When someone passes on and leaves a will, there’s usually someone in charge of making sure all of their assets are distributed according to their desires. This person is the executor of the will, and it’s up to them to make sure the estate of the deceased is handled according to the dictates of the will.
So, what, exactly does an executor do? And what do you need to be ready for if you take on this role? Let’s take a look at the duties and obligations of an executor.
What Does an Executor Do?
Basically, an executor is the designated representative who is supposed to make sure that the estate is settled appropriately, with the assets distributed according to the desires of the deceased.
Some of the items on the to-do list for an executor might include making sure the death certificate is properly filed with all the right agencies, making funeral or other arrangements, having assets appraised, making sure all payments continue being made until the estate is settled and making the arrangements to ensure that all the beneficiaries get the assets they’re entitled to.
Do I Have To? What Happens If I Don’t?
The best time to refuse to act as executor of a will is when you’re asked by the will’s creator. You don’t have to say yes when you’re asked to be an executor. If you don’t think you’ll be able to adequately fulfill the duties, then it’s usually best to say no in the first place.
After the person passes, if you refuse to act, someone else can be appointed to act as executor instead. However, you should realize that, depending on the situation and the state laws involved, beneficiaries can potentially hold you liable if there are losses related to your inaction. If you miss estate tax payments, you could be on the hook for penalties and interest. Additionally, if you don’t make moves as expected, you might end up being sued for different losses.
As an executor, you’re expected to make sure the estate is settled in an orderly manner, and that the beneficiaries receive what the deceased meant to give them.
A Step-by-Step Guide to Settling the Estate
Start With the Death Certificate
Your first move is obtaining copies of the death certificate. In many cases, the funeral home helping with final arrangements can provide you with these copies. You’ll likely need several copies since the death certificate has to be sent to:
- Social Security Administration
- Life insurance
- Other financial institutions where accounts are held
- State and local government agencies
Basically, before you can manage the business of the estate, you need a copy of the death certificate to show anyone who might be involved with the deceased’s finances.
Depending on the wishes of the deceased, you might need to make final arrangements for a funeral, memorial service, cremation, or other action. Make sure the final arrangements are in accordance with what the deceased wanted.
File the Will in Probate Court
Even if assets can be passed on in a streamlined manner, you might still need to file the will in probate court. Check the state’s laws to make sure you’re moving forward appropriately.
Set Up an Account for the Estate
You need to set up a separate account for the estate. This account should be used to receive anything still owed to the deceased, such as dividend payments on investments, outstanding paychecks, tax returns, and other items. You should use this account to pay for expenses related to the estate, such as burial, estate taxes, payments to creditors, and any maintenance on property owned by the deceased.
Assemble a Knowledgeable Team
Depending on the complexity of the financial transactions involved and the requirements of the estate, it might be worth it to put together a knowledgeable team that can help you figure out how to manage the estate. You might need help from insurance agents (for the life insurance benefit), estate attorneys, the deceased's accountant or investment advisor, and others who might have been involved. You might also need to reach out to various agencies, including those that administer Medicare, Social Security, and veterans benefits.
Figure out who is most likely to be able to help you as you move forward with your duties, and communicate with them regularly as you go through the process.
Manage the Assets of the Estate
Next, you want to make sure you figure out where all the assets are. Verify all the accounts, as well as tangible assets, such as cars and real estate. Sometimes it can take months or even years to settle an estate. If that’s the case, you’re responsible, as executor, for making sure that property is maintained and any ongoing payments (including applicable taxes and utilities) are made. You’ll need to manage the assets of the estate, with appropriate help, until it’s time to distribute the assets and close the estate.
Manage Asset Distribution
At some point, it'll be time to make sure the assets of the deceased are properly distributed to the heirs. This might mean selling certain assets to make sure dollar amounts are met. In some cases, its more about making sure a title or deed is transferred properly to the new owner of an asset. A will can be a good guide for helping you figure out how to move forward with the asset distribution.
Take Care of Taxes
Part of your duties as the executor of a will is to make sure that an income tax return is filed for the period covering the beginning of the year until the death date of the deceased. You might also need to file the appropriate tax returns for the state.
Close the Estate
Eventually, after all the steps are followed, it’s time to close the estate. Depending on state law, you might have various duties to perform as part of the final closing of the estate. Part of the process involves sending releases to the estates beneficiaries, having them affirm that you did your job as executor of the will and that your compensation is appropriate. You also need to provide an accounting of all the property of the estate, and all the expenses related to managing the estate after the death. You will need to file your final inventory with the court and make sure all other required paperwork is completed. Once that’s done, the estate will be considered closed.
Don’t Forget to Pay Yourself
In general, the executor of the estate is entitled to a commission for carrying out their duties. In some cases, the amount is stipulated in the will. In other cases, the state might have a set fee schedule you can use. In any case, you want to make sure you pay yourself for your services.
Being the executor of a will is a big job. You have a lot to manage and it’s important to stay organized. Before agreeing to the job of executor, make sure you understand what’s involved and have discussions with the creator of the will to make sure you know their wishes.