What would happen if someone you were close to, asked you to be the Executor of their estate plan? Would you be honored, or would you be uncomfortable with the responsibility? What do you need to do, when do you need to handle these tasks and how much time will it take?
These are the questions often asked about the role of an Executor, as reported in The Huntsville Item in the article “Role of an executor.”
A person having a will prepared is called the “Testator” if male and a “Testatrix” if female. The person they appoint to take care of distributing their assets and carrying out the instructions in their will is called the “Executor” if male and the “Executrix” if female. That person also pays the estate’s debts and taxes. Note that the debts and taxes are not paid from the Executor’s personal accounts, but from the proceeds of the estate.
The Executor of an estate plan has several responsibilities and powers. Therefore, it’s important to choose an individual who is organized, good with finances and knows how to get things done. An Executor could be a person or an institution, like a bank. Here are some things to consider when selecting an Executor for your estate plan:
- Are they good with handling their own personal business?
- Do they have some familiarity with your business, finances and property?
- Are they willing and able to act as your Executor?
- Do they have the time to devote to serving as Executor?
- Can they work with your estate planning attorney and your accountant?
- If you own a business, will they be able to keep it going during a transition period?
There should always be a “Plan B” and perhaps even a “Plan C,” if the first person you wish either cannot or will not serve as Executor of your estate plan. If you do not have a Plan “B” or “C,” the court may name an Executor for you. That could be a person you don’t know, who does not know you, your family or your business.
The Executor’s tasks vary, depending upon the laws of the state. However, in general, these are the Executor’s tasks. Note that an estate planning attorney usually assists with this process.
- The will is probated, which requires filing a petition with the probate court in the decedent’s jurisdiction.
- The court issues Letters of Administration to the individual designated in the will to serve as the Executor of the estate.
- A general notice is given to unsecured creditors giving them a limited amount of time to file a claim with the estate.
- Notice is given to each secured creditor, by certified or registered mail.
- Documents need to be gathered, including insurance policies, bank statements, income tax returns, car titles, leases, home deeds, home titles, mortgage paperwork, property tax bills, birth, death and marriage certificates and unpaid bills.
- The post office, relatives, friends, employers, insurance agents, religious, fraternal, veterans’ organizations, unions, etc., all need to be notified.
- The personal property of the estate needs to be collected, preserved and appraised.
- The residence needs to be secured and maintained, including a review of insurance coverage.
- An inventory of the estate’s assets needs to be prepared.
- The Executor needs to apply for an employee identification number (EIN) for the estate’s bank account.
- Once the EIN number has been created, open a bank account on behalf of the estate and pay all valid debts from the estate account.
- Determine any tax liability and prepare for a final tax return to be filed.
- Distribute the assets and property of the estate, according to the directions in the will.
Usually the estate planning attorney handles many of these tasks and works closely with the Executor of the estate. Some Executors are compensated by the estate for their time and effort, but that is not always the case. Talk with your estate planning attorney in advance, about any compensation for your Executor.
Reference: The Huntsville Item (April 13, 2019) “Role of an executor”