How to Be a Good Executor
Being asked to be an executor of someone’s estate is an honor and a huge responsibility. Your loved one believes you will do the right thing and trusts you to handle their affairs when they are gone.
This is one time you really don’t want to disappoint. Here’s how to get the job done.
Know what you’re getting into
First off you want to be sure you are eligible to serve. “Some states stipulate that only family can serve,” points out Mary Sue Donohue, a partner with Buckingham Doolittle & Burroughs.
Then too, before agreeing to serve, make sure that the will relieves you of any obligations to post bond or file inventories or report to the court. Those are big hassles you will want avoid, says Rett Peaden, associate practicing in the estate planning and probate section of the law firm of Davis, Matthews & Quigley. If the will doesn’t relieve you of those obligations, make the beneficiaries release you from the obligation and have the court bless it. A lawyer should be able to tell you if the will does have the necessary language. Your loved one may think their will does the trick, but if it’s a form they downloaded from the Internet, nine times out of 10 it won’t, warns Peaden.
An executor needs to know that when they accept the office and take the oath, they are also accepting potential liability for not administering the estate properly, says Peaden.
“Even if you act in good faith, certain missteps can put you on the ropes. Creditors of the deceased individual, beneficiaries of the estate, Uncle Sam and even the Court are all going to be looking over your shoulder and warning their slice of the pie,” says Peaden.
For this reason, an executor needs to keep meticulous records and never get in a hurry. Most states are going to allow the executor some time, usually several months, to get a sense of the extent of the estate and marshal the probate assets to pay all of the claims, he adds.
Keep in mind too, “This is a lot of work, approach it as a job, not a favor,” says Leiha Macauley, an attorney with Day Pitney.
Don’t go it alone
Once you accept the assignment, one of the best things you can do is hire a lawyer with experience in estate administration. Depending on the circumstances you may also need to get assistance from appraisers and real estate agents.
“With a good team, it is less likely that your decisions will be questioned. Remember, the executor has a fiduciary duty to act like a prudent investor in managing the estate’s assets,” says Peaden.
There are a number of tasks. Get organized and be ready to deal with administration processes that can be very complicated with large amounts of both paperwork and money involved, says Nathan Dosch, an attorney with Neider & Boucher. “You must have the time and inclination to deal with creditors, attorneys, CPAs, the courts, and the heirs,” he adds.
Locate the original of your loved one’s Last Will and Testament and file it with the appropriate court, says Michael Friedman, a partner, specializing in trusts and estate with the firm of Kurzman Eisenberg Corbin & Lever.
Obtain certified copies of the decedent’s death certificate. Safeguard and insure all personal property of the decedent, particularly valuable jewelry, artwork, furnishings, and collectibles, otherwise you might be liable for their loss, says Friedman.
Obtain a taxpayer ID number for the estate and open an estate checking account. Safeguard all real property and continue paying for its insurance, property tax, utility bills and mortgage payments, he adds.
Determine the debts and liabilities of the decedent (including funeral expenses, medical expenses, out standing credit card bills) and determine the validity before paying them. In most jurisdictions, the payment of funeral expenses and estate administration expenses (included Executor’s Commissions and legal fees) take priority over the payment of the decedent’s debts and claims against the estate, says Friedman.
Get copies of the decedent’s income tax returns and gift tax returns. “Examine the decedent’s income tax returns and taxable gifts to confirm there are no problems, or missed assets,” says Macauley. If you under value assets or do not appropriately value them, you can be personally liable for tax liabilities on assets not reported or undervalued to tax authorities, she adds.
Cancel all credit cards and subscriptions and obtain any refunds and medical reimbursements, which may be due.
Talk, talk, talk
Your job will go smoother if you communicate, early and often. “Nothing ticks off beneficiaries more than not knowing what is going on. Open communication from the start can prevent many problems down the road. Be transparent and let people know what you are doing. On the other hand, sometimes no amount of openness is going to stop some beneficiaries from being angry and suing the estate. If mom always favored one child over another, and the will confirms it, the executor is in for a rough time,” says Peaden.
What’s key says Stephen Hartnett, associate director of education for the American Academy of Estate Planning Attorneys, “is to be fair and not play favorites.”
Mistakes to avoid
Much of there is a long to-do list, there are things you don’t want to do too. For example, don’t undo the staples or other fastener of the original will, not even to photocopy, fax, or scan it, says Friedman. “Under the best case scenario, doing so may create an additional burden of proving the validity of the will to the court, and may cost you additional time and expense. Under the worse case scenario, the court may refuse to probate the will,” he adds.
Do not distribute the estate’s assets before all taxes and debts are paid, or you may be held personally liable for these taxes and debts,” he warns.
No doubt being an executor is a big job, but it is mostly an honor and a privilege.
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