An executor is the person you name to settle your will according to your directions. It is helpful to choose a back-up executor just in case something happens to your primary choice. You may opt for co-executors who can either share the duties or have different duties
Your executor is entitled to a fee for their role in closing out your estate, but are not entitled to proceeds from the sale of the property of your estate. Many states mandate this fee and some states govern what the executor is paid based on the size of the estate.
Your executor may have to post a bond, a kind of insurance policy intended to protect your beneficiaries in case they mishandle the estate assets.
Your executor has the most important role in seeing to your estate after your death and choosing them can be challenging. Most married couples choose their spouse, but it is also common to name an adult child, parent, sibling, or capable friend. You may prefer to choose a professional such as a lawyer, accountant, bank, or trust company. This is more expensive up front, but their experience may save money in the long run.
If you do not choose an executor, the probate court will choose one for you.
There are some restrictions on your choice of executor, some vary by state.
Choosing the Right Person for the Job
Choose an executor whom you trust explicitly, who will perform their responsibilities in good faith (a legal concept known as “fiduciary duty”), and will be able to make objective and difficult decisions.
It is best if they are organized, have good financial management skills or willing to consult someone who does, and live close enough to be able to fill out paperwork and carry out duties of the estate without having to drive long distances to do so.
You should talk to the candidate about their willingness to take responsibility before officially naming them as executor. Make sure they are aware of the entire range of responsibilities and time commitment (up to a year or more) involved in carrying out their duties as executor.
In most states the Probate Court has the final say on who is qualified to serve as an executor and will not allow anyone who is not capable to be or remain an executor of your estate.
Your chosen executor can decline the position or resign at any time.
Choose an alternate executor in the event that your:
Your executor may be more comfortable if they consult an attorney to help them with the process. The attorney can assure that they properly comply with their duties.
Being chosen to be an executor is a significant obligation, so it is important to be aware of what will be expected of them. There are many ways you can reduce their burden while you are alive.
The executor’s role usually begins right after your death and includes handling all the debts, loose ends, instructions in the will, and more that come with an estate. If you become incapacitated, they would begin their duties at that time.
Aside from possible disputes with beneficiaries and/or co-executors, there are other drawbacks to being an executor.
With this much responsibility, prospective executors are free to refuse if they do not feel able to manage it or are not interested. If accepted, their job as executor may be easy or challenging to carry out depending on the size and complexity of your estate.
With few exceptions, the probate court supervises your executor while the will is being settled to ensure that your wishes specified in the will are carried out in good faith and with the utmost honesty and diligence.
There are basic tasks your executor is legally responsible for. The order in which they are done is logical and depends on certain tasks being completed before they can proceed to the next and how quickly they need to be done.
Their first task is locating, reading, and understanding the will including any codicils to know how they are to proceed. This is best if they have done this prior to your death.
Once the funeral and burial is done, it is time to prepare for probate.
There are many steps to get ready.
Next, decide what kind of probate is needed and perform the following steps.
If a probate court is required to settle the estate, as with most wills, they will need to:
If approved, the court will issue letters of office or letters of authority, which they will need along with the death certificate for future actions on behalf of the estate.
Once the probate process has started, they will continue to manage the estate and begin to arbitrate the estate finances and arrange for payment of estate debts and expenses. Depending on the details of the estate, many specific duties may be required.
Collect and create an inventory of all personal property and assets in the estate and protect them until distribution determines who inherits the property.
Notify banks, credit card companies, government agencies, utility providers, lawyers, brokers, landlord/tenants, insurance agents, doctors, Social Security Administration, VA, employer or employees, etc. of their death.
Set up an Estate Account.
Maintain the property until it can be distributed to the beneficiaries or sold.
Settle the estate’s debts and taxes. The executor should retain and prepare a statement of all receipts and disbursements.
Use estate assets (including selling them if necessary) to pay any debts such as federal estate taxes and state taxes (if the estate is large enough), mortgage, car loans/leases, credit card bills, student loans, personal loans, and/or outstanding taxes.
Once this is done, they may need to petition the court for the authority to perform specific tasks indicated in the will unless your beneficiaries waive the requirement as allowed under some state laws.
This petition may include an accounting of how the assets were managed during the probate process.
Once the petition is granted, they may:
Once they have completed all these tasks, they will apply to the probate court for an official
release of their executor duties at which point the estate will be closed.
Go to Executor Duties Checklist for a downloadable PDF to help with the process.
