What are the duties of the executor of an estate?

An executor (sometimes called a “personal representative”) is typically the individual a person names in a will to handle the gathering and distribution of the person’s assets after he or she dies.

Once confirmed by the probate court, the executor protects and handles the deceased’s funds, property, and accounts, makes sure taxes and bills are paid, and then distributes the remaining assets to the designated beneficiaries.

Serving as an estate executor is an important responsibility that can be demanding, especially in the absence of family harmony and good will among all heirs.

Filing the Will for Probate

The first step the named executor often takes is hiring an attorney to file the deceased’s Will in the appropriate probate court. A Will (unlike a living trust) is not self-operating, although a probate court will often provisionally grant the named executor power to take certain actions before the court formally accepts the Will as valid, and “admits the will to probate.”

While the probate process is usually very routine, it also tends to be rather formalistic and involve extensive paperwork. Unless an estate is relatively small (most states have simplified the process for small estates), the named executor usually retains a licensed attorney to file the Will in the probate court, send out all required notices and handle any needed court appearances.

One advantage of consulting an attorney who is experienced in wills and estate administration in the probate process is that such an attorney can help the executor gather, protect and secure all the property of the deceased person, and help handle the legal requirements such as sending out notices, and greatly speed up the process.

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Providing Notice to Family Members and Creditors

Most states require that written notice be given to all persons who otherwise would inherit if the Will were to be found invalid – typically members of the deceased’s immediate family who would otherwise be entitled to inherit under the state’s laws of intestate succession. The executor’s lawyer generally handles this for the executor.

Notice also must generally be published in a local newspaper, so that any creditors or banks are formally made aware of the death in order to come forward with any bills or debts the deceased owed, as they must file any claims they have against the deceased’s estate within a short time frame.

Will Contests

After receiving notice of the death, any person who would have been legally entitled to inherit (such as a child or spouse of the deceased) more that they would be receiving under the deceased’s Will can object to the Will in court, and start what is known as a “will contest.”

Among the possible grounds a court may have for not admitting a Will to probate are that the purported Will is a forgery, that it was not properly signed or witnessed, that the deceased lacked sufficient mental capacity to make a Will, or the deceased was the victim of fraud, duress, mistake or undue influence when making the Will. Will contests, however, are rare and infrequent.

Accepting the Will to Probate

After the required notices are given, and the time to file objections has passed (or is waived) the probate judge reviews the Will, and in the absence of any heir claiming that the Will is invalid, typically grants the named executor formal legal authority to carry out his or her duties under the Will.

In many situations the executor will be required to report back to the probate court on a periodic basis and make a final report after the estate is wrapped up and fully distributed.

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Property Collection

The first job any executor will undertake is collecting and securing all property of the deceased person. This includes personal property such as clothes, jewelry, any other items in the home, any investment assets, a car or truck, as well as any real property. An executor may change the locks on the doors of any real property to ensure that none of the personal property within the home is removed and that the home is not vandalized. Additionally, the attorney will be able to advise the executor as to whether to insure valuable items and perhaps even place smaller valuable items in a safety deposit box in the name of the estate.

Locating Assets and Accounts

In most cases, not every account in the deceased’s name will be documented in their estate plan. Checking, savings, retirement, pension, and life insurance accounts where there are no beneficiaries named, and no “pay on death” instructions, are just a few examples of accounts that often exist. (Where there are living named beneficiaries, or pay on death instructions, such assets typically pass outside of the probate process.)

In order to gain access to and either close or distribute such accounts, the executor must typically provide copies of the death certificate and/or the order appointing the executor to the bank, insurance company or other firm which holds the deceased’s assets.

Business Interests

If the deceased was a partner in a business, or had a meaningful ownership interest in a corporation or LLC, these businesses must be contacted so that agreements can be addressed. These documents can be time sensitive, triggering clauses that could affect the deceased’s share in the business or the estate’s ability to exercise stock options. The executor typically collects all related documents and gives them to the estate’s attorney for review.

