Some states require that the person who will act as executor live in the same state as the decedent. In any event, one will want to choose someone who they trust with their most intimate personal financial matters. It is also critical that their chosen executor be a stable and emotionally grounded person. The process of administering an estate often involves interpersonal stress among family members, and an executor with the ability to handle conflict effectively can have a significant impact on the process.
If one does not have a relative or friend that they would choose as executor, they can name a professional third party. This usually involves choosing a bank or trust company that is charted by the state and has the legal authority to administer estates.
In the event that the executor chosen needs professional help settling the estate, they are authorized to have the court approve hiring an attorney, accountant, appraiser, real estate agent, or other professionals needed to assist. The estate will pay the expenses of these professional services upon approval from the court.
Finally, it is important to discuss the decision with the person chosen to be executor. The responsibilities that come with acting as an executor of an estate can be very time consuming and complex. One should be sure that the person they choose understands the obligations of the job and that they are willing to undertake the responsibilities involved. The chosen executor will also need to know where to locate the will and information regarding the assets and liabilities of the decedent.