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One of the first steps your executor should take is to open an estate account. An estate account is a new bank account opened by your executor after you have passed away.The account is used to pay day-to-day administration expenses as well as for the final distribution of funds to the estate’s beneficiaries.
If you have adult children, an alternative is to make them a joint account holder of an existing bank account. You could make your executor a co-holder. There are benefits to both approaches.
Although the probate court will be involved, an estate account is probably the better option for both your estate and your executor as opposed to a joint account or the executor opening a separate bank account in their own name.
An estate account should be created even if your executor was a co-holder of a joint account before your death. This is true even if your spouse was the co-holder and is the executor.
Probate courts are more willing to open the estate (unfreeze your assets) to deposit them in an estate account since the money will remain in the estate and can only be used for estate purposes.
The existence of the estate account gives the executor the ability to endorse and deposit checks made out to you after your death.
An estate account controlled by your executor reduces the risk of your funds being used in a way not specified in your will.
Having all the estate’s money in a single account allows the executor to more easily use and transfer estate funds to beneficiaries, and makes record keeping and managing incoming and outgoing funds easier
The only funds that can be deposited belong to the estate, which may not be true if the executor is the holder of the account.
This will simplify the calculation of taxes since the estate will clearly own any income generated by the account.
All the records that may be required for tax or other purposes are readily available to the executor.
While a joint account avoids the probate process there are more drawbacks.
Funds in a joint account would be accessible to any co-holder before your death, making them able to remove money without your consent.
Assets in a joint account are accessible to creditors of any joint account holder.
When you pass away the other co-holder gets title to their half of the account’s remaining funds. Your half of the estate will be distributed according to the executor.
If your executor passes away prior to the settlement of the estate, they will not have any say in where your half goes.
Unless you already have, amend, or create a will that specifies this, your co-holder will be able to determine where the money goes regardless of your wishes for the funds.
Money added to a joint account after your death could be considered the co-holders’ and used accordingly.
The executor may become liable if a co-holder is accused of spending the estate’s funds inappropriately.
If other beneficiaries do not receive any of this money, they may want to contest the will.
Any jointly held account intended to be distributed to other beneficiaries after your death creates a unique situation for the co-holder if it is not converted to an estate account. Similar consequences can occur if the executor opens an account in their own name to manage estate finances.
The major issue arises if the surviving account holder continues to add money to a joint account. Since other beneficiaries are named, the account could be considered part of the estate and this would result in mixing their money with the estate. Additional concerns develop if they are also the executor.
The process of opening an estate account can be straightforward with simple estates, but with larger and more complex estates may be best to hire an estate lawyer. They can steer you through the process, make you aware of important details, and advise you if disputes occur or even represent you should there be any liability issues.
Begin the probate process by submitting the will along with the death certificate to allow the executor to manage the estate.
Obtain a tax ID number for the estate account.
Open the estate account by filling out all the required forms.
The executor should transfer money from checking and savings accounts or other financial assets such as stock dividends and rental income to the estate account once they are confirmed by probate. This does not apply to any assets already accounted for in trusts.
If an estate account already exists with the beneficiaries as co-holders of the account, control of the account goes directly to them after your death. However, the money can only be used for estate purposes according to your wishes, as opposed to a simple joint account which the surviving co-holder controls without limitations.
Your executor will need a checking account or a money market account to write checks or use a debit card for day-to-day expenses.
They can only use funds in the account for estate purposes such as to pay day-to-day expenses, bills, debts, funeral expenses, etc.
If there is more than enough money to pay bills and debts, an estate savings account or an estate money market account can be opened to generate more interest. If specified in the will, the money can be invested.
Before the estate account can be closed your executor must first close the probate process.
Only after probate is complete and final distribution of the estate funds is permitted can the account be used to make the final payments to all of the beneficiaries.
After this is done the account itself can be closed. In most cases, this may be as simple as filling out forms required by the bank.
Like a traditional executor, a digital executor can be appointed in your will. If you’ve already created your will without one, you can either re-write your will or create a codicil to amend it. Some online legal services have altered their forms to allow you to name a digital executor.
The responsibilities of the digital executor are complementary to your traditional executor. They will manage your digital assets after you die including paying any debts or maintenance fees on behalf of your digital estate and making sure they are distributed to your beneficiaries according to your wishes.
A digital executor’s tasks can include:
In most states, a digital executor is not recognized as a distinct entity. Check with a local estate planner about the laws around digital estate planning in your state. If not, you can still create a digital estate plan and figure out who you’d like to carry out that plan. You may name that person as a co-executor in your will knowing that they will be responsible for your digital estate.
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