Whether you’re planning ahead for your own heirs or have been asked to serve as an executor of an estate for someone else, it pays to understand what the role requires.
Whether you’re planning ahead for your own heirs or have been asked to serve as executor for someone else, it pays to understand what the role requires. The executor shoulders the fiduciary responsibility to keep track of all assets and debts for the deceased person and executes the instructions in the will for disposing the assets. Claims against the estate could become the executor’s personal responsibility if funds aren’t handled correctly, says Hugh Drake, a partner with the Brown Hay & Stephens law firm in Springfield, Ill. The job can be a steep learning curve, especially if you know little about the deceased person’s possessions, the scope of the estate or where important papers were kept. Here’s a step-by-step guide of what the executor will need to do.
The first step for executors is to read the will and understand the testator’s intentions, which aren’t always clear. When Kiril Alexandrov, 55, became executor of his mother’s estate, he and his sister had different ideas about what their mother wished to do with their childhood home in Pennsylvania. “It’s just sitting there, useless. We pay taxes on it and never go there,” he says. “Things like that should’ve been addressed when my mom was alive.” When preparing an estate, consider a letter of direction to guide the executor. “Give the executor a sense of where my heart was when I did this,” Drake advises.
Sometimes the heirs have little or no idea of what’s in the will. It’s left to the executor and the estate’s attorney to share that information. This job can be made easier if the testator discusses the will with the immediate family before passing away so that there are no surprises. David G. Hoffman, an attorney in Fairfax, Va., arranges annual conferences with his clients and their children to ensure they understand the will, the estate and what to expect as executors and heirs. This helps avoid fistfights over a family heirloom. “If you have an argumentative family, that is going to cause you more problems than all the assets in the world,” says Hoffman, who wrote The Essential Executor’s Handbook (Career Press, $17).
The best executors are organized, comfortable with details and numbers, and methodical in what can be a long process, starting with understanding what’s in the estate. “Your job is to pass things from that person to whoever inherits it. You need to know what’s there,” says Mary Randolph, author of The Executor’s Guide (Nolo, $40). Ideally, the testator should have listed for you all accounts, assets, debts and liabilities in one place, with passwords for online accounts and digital assets, as well as the names and contact information of professional advisers like lawyers and accountants. In practice, that doesn’t always happen, and the executor has to piece all this information together, including tax records, insurance policies and any safe deposit boxes or forgotten accounts from two decades ago.
After the testator dies, don’t rush to distribute assets immediately. Everyone, including the executor, needs time to grieve and honor the decedent with a funeral, but you should secure household possessions so that nobody walks off with a valuable wine collection or the family Bible. “A lot of times it’s the things that are of sentimental interest that generate the most conflict,” says Drake. “For the executor to have the ability to change the locks on the house and inventory everything is great.”
You’ll need copies of the death certificate to close and transfer the decedent’s accounts, says Alexandra Owens, 58, a New York City-based association executive, who served as executor for a work colleague. Be sure to request multiple copies.
You will need to decide whether you should hire an attorney to file legal and tax forms or if you can manage most tasks on your own. The decision likely hinges on the complexity of the estate, the state the decedent lived in and how easily you can manage the disposal of the assets. Some states provide a simplified probate procedure for smaller estates. Only assets held solely by the decedent go into probate. You don’t include life insurance policies or retirement accounts that named a beneficiary, or any real estate held with a living spouse or other individual. “You can get lots of help at a bank or from a lawyer or government websites,” Randolph says. You can also get an attorney’s advice without turning over everything, and the estate will pay the attorney’s fees.
The bulk of the executor’s job involves spreadsheets, forms, court dates, phone calls and email. Once you file with the court and receive authority to act on behalf of the estate, you can create a calendar of deadlines for notifying creditors and heirs, filing forms and completing taxes. Again, state rules will hold sway. Illinois, for example, requires executors to pause the probate process for six months to make sure potential creditors have ample time to file claims on an estate, Drake says. As the executor, you should consider creating one centralized system to keep track of accounts, tasks and the distribution of assets.
The estate will need a separate bank account so that the executor can pay all bills and deposit proceeds from assets in the same place. Keep good records and preserve the value of assets by, for example, maintaining the decedent’s house.
Notify all heirs of the process and timing of probate, and keep them updated. At the end of the claims period, you determine which creditors need to be paid and in what order. Then heirs receive assets as designated in the will. Unless the decedent has a valuable collection or antiques, you should be able to divide up household assets without an assessment. Families can agree on a method, such as taking turns choosing items. “It was so much work,” Alexandrov says of being an executor. “The most positive part is it brings you close to the person that has expired. I gained an incredible amount of respect for my mom, for all her accomplishments.”