What It Means and What You Need to Know

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It is an honor to be asked to execute an estate. Whether you accept the honor probably depends on how much time and energy you can dedicate to a job that can be surprisingly time-consuming. As executor, you act as the “voice” of the deceased, making sure their final wishes are respected.

If you do agree to become executor (or “personal representative,” as it is called in some states), there is a list of duties you must carry out. Fortunately, you can take care of one issue at a time.

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Before death

Once you agree to be executor, ask for a copy of the last will and testament, and familiarize yourself with it. Make a note of who will inherit property, if there are any co-executors (called “co-fiduciaries”), and if there are unusual requests. Ask about the location of any safe deposit box, essential papers such as a property deed or car title, and note where everything is.

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If you do not have a copy of the will when death occurs, you can get a copy from their attorney.

After death

Order death certificates

Death certificates can be ordered through the crematorium or funeral home, a third-party company, or the state or county in which the person died. You will be asked to provide a death certificate in many situations, including when filing for life insurance, accessing bank accounts, and, sometimes, dealing with creditors. Six to 12 copies of the death certificate will typically suffice.  

File the will

A will must be filed with the local probate court, even if probate is unnecessary. Generally, probate is deemed unnecessary when the estate is small, although each state determines what they consider “small.” For example, California considers an estate valued at $166,250 or less small enough to bypass probate, while Missouri has a threshold of $40,000. Check your state laws to learn when the need for probate kicks in.

Make notification calls

Among those who should be notified of a death: the Social Security Administration, credit card companies, creditors, the Veteran’s Administration, and any other government agency with a financial interest. 

Apply for a Taxpayer ID for the estate

Even though the deceased had a social security number, you will need a tax ID number specifically for the estate. To get one, go to www.irs.gov and fill out Form SS-4. The form is called Application for Employer Identification Number, a title that has nothing to do with what you need, but is the correct form nonetheless. 

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Open a bank account

Open a bank account in the name of the estate. For example, “Estate of Connie Bradshaw, Deceased, Katherine L. Jones, executor.” It is into this account any incoming paychecks, life insurance, or other funds will be deposited. You will also use this account to pay bills throughout the probate process, and eventually to distribute money to beneficiaries. If you live in a different state than the deceased did, open an account in their home state.

Oversee the maintenance of property

If property is to be sold or distributed to heirs, you must oversee its care until it is distributed.

Complete an inventory

Submit an inventory of assets to the court, complete with the fair market value of each asset. 

Pay taxes and fees

File an income tax return from the beginning of the year until the date of death, and pay any taxes owed.

Pay for other services

Pay the fees for any accountant or attorney services before you distribute assets. 

Distribute assets

Once debts are taken care of and taxes and professional services are paid, distribute assets to beneficiaries. It is common for it to take a year or more to get to this point.

Dispose of remaining property

If there is any property remaining after you have distributed assets, dispose of it. It is a good idea to ask beneficiaries in writing if they would like anything that remains, and keep a record of their responses before making a final decision. 

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File a final accounting 

Once everything has been taken care of, file a final accounting of the estate with the court. Probate will not close until all money has been accounted for. A final accounting lists what was in inventory, the total amount of money that came in during probate,  assets that were sold, and all distributions.

Close the account

Submit all receipts and records to the court, request that the estate be closed, and ask to be released from your executor role. 

Tips

Some estates require little work, while others can be time-consuming. These tips can make the process easier.

Decide whether you need an attorney

If the will is complicated or requires that you make important decisions, consider enlisting the aid of an experienced estate attorney. For example, if the deceased requested that you distribute money (at your discretion) to their minor child until age 25, an attorney can advise you on the best way to do that. No rule says you must hire an attorney, but it’s worth considering.

Keep careful records

Whether you use an attorney’s expertise or don’t, keep detailed records of everything you do. Records should include expenses incurred, income, and to whom distributions were made. Beneficiaries have a right to review your documents before the distribution process is finalized.

Being an executor can be straightforward or quite complicated, but there is satisfaction in knowing that you helped fulfill the final wishes of someone important to you.

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View more information: https://www.fool.com/the-ascent/banks/articles/executor-estate-what-it-means-what-you-need-know/

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