If you’re a baby boomer or above the age of 35, you probably know someone that has been an executor of an estate or is going to be one. We’ve been getting many questions about this topic lately so we’ve provided some descriptions and ideas about what’s involved with being an executor. What exactly does it mean and what do executors need to do when they are called upon to serve? Here’s a quick overview.
What is an Executor?
Briefly, an executor is a person who is in charge of settling an estate of a person that has died, usually a family member or close family friend of the deceased person (also known as the decedent). An executor can be an attorney or court appointed official as well. There aren’t many rules for who can serve as an executor. Basically any adult who hasn't been convicted of a felony can serve, though some states impose special conditions and limitations for executors that live out-of-state.
An executor is responsible for winding up, settling or closing out the decedent’s affairs. This can be relatively simple or quite difficult based on the disposition and complexity of the estate. The executor has the responsibility for protecting a decedent’s property until all debts and taxes have been paid, and then managing remaining assets as they are transferred to the people and organizations that are entitled to them.
Here are a few typical responsibilities and activities to be performed by an executor of an estate. This should give you a good picture of what’s involved:
The executor will handle day-to-day details of the estate. This may include maintaining property, terminating leases and credit cards, and notifying banks and government agencies of the death, dealing with tax returns and gathering documentation. The executor may need to pay utility bills, mortgage payments, insurance premiums etc., and other expenses of the estate with estate funds. It’s like running someone else’s household for a period of time.
If the decedent left a will, the executor will read it to determine how assets are distributed. Basically the executor will figure out who inherits the property and assets of the decedent. If there's no will, or if the will is to be contested, you will want to consult an attorney.
In many cases executors will need to provide proof of the validity of the will by filing documents with the court in the county in which the decedent lived.
Executors are responsible for identifying and locating all the assets of the estate and will manage them until they can be properly distributed to those that will inherit them. They may need to create a comprehensive list of assets for probate court. (This is where being familiar with an estate as an executor will be particularly helpful)
With probate, executors will have several responsibilities around that process, including sending out formal written notices about probate proceedings to heirs, beneficiaries, and creditors.
Determining whether to sell real estate or securities owned by the decedent is another key responsibility of the executor. We recommend getting advice from an attorney before you sell anything.
Executors must determine whether or not probate court proceedings are needed. Again consult an attorney if you are not certain about this. If the decedent’s estate is worth less than a certain amount it will probably go through a streamlined probate process.
Executors will typically set up a bank account for the estate. This account will be used to pay bills owed by the deceased person (the estate).
Pay debts and pay taxes - If you are uncertain about what debts and taxes to pay, consulting an attorney will again be worthwhile.
Finally, property/assets will pass to the people or organizations named in a Will or be transferred to those entitled to inherit it under state law. A primary duty of an executor is to oversee the distribution of the deceased person's property.
Because being an executor can be challenging, it’s good to know that executors do not need to “go it alone.” That’s why we encourage executors to consult an attorney with any questions having to do with settling an estate. It’s likely that an attorney can help. At Callahan Witherington, we welcome your call.