The Responsibilities of an Executor
What the executor does
The executor is the person who has to distribute the property of someone who has died and arrange for all their debts and expenses to be paid. If there is a will it will usually name the person who is to be appointed. If there is no will, the court may appoint an administrator to perform the task.
The person who is named does not have to accept the task and should fully understand the responsibility and the time and effort that it will take before taking on the job. Usually it is a family member or close friend who is chosen and we strongly advise that in all but the simplest of cases the executor consults with an attorney to make sure that they know exactly what needs to be done.
The executor is legally responsible for the duties they perform and, if the will is contested, this can become an onerous duty.
Top 10 Duties and Responsibilities of an Executor
It is the responsibility of the executor to sort out the finances of the person who has died. They have to make sure first that all debts and taxes are paid before distributing anything that is left is properly distributed according to the will and any applicable laws.
The law allows for an executor to be paid for the work that they do. Generally friends and family don’t charge for this service but they will need to pay for any professional advice they receive. The executor has a legal responsibility to be honest, diligent and impartial. Here are just some of the main responsibilities of an executor.
Find the will and file it with the City or County
First the executor needs to determine if there is a will. If there is they need to read it and make sure that they fully understand it. Generally the will needs to be filed with the city or county even if probate is not required. Once this is done the executor needs to locate all of the deceased assets and determine who is going to inherit them.
Decide who needs to be notified
The social security administration, the IRS, banks, credit card companies, insurance companies, veteran’s administration, pension plans and other financial institutions are all examples of entities that need to be notified.
In addition the Executor needs to locate any subscriptions and regular payments for things like cable, power, telephone, magazines and any other regular expenses and decide which need to be notified or cancelled.
Set up a bank account for the estate
The executor will need a bank account to receive any money that is due to the estate and to make payments to people that are owed. It is usually best to do this with the bank that the deceased used for their regular banking or with a bank with whom the executor already has a relationship.
Some bills will still need to be paid, for example a mortgage or utilities. The executor should also look for any regular payments that can be cancelled. At this point close any existing bank accounts and transfer the funds to the new estate account and make sure that all income and expenses are paid from it.
Make an inventory of the assets
Make a formal and complete inventory of all the estate’s assets. In some states this has to be filed with the court.
See if probate is necessary
Some property can be passed without probate. These usually include property held jointly by husband and wife, so probate isn’t always necessary. There is also an expedited process for low value estates
Protect the value of the assets
It is the executor’s responsibility to make sure that the value of the estate is maintained on behalf of the beneficiaries. This means paying the mortgage, keeping up with any repairs and finding and protecting any personal property until it can be sold or otherwise distributed.
If there is no cash in the estate to pay for these obligations the executor must contact the company or institution to make financial arrangements to protect the asset. The executor doesn’t have to pay for any of the estates expenses themselves but does have the responsibility to make sure the value of the assets is maintained.
File a tax return and pay outstanding debts
Each state has procedures for notifying creditors. A tax return has to be filed for the current tax year (and the prior year if one has not yet been filed) and all federal and state taxes must be paid from the assets of the estate. If there is not enough cash to pay these obligations the executor should contact the creditors and the IRS and see if they are prepared to wait until enough of the estate is liquidated to make payment possible.
Dispose of other property
If there is any property that is not the subject of a specific bequest the executor has to dispose of it. There is a legal obligation to maximize the value for the benefit of the heirs.
Appear in court
An executor may be required to appear in court on behalf of the estate. If this happens then we strongly advise that the executor seeks legal counsel.
There is a lot of work involved in being an executor, even of a small and simple estate. There are many pitfalls and there is always the risk of a disgruntled beneficiary taking legal action against the executor.
You should think very carefully before accepting the responsibility. If the estate is large or if the beneficiaries are contentious, we recommend taking out executor insurance to cover your personal liability.
In all but the very simplest cases, onsulting with an attorney is generally a good idea to make sure that the executor properly complies with his or her duties.
Once all debts are paid the assets can be distributed according to the will or if there is no will according to the state’s intestacy laws. The executor is bound by the terms of the will and does not have discretion in how to make these distributions.