“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 job of the executor is an important one. The executor has a fiduciary