Executor of a Will
An executor is the person – or in some cases, a bank or trust company – charged by law with the task of protecting the assets of a deceased person, carrying out the instructions as outlined in the person's last will and testament and, if necessary, managing the deceased person's estate as it goes through the appropriate probate process.
In many cases, an executor is a relative or close friend of the decedent. That person is often named as the estate's executor in the will by the decedent.
But if an estate goes through probate, the probate court judge has to confirm the decedent's selection with letters of testamentary before he or she can act legally on behalf of the estate.
By law, any "interested person" can apply to be an executor. That can mean another relative not named in a will or even a creditor of the decedent.
In addition, the person named in a will as executor can be challenged in court by someone else who believes he or she would be a better choice.
If the decedent died intestate – without a will – there can be no executor. The court will then appoint an administrator to perform similar functions.
What Happens after a Court Appointment?
After a court appointment, an executor is required to act in a fiduciary capacity, meaning he or she must perform the executor's duties exclusively in the best interests of the estate. While the law doesn't require an executor be a legal or financial expert, the court expects a high degree of diligence, honesty and impartiality.
An executor can be removed by a probate court judge for cause, and an estate can also have more than one executor. In situations where no executor is nominated in a will, or the named executor is unwilling or unable to serve, the probate court will appoint one.
A potential executor may be required to post a fiduciary, or probate, bond against any future malfeasance, negligence or misuse of funds while the estate is being administered. However, in almost all probate matters involving trusted family or close relationships, the bond is waived in the will. If it wasn't, it can still be put aside if the interested parties all consent.
In the rare situations in which a judge orders a bond to be posted prior to appointing the executor, someone will have to pay to have it issued by a surety company. However, once appointed, the executor can then petition to have it paid back out of estate assets.
An executor is generally entitled to compensation for services rendered, as it is recognized that the time commitment – probate can last from a few months to a few years or more - and the responsibility, is considerable. Generally, a bank or financial institution acting as executor will accept the commission, which is usually based upon a percentage of the decedent's probate estate value.
However, executor fees can be waived, and often are, when the person acting in that capacity also expects to benefit from the estate's assets.
Duties of an Executor
Executors have a number of important duties depending on the size and complexity of the estate, particular family circumstances, and the probate and tax laws of the state where the decedent last lived.
The executor's job is not complex, but it can be time-consuming and even frustrating if the probate process gets complicated or encounters resistance from creditors, beneficiaries or people who contest the will.
An executor has to find the decedent's will and other documents and accounts related to his or her estate; file the will with the court; notify creditors and beneficiaries that the deceased is dead; pay any taxes and debts; and handle the day-to-day details of getting the estate probated.
Find the Will and All Other Financial Documents
A person who knows or suspects that he or she may be the executor of an estate needs to locate the decedent's will and all other financial documents, including those concerning trusts, insurance policies, contracts, deeds, bills, investment and bank accounts, real estate and property, business interests, tax returns, etc.
Ideally, the decedent will have left detailed instructions concerning the location of these documents, but that is not always the case. Sometimes a will is kept in a bank safe deposit box, and sometimes at a lawyer's office. Sometimes, along with other important papers, a will may have been left in a file cabinet, a desk drawer or a home safe.
In some jurisdictions, a surviving spouse or an adult descendant may have access to a decedent's bank safe deposit box; in others, a court order may be necessary before a bank will grant access.
File the Will in the Local Probate Court
Once a will is located, it must be presented for probate within a prescribed time period -usually within a few days to a month of the death - along with the decedent's death certificate. Generally, this step is required by law even if no probate proceeding will be necessary.
If the decedent had a living trust, or if his or her assets were owned jointly, or left to named beneficiaries by contract, such as retirement accounts, insurance policies, etc. probate may be avoided.
If it is determined that probate is necessary, the executor must be officially invested by the court with the necessary powers and responsibilities.
Gather and Inventory the Decedent's Assets
An executor must locate all of the decedent's assets and determine their value, even those which are not part of the probate estate including: all real estate; tangible personal property like jewelry, artwork, vehicles, etc.; and all personal intangible property such as stocks and bonds, pension plans, brokerage accounts, insurance policies, certificates of deposit, savings and checking accounts, social security payments, veterans benefits, etc.
This task may require that the executor hire any or all of the following: a probate attorney, a tax expert, a certified accountant, a professional appraiser, etc. All assets that are part of the probate estate should then be transferred to a separate account in the name of the estate in order to receive deposits and make payments.
Handle the Estate's Day-to-Day Details
This may include notifying banks and government agencies like the Social Security and Veterans Administrations and post office of the decedent's death, terminating leases, and/or closing credit cards and utilities accounts. Also, the executor is generally responsible for funeral and burial arrangements.
The executor is also responsible for investing and managing the estate's assets, and if necessary, attending to the decedent's business affairs. He or she must also make periodic reports to the probate court concerning the estate's administration.
Notify the Estate's Known and Unknown Beneficiaries
The executor is responsible for notifying all known beneficiaries mentioned in the will that the estate is being admitted to probate. Any person who would be adversely affected by probate administration is thus given an opportunity to appear in court and object.
In addition, he or she must publicize the death of the decedent in a suitable newspaper or periodical, giving any unknown beneficiaries the opportunity to make a claim against the estate.
Notify the Estate's Known and Unknown Creditors
It is the responsibility of the executor to contact all known creditors of the decedent that probate administration has commenced, giving them a prescribed time in which to file claims against the estate.
He or she must also publicize the probate proceedings in a suitable newspaper or periodical in order to give any unknown creditors a similar opportunity.
Pay the Estate's Debts and Taxes
The executor must pay all of the estate's genuine and verifiable debts including any unpaid medical bills, funeral expenses, loans, and outstanding credit accounts. The executor generally has wide latitude to settle debts, sell any estate assets in order to pay them, or contest them in probate court.
The executor is also responsible for paying all of the decedent's outstanding income taxes, as well as any taxes owed on income earned by the estate during the course of probate administration. In addition, he or she must pay any federal and state estate taxes due, any gift taxes owed, as well as file all necessary tax returns.
Pay Probate Administration Expenses
All probate administration expenses must be paid by the executor from the estate account, including court costs, attorneys' fees, any other professional costs, publication and copying expenses, etc.
In addition, he or she must pay all storage and moving costs pertaining to the estate's tangible property and any additional expenses should the estate require ancillary probate administration in a state other than the one where the main probate administration is taking place.
Distribute Assets to Beneficiaries
One of the executor's most important jobs is distributing the estate's assets to the beneficiaries as instructed by the decedent's will. This can only be done after all debts, taxes, and administration costs have been paid. However, if there are any family allowances or exempted properties covered by a particular state's probate statutes, certain assets may be distributed before probate administration is completed.
If the estate encounters any unforeseen debts after assets have been distributed, the executor may be held personally liable for the payment of those debts. Therefore, it is a good idea for the executor to have all beneficiaries agree, in writing, to return any assets if it should be later determined that the estate needs to recover them in order to pay valid claims.
Prepare an Accounting
The executor is required to account to the beneficiaries for every asset collected, all gains and losses, all income and other receipts during administration, and all of the property paid out or distributed to the decedent's creditors and other beneficiaries.
He or she must also prepare a final accounting to the probate court before the estate can be closed.