The Complex Role of an Executor
The executor of an estate has a fiduciary duty to carry out their functions responsibly. Fulfilling these duties is not only a measure of your ability, but a measure of your character. You can approach these tasks methodically. In fact, it is probably best if you do. Here are some common steps required of executors following the death of a testator.
When the time comes, what steps need to be taken? The first step is to determine whether you require assistance in carrying out your duties as an executor. You may want it, particularly if the deceased had notable tax or legal problems, significant business or real estate investments, or disputes with intended or potential heirs.
Does that mean hiring an attorney?
Maybe, maybe not.
Attorneys can be hired for a lump sum, an hourly fee, or a consulting fee payable from the estate. They can take on all the work or serve as consultants. (If someone challenges the legality of the will, hiring attorney is a must).
Alternatives to Hiring an Attorney
Did the deceased have a simple estate? Then a lawyer’s involvement may not be necessary. Your questions might be adequately answered through a chat with a probate clerk. Or, you might find them online or in a guidebook.
Need a more personal but economical approach? Consider hiring an Estate Administration Support professional. Often financial advisors, these professionals can assist you with the administration of your duties as an executor ranging from research and document preparation, to serving as a quarterback by bringing accountants, attorneys and other professionals into the conversation, when necessary.
Estate Administration Support professionals are generally not attorneys and cannot provide legal advice. But they can help take much of the operational burden from your shoulders and point you in the right direction in your administrative duties.
What about probate?
Many assets do not require probate. Assets with designated beneficiaries, jointly owned assets, assets held within trusts, and securities and bank accounts with “payable on death” transfer forms are commonly exempt from the process.
In most states, probate is necessary to legally validate a will and close an estate. That means filing the will in probate court. As you do that, you must ask the court to confirm you as executor, and you must also notify the actual and potential beneficiaries of the estate’s assets: the named beneficiaries as well as immediate family members who could be in line to receive assets should the probate court rule the will invalid. Next, you must compile an inventory of all the assets of the deceased, those subject to probate and not. (Non-probated assets, of course, may be distributed well before the end of the probate process.)
Probate may go on for months. During this time, you will have more duties to carry out. You must manage assets on behalf of the estate. You must contact Social Security, Medicare, and other state and federal government agencies, and perhaps past employers.
Payments must be made from the estate, too: tax payments, mortgage payments, homeowner’s insurance premiums, and utility bills related to the primary residence.
Outstanding consumer debts must be addressed, and state laws will tell you how to notify any creditors who should be told of the testator’s death. Typically, they have up to six months to file a claim for collection of a debt; as executor, you make the call whether that claim is valid or not.
There will also be inflows to the estate, not just outflows – setting up a bank account on behalf of the estate may be very useful. May come to hold dividends, royalties, rents and forms of work-related income.
Finally, the executor oversees the distribution of assets per the instructions in the will or other estate planning documents. Your Estate Administration Support professional can assist you with obtaining a Taxpayer Identification Number (TIN), establishing an estate account, and distributing cash and securities upon your direction.
Once you follow through on the previous tasks, the last step is to ask the probate court to formally settle the estate.
It is no small responsibility to serve as an executor, especially for a complex estate. Prepare for the tasks ahead of you, so that you may do them well.
Looking for an Estate Administration Support professional? Ask your financial advisor if he offers these services. It could help take some of the guesswork and frustration out of the process.