What Exactly Does an Executor Do?

The executor is usually a spouse, close family member or trusted friend. If no such person is available, a qualified compensated person can be appointed under state law, according to a recent article from The Street entitled “Top Duties of an Estate Executor and How to Carry Them Out.”

The executor needs to be trustworthy and organized, since there are many details involved. Depending on the complexity and size of the estate, the executor’s duties could include additional tasks. However, the following are the five main categories:

  • Filing the will with the court
  • Gathering documents
  • Paying debts and taxes and collecting from any debtors
  • Closing out Social Security accounts, insurance policies and retirement accounts; and
  • Maintaining any real estate property, until it is sold or ownership is transferred to an heir.

Once the will is filed with the court and the will is deemed to be valid, the court will issue Letters Testamentary, and the executor will be empowered to go forward with their tasks as directed by the will.

Gathering documents.

The executor needs to gather documents, including:

  • Death certificates
  • Deeds and titles of ownership
  • Trust documents; and
  • Insurance policies.

Combine assets and close accounts.

The executor needs to contact the decedent’s banks, credit card companies, lenders, leasing companies and any accounts holding assets.

The executor also applies to the IRS for an estate tax ID number, also known as an EIN, and opens an estate bank account. This is where any assets are deposited, including proceeds from the sale of any assets.

The Social Security Administration needs to be notified of the death. Depending on the date of death, the last Social Security deposit may be recouped from the decedent’s bank account. If there is an eligible survivor, the executor may help the spouse or dependent apply for benefits.

Collect money owed and pay debts.

The executor may help beneficiaries file for life insurance proceeds.

The executor needs to examine and adjudicate any outstanding debts owed to the decedent and handle any creditor claims. The debts are not the financial responsibility of the executor and should be paid only from funds in the estate account.

With good planning, the executor can ensure an orderly and uncontested flow of assets from the deceased’s estate to heirs. This includes consultation with the testator while they are still living and can discuss their wishes and plan for a smooth transition. This is certainly not the most comfortable discussion. However, it can make the process easier for all concerned, if done with kindness and care in advance.

Reference: The Street (Dec. 5, 2022) “Top Duties of an Estate Executor and How to Carry Them Out”

Who Is the Best Person for Executor?

Several critical estate planning documents give another person—known as an agent or personal representative—the legal right to act on another person’s behalf. They include wills, trusts, powers of attorney and advance health care directives, as described in a recent article titled “The nomination of trustees, executors and agents” from Lake County Record-Bee.

Your will is only activated after you die. The will and executor then have to be approved by the court. Many people think being named as an executor confers instant authority, but this is not true. Only when the will has been deemed valid by the court, does the executor have the power to act on behalf of the decedent.

After death, the court is petitioned for a court order appointing the executor and then letters testamentary are signed by the appointed executor. An executor then becomes active as an officer of the court with a fiduciary duty to act as personal representative of the decedent’s estate.

If the named person declines to serve, the will should have a secondary person named as executor, who can then request the appointment be validated by the court. Others can petition the court to be appointed. However, it is best to name two people of your choice in your will.

A trust is a separate legal entity with a trustee who is in charge of the trust and its assets. If a revocable will is created, the trustee is usually the same person who has the trust created, also known as the grantor. For an irrevocable trust, the trustee is someone other than the grantor. The appointment does not become official until the appointment is accepted, usually through signing a document or by the successor trustee taking action on behalf of the trust.

Just as an executor might not accept their role, a trustee can decide not to accept the nomination. However, once they do, they have a fiduciary duty to put the well-being of the trust first and manage it properly. You can’t accept the role and then walk away without serious consequences.

Powers of attorney are used while a person is living. The power of attorney’s effective date depends upon what kind of POA it is. A durable power of attorney is effective the moment it is signed. A springing POA sets forth terms upon which the POA becomes active, usually incapacity. The challenge with a Springing POA is that approval by the court may be required, usually with proof from a treating physician concerning the person’s condition.

Similarly, the health care power of attorney appoints a person who acts on behalf of another as their agent for health issues. They can decline the position. However, once they agree to take on the position, they are responsible for their actions.

If the POAs decline to serve and there is no secondary person named, or if all named POAs decline to serve, the family will need to apply for a conservatorship (also known as guardianship). This is a lengthy and expensive process requiring a thorough investigation of the situation and the person who needs representation. It can be contested if the person does not want to give up their independence, or by family members who feel it is not needed.

These are commonly used terms in estate planning. However, they are not always understood clearly. Your estate planning attorney will be able to address specific responsibilities and requirements, since every state has laws and appointments vary by state.

Reference: Lake Country Record-Bee (July 30, 2022) “The nomination of trustees, executors and agents”

Does Your Estate Have to Go Through Probate?

Probate is a court-supervised process intended to ensure the validity of a lasts will and to protect the distribution of assets after a person has died. If there is no last will, probate still takes place, according to the article “Probate—Courts protecting you after death” from Pauls Valley Democrat.

Every estate that owns property must be probated, unless the title or ownership of the property has been transferred before the person died by gift, if the property is owned jointly with another person, or if it passes by direct beneficiary designation. If a person died without a last will, probate still takes place, but the guidelines used are those of the state law where the person died.

In all cases, it’s better to have a last will and to decide for yourself how you want your assets distributed. For all you know, your state law may give everything you own to an estranged third cousin and her children, who are perfect strangers to you.

If you don’t have a last will, which is referred to as dying “intestate,” the court decides who is going to serve as your administrator. This person will be in charge of distributing all of your worldly goods and taking care of the business part of settling your estate, like paying taxes, selling your home, etc. Without a last will, the court picks a person, and it might not be the person you would have wanted.

Here are the basic steps in probating an estate, once the probate petition is filed:

Initial hearing. This is where the court affirms its jurisdiction and identifies all known heirs, and the personal representative is identified.

Letters Testamentary. This document is issued to the personal representative. This is a judge signed document proving to others, like banks and investment custodians, that the personal representative is legally permitted to handle your property and act on behalf of your estate. It’s similar to a Power of Attorney.

Probate. This court process collects, identifies, and accounts for all assets of a decedent. The representative must be mindful to document any money going in and out of the estate during the administrative process.

Written notice must be given to all and any known heirs. This can lead to relatives and others believing they have a claim on your estate and to then challenge the provisions of your last will with the court.

Notice is also provided to creditors, who have at least 60 days after notice is provided to make a claim on the estate. This timeframe varies by jurisdiction. In some jurisdictions, these notices are published in local newspapers, once a week for two or more consecutive weeks. Once they receive fair notice, general creditors who fail to file a claim lose their right to ever file a claim on the estate.

An estate plan is created with an eye to minimizing taxes, maximizing privacy for the family and heirs, and transferring ownership of assets with as little red tape as possible. Failing to properly plan can lead to a probate taking months, and in some cases, years.

Reference: Pauls Valley Democrat (July 1, 2021) “Probate—Courts protecting you after death”