When a loved one passes, the prospect of settling an estate, including legal proceedings and tax returns, is likely the furthest thing from one’s mind. In the midst of dealing with the emotions precipitated by the loss, on top of making funeral arrangements, the executor of an estate may become overwhelmed at the thought of rounding up documents, notifying accounts, going through probate, and distributing assets.
According to a U.S. Trust survey, about 75% of high net worth individuals name family members or friends as executors of their estates. But, before accepting what you might, at first, consider to be “an honor”–the responsibility of the role of executor—it’s important to not only understand what is involved, but also to know where you can turn for guidance throughout the process of settling the estate.
Careful consideration should be given to a host of questions. What does the role of executor entail and what duties will be expected of you? Do you have enough time to perform the necessary responsibilities? Do you have access to the documentation you need for fulfilling this role? Are you prepared to handle any conflicts that could arise and potentially any lawsuits that might result? What follows are answers to a few of the questions you may have before agreeing to this important role.
What Is an Executor?
An executor’s main responsibilities are to protect the assets of the estate and administer the estate through the probate process. Probate is based on each state’s law, so the role of the executor essentially is dictated by state law. It is a court-ordered appointment to handle the legal and financial obligations of the deceased, including filing any necessary tax returns and paying taxes.
What Are an Executor’s Duties?
Executors must act in good faith and on behalf of the beneficiaries at all times, following the decedent’s wishes as laid out in the final will. Some responsibilities include notifying the Social Security Administration, creditors, and financial institutions of the passing of the decedent, as well as applying for an IRS employee identification number for the estate. Executors manage the estate’s bank account by collecting funds due to the estate and paying liabilities owed by the estate. They also are required to prepare an inventory of the estate’s assets, which begins with locating and collecting the assets.
In order to properly value assets, executors should have them appraised. None of the assets, not even a coffee cup, can be given away until the estate has gone through the probate process and the assets are ready for distribution. In some cases, it becomes necessary to change the locks on the decedent’s home to deter family from entering and removing items. The executor has a duty to protect all assets during the estate’s administration. However, it may happen that an executor must sell assets during the probate process, particularly in the event that a claim is made against the estate. Finally, the executor must distribute the estate’s remaining property to the beneficiaries.
How Is an Executor Selected?
Executors often are selected because the decedent trusted that they were responsible and financially savvy enough to successfully see their estate through the probate process, as well as manage any family conflicts that might arise. While executors must be prudent, the decedent may not have considered whether his or her choice has the time to devote to the task.
How Much Time Is Involved?
The short answer is: it depends. Larger estates involving multiple properties and assets or those with numerous beneficiaries typically would be more complex and time-involved. The probate process, which can be lengthy, also may vary by state. For example, the minimum amount of time it would take in the state of Tennessee is four months, according to a blog by attorneys at The Higgins Firm in Nashville, but it’s likely closer to at least six. However, some estates may take a year-and-half to two years or more to settle—some even longer, especially if litigation is involved. During that time, there will be paperwork to complete, bills to pay, court proceedings to attend, assets to distribute, and potential conflict resolution measures to implement should family members disagree.
Will You Have Access to Required Documentation?
According to a Bankrate.com article, 7 tips for the executor of an estate, “The best gift an executor can have from the decedent is a detailed list of assets and where to find them. This includes copies of wills and trusts, documentation on insurance, investment accounts, prearranged funeral plans, bank accounts, real property such as vacation homes or artwork, business interests, and partnerships. Documents that verify the value of antiques or collectibles will also be helpful. Ideally, all of this would be in a safe deposit box, ready for the executor.” If you are approached to be an executor, ask the decedent if such a list already exists, and if not, will he or she create one for you–be sure you know where to locate it when the time comes.
What Are My Liabilities?
Aside from general conflicts that may arise between beneficiaries of an estate, an executor may find him or herself in the middle of a lawsuit. If the estate is not executed properly–bills and taxes aren’t paid, assets aren’t distributed according to the will, etc.—you could be held responsible legally and financially. According to The Probate Bureau, “Your liabilities as an executor are personal and unlimited. Your legal and financial responsibilities last for 12 years.”
How PYA Can Help
If after giving thought to all of the aforementioned considerations, you decide to take on the role of executor, rest assured there are options available to outsource some of those duties, especially if you have a busy schedule. You may want to contemplate hiring professionals to lessen the burden, and, hopefully, lower your stress level if you are feeling overwhelmed. An impartial third party also can ease the emotional aspect of dealing with the personal belongings of a deceased loved one.
Serving as an executor also may afford you valuable insight into choosing the future executor of your estate. It’s an important decision, as the individual needs to be willing, capable of fulfilling the legal duties, and emotionally prepared to deal with beneficiaries if any conflict arises. It’s also a best practice to choose a replacement executor if the original dies or is unwilling to accept the role.
If you have questions about the role of an executor, or need assistance with executor duties or making an executor choice, contact a PYA executive below, (800) 270-9629.