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Death and Taxes

Death does not excuse taxes that are or may be due. Before assets can be distributed from the estate, it is essential for the executor to make provision for payment of any and all taxes that may be due for prior years, as well as any taxes that will be due for the year in which the deceased died.

Locating all income and tax documents from the previous year is important, and will make it easier to file the final Federal and any state or local income taxes on behalf of the deceased. If any taxes are or will be owed, they would be paid from the funds in the estate.

To the extent that the deceased’s estate is large enough, it may be subject to Federal or State Estate taxes. These too have to be paid, whether by the estate or the beneficiaries, depending upon what the Will and state laws provide.

Other Debts

After provision is made to pay the government and funeral home, it’s time to attend to the rest of the creditors. These can include hospitals, care facilities, credit cards, mortgage companies, and many others. An executor will need to go through the deceased’s files and locate all invoices. If it’s unclear whether a certain bill was paid, the next step is to contact the business and find out. It is best to keep a running list of bills to be paid with the appropriate invoices paper clipped and give this to the lawyer. If the total is very large, the court may need to approve the payments.

Legal Fees and the Executor’s Fees

The attorney retained by the executor on behalf of the estate is also paid from the assets of the deceased, as is the executor. The executor should discuss fees with the attorney at the outset of the relationship, prior to retaining the attorney.

Depending on the circumstances and state there often is a set or customary fee normally payable based on a percentage of the estate’s assets, although the amount or percentage may be increased if the duties of the executor or attorney require greater than average efforts and time. As any fees paid to the executor are taxable, in situations where the executor is also a large beneficiary of the estate, the executor often will waive some or all of the fee he or she would otherwise be entitled to.

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Distribution

Once all accounts are located and expenses paid, any remaining estate assets can be distributed. An executor should obtain a signed receipt for each distribution from the person who inherited so that there is no doubt as to whether the asset was properly distributed; and present these receipts to the attorney, who will submit them to the judge to close out the probate proceeding.

What if the Named Executor Can’t Serve

A well drawn Will typically specifies an alternate so that if the first person designated as the executor should for any reason become unable or unwilling to act (such as the result of his or her death, disability, or moving away), the second named person would serve as executor.  In large estates several persons are sometimes named to serve as co-executors, or a bank or trust company is named as executor or co-executor.

Case Studies: Navigating Executor Duties – Case Studies and Insurance Considerations

Case Study 1: Property Protection and Liability Coverage

As the named executor of her late uncle’s estate, Laura had the responsibility of collecting and securing all the assets, including valuable personal property and real estate. Recognizing the potential risks associated with managing these assets, Laura obtained an executor liability insurance policy.

This type of insurance provided coverage for any claims or lawsuits brought against her as the executor, protecting her personal assets in case of any legal liabilities or errors during the estate administration process. With executor liability insurance in place, Laura could fulfill her duties confidently, knowing that she had a safety net against unforeseen risks.

Case Study 2: Tax Obligations and Audit Coverage

Mark was appointed as the executor of his father’s estate, which involved complex tax obligations. Concerned about the accuracy of tax filings and the potential for an audit, Mark decided to consult with an estate planning attorney who recommended obtaining tax audit insurance.

This insurance coverage would provide financial assistance and professional representation in the event of an audit by tax authorities. By securing tax audit insurance, Mark could mitigate the potential financial and legal consequences of any tax-related issues during the estate settlement process and ensure compliance with tax regulations.

Case Study 3: Business Interests and Key Person Insurance

As the executor of a deceased business owner’s estate, Sarah had the responsibility of managing the business’s assets and interests. To safeguard the value and continuity of the business, Sarah explored the option of key person insurance. This type of insurance policy provides coverage in the event of the death or disability of a key individual within a business.

By obtaining key person insurance, Sarah could ensure that the business’s operations and financial stability were protected during the estate administration process. This coverage helped mitigate potential financial losses and provided support for any necessary transition or sale of the business.

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