By Steven M. Wyatt, Esq.
Executors and administrators (sometimes called personal representatives) of estates shoulder a great deal of responsibility. For this reason, trusted professionals familiar with the estate administration process are often the best choices. However, in many cases, the deceased’s closest family member (child or spouse usually) is assigned this duty whether directly in the will or by a court), often without regard to whether they’re actually suited for shouldering the associated burden. It’s important to note that a potential executor is not bound to accept the position, but if that person does accept then they are bound by several duties and responsibilities and may be held liable if they don’t perform correctly. Though the scope of an executor’s job varies depending on the size and complexity of the estate being managed, here’s a broadly applicable checklist of responsibilities that those chosen to become executors should consider.
- Get Professional Legal, Accounting and Investment Help
When in doubt, bring in someone who knows what they’re doing. Executors may face liability in certain scenarios if they mess up. Sometimes spending the money to secure professional guidance is worth it to mitigate the risk of a catastrophic error. The estate should be able to pay the fees as well. Occasionally, the deceased will have an existing relationship with an estate planning or elder law attorney, accountant, or financial advisor. These individuals can be valuable resources throughout the estate management process.
- Locate Important Documents
An executor needs to determine if a will exists and if so, where it actually is. Often, this requires a thorough search of the deceased’s home and belongings. It’s important to note that you need the original, if possible. If the deceased had an attorney, the executor should contact the attorney as well to check to see if they have any knowledge of the existence of a will or its location. It’s fairly common for people to keep copies of their wills in their homes, but leave an original with their attorneys for safe-keeping.
It is also important to take note of and keep organized any financial or tax documents you come across during your search. This will likely help make life easier later on.
Finally, you likely will need to produce death certificates to wrap up the deceased’s various accounts and relationships and to dispose of the remains. The process of getting death certificates varies by state, but usually the funeral home is the best place to start. Get a bunch. You’ll need them.
- Apply for Probate
Even if probate isn’t initially thought to be necessary, the will (assuming there is one) might still be filed with the appropriate probate court. If there is a will, the court will grant the executor what’s known as “Letters Testamentary.” This document officially begins your legal responsibility as executor and authorizes you to take control of the deceased’s estate. If there’s no will, then the court will grant “Letters of Administration,” which has much the same effect.
- Notify Beneficiaries and Creditors
If there’s a will, an executor must notify any beneficiaries named, as well as any potential natural or legal heirs (spouses, children, siblings, parents, etc.). You will also have to notify any potential creditors as well. Many states require that an article or advertisement of the deceased’s passing be published in a local paper for the benefit of potential unknown creditors. Additionally, it’s wise to directly contact the more obvious organizations, like banks, credit card companies, and the Social Security Administration.
- Create an Estate Bank Account and Pay Bills
Death doesn’t mean that money stops coming in and bills no longer need to be paid. It’s wise to set up a separate account where post-mortem income, like paychecks or money owed from other sources can be held. Additionally, the executor must keep paying the deceased’s bills. You can probably safely cut off things like the deceased’s cable, but expenses like mortgage payments and utility bills must continue to be addressed.
- Create and File an Inventory of Estate Assets and Liabilities
This one varies by state, but is an indispensable exercise even if the court doesn’t require that a formal list be filed. It’s difficult enough to keep track of our own belongings and obligations, let alone those of another, so the more organization that can be introduced into the process, the better. Remember, at some point the heirs or creditors (or both) will come looking for the deceased’s things, and it’s the executor’s responsibility to produce them when that time comes.
- Manage the Estate’s Property
This is a fairly broad category encompassing an executor’s duty to protect the deceased’s property from loss. Security is often the first concern here, ensuring that the deceased’s home and the items in it are protected from theft, decay and destruction. However, there are some less obvious responsibilities as well. For instance, if there is a business in the estate, then the executor must do everything in their power to assure that it continues to run (exactly what this entails can vary wildly.) Items outside the home, like safety deposit boxes, must be located and protected as well. Additionally, this is a good time to bring in an outside appraiser to value the physical assets of the estate.
- Pay Estate Creditors
As mentioned previously, state law varies as to how an estate’s creditors should be notified. However, once an entity is determined to have a valid claim, the executor must settle the debt from the estate’s funds. The order in which the obligations must be paid varies, but usually reasonable funeral costs come first followed by probate and administration fees, and then the creditors line up. It’s imperative to note that the executor is not personally liable for any of the deceased’s debts, provided they correctly administer the estate.
- File Tax Returns of the Estate
The executor needs to ensure that the deceased’s income tax returns (state and federal) are timely filed. For final income tax returns, the timeframe is generally the first of the current year through the date of death (April 15th deadline, just as if they were alive). For larger estates, including those wanting to preserve portability or those wanting to establish basis, estate tax returns (both federal and state, if applicable) may have to be filed as well. Generally, federal estate tax returns are due nine months after the date of death, but six-month extensions are available with some advance notice and an estimated payment of taxes thought to be due.
- Distribute Estate Assets
When all estate debts are settled, the executor must distribute the estate’s assets to the estate’s beneficiaries. If there is a will, it controls who gets what, and the executor must follow its instructions. This includes setting up trusts or other entities outlined in the will. If no will exists, then state intestacy law determines how everything is distributed. Note that an executor may be required to liquidate property that isn’t specified in the will in order to meet other obligations in the will. This is a highly emotional and volatile stage, as there’s very little rhyme or reason as to what beneficiaries will fight over. It’s important to keep lines of communication open and try to balance everyone’s competing interests.
If there’s anything left over in the estate after all of the will’s distributions have been made, then it’s the executor’s responsibility to dispose of it as the will dictates or the law requires.
- File a Final Accounting With the Court
Here’s where all of the organization and accurate record keeping will hopefully pay off. Unless it is specifically waived in the will, executors must create a final accounting for the estate that enumerates all income earned, distributions made and expenses paid by the estate. Basically everything that came in must be balanced with everything that went out. The beneficiaries must review and sign off on this document before it’s considered finalized. Once this has all occurred, the accounting must be submitted to the court for approval upon on the granting of which the estate will be deemed closed.