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The executor is someone who handles the financial affairs of a deceased person. If the deceased has a will, the will usually names a close relative, friend, accountant, attorney, or financial institution to act as the executor. If the deceased wanted more than one person to handle their affairs – for example, more than one child – they could designate co-executors.
The executor should have integrity and good judgment. The law requires that they must act in the best interests of the estate (which is known as a “fiduciary duty”) even if they are also heirs, which is often the case.
What is an Executor or Executrix of Estate?
A trustee is the person responsible for granting the deceased’s wishes set out in their will, such as the distribution of assets to the beneficiaries. The executor also performs other duties related to closing the deceased’s affairs, including paying back creditors, issuing obituaries, and filing final tax returns.
In some states, the executor may have a different name, e.g. B. “Personal Representative”. “Executrix” is an outdated term for a woman who plays the role of executor.
How an executor is appointed
Often the will of the deceased appoints an administrator. But sometimes not, and sometimes the deceased – also known as the testator – has no will (in other words, he dies in the gut) or the will is invalid. In these cases, a debt restructuring judge will appoint someone, usually a close relative, to serve in that role. This person is referred to as an administrator or personal representative in lieu of an executor, but the job is the same.
You do not have to assume the role of administrator or executor of the estate. If you refuse, an alternate or conditional executor named in the will (or an administrator appointed by the debt restructuring judge) will take responsibility. While it is common to be compensated for this role, it can be time consuming and emotionally challenging.
You may want to delegate the duties of an executor in the following situations:
- You live far away from the deceased
- Heirs (or people who think they should be heirs) likely seem to be fighting over the estate’s fortune
- You are too sad to take the job or in poor health
- You have been appointed co-executor of a will and don’t get along with the other executor
- They are not detail-oriented
- You are too busy with other tasks like work or care
It is reasonable to refuse. It is also possible that you prefer to get the job done because you trust yourself more than others. And if you start the job but can’t finish it, you can hire professional help or move responsibility to the next person in line.
A court may override the deceased’s choice of administrator, and do so if that person is under the age of majority, has a criminal history, has a substance abuse problem, or has an intellectual disability. The court cannot elect a new executor just because a beneficiary is dissatisfied with the choice.
Executor’s Obligations
An executor must always act in good faith, and that means one of an executor’s job is to know when it is beyond his or her ability to handle all matters relating to the estate. Sometimes an estate administrator needs to hire a professional such as an accountant or attorney to assist with the valuation and distribution of certain assets, such as
- Assets with disputed ownership
- Business interests
- License fees
- Out-of-state assets
- Complex investments
Ambiguities in the will and substantial bequests to minors can also require the expertise of a specialist. It is common for the rebate to pay for any professional help.
What an executor can’t do
An executor cannot do things that are not in the best interests of the estate. For example, the executor cannot put his own interests above those of the estate. The executor cannot override the will either (at least not without a trial to determine, for example, that the will is invalid). Nor can the executor refuse to pay legitimate creditors or withhold a beneficiary’s inheritance.
It probably goes without saying, but an executor cannot take money from the estate. This includes distributing his own inheritance or paying himself for the executor’s duties before the proper steps are taken, such as: B. Determining the gross value of the estate and settling the estate debt and taxes.
The executor cannot sell the estate’s assets for less than market value. Therefore, it is often a good idea to have your assets independently assessed prior to selling. For example, in selling the estate, the executor cannot buy the deceased’s residence for $ 100,000 if it is worth $ 300,000, a practice known as proprietary trading. When an executor sells real estate to himself, it must be done at fair market value. An executor cannot mix his own property with the property of the estate either.
An executor also cannot fail to do anything on the executor’s duties checklist below, unless it is not the case. Possible effects on the breach of fiduciary duty in executing an estate include removal as executor, lawsuit, fine, and serving the prison sentence. Mistakes made in good faith are less of an impact than mistakes made out of negligence, negligence, or self-interest.
Executor’s to-do checklist
The following should be attempted by an executor in the first week after death:
- Secure the house
- Take care of your pets
- Notify the Department of Health of the death if a funeral home, crematorium, hospital, or care facility failed to do so
- Obtain multiple certified copies of the death certificate from the funeral home, crematorium, or the state life records office
- If necessary, notify the current employer
Here are some of the tasks an executor should perform within the first one to three months:
- Submit the will (if available) to the probate court in the deceased’s country of residence, as well as an application for an inheritance (check the registration deadlines in your country).
- Notify the deceased’s beneficiaries of the estate negotiation
- Get confirmation from the court of your role as executor (or administrator) and receive the will letters to help you carry out the will (or manage the estate).
- Notify the Social Security Agency, Centers for Medicare and Medicaid Services, the Department of Motor Vehicles, the U.S. Postal Service, and other government agencies that have provided payments or services to the deceased (others could be the Department of Veterans Affairs and state pension fund administrators).
- Return any Social Security payments received during or after the month of death
- Search the deceased’s financial records to compile an inventory of the estate’s assets and liabilities, including handling digital assets (social media, online photo storage), unless someone else is designated as the digital executor
- Make sure the estate receives all wages and benefits owed to the deceased, e.g. B. payment for unused vacation time
- Gather up any personal or business debts owed by the deceased, including renting a commercial or residential property
- Notify the financial institutions, creditors, credit bureaus, and lenders (student lenders, auto lenders, personal lenders, etc.) that the deceased had accounts with
- Notify the insurers, especially the life insurers. However, please ensure that the policies protecting the insured’s possessions (including his / her residence) remain in effect until the transfer of ownership
- Transfer the estate’s cash and cash equivalents to an interest-bearing estate bank account that will be used to pay off the estate’s liabilities
- Continue to use the estate’s assets to pay mortgage, homeowner insurance, property taxes, homeowners association fees, and utility bills until the property is sold or transferred to an heir (or let the heirs pay these costs and keep records so that they can be reimbursed).
Looking ahead, within three to six months of death, an executor should attempt to:
- Submit the estate’s final income tax return (or hire a tax advisor to do so)
- If applicable, file the state and federal estate tax returns
- If necessary, sell assets to pay off the estate’s debts
- Pay the creditors, but first check with an attorney to see if the estate has more debts than assets to pay it off. It is important to proceed with caution when the estate is insolvent.
An executor should try to do the following within six to 12 months of death:
- Submit a record of all transactions in the estate that you have conducted to the probate court for approval
- Make an estate payment for your services as an executor
- Distribute the remaining assets to the heirs
- Schedule a final estate hearing to complete the process
Don’t feel bad if you can’t complete these tasks on the timeline given above. Many factors – grief, estate size and complexity, advance planning by the deceased, the courts – affect estate settlement schedules, and the process can easily take over a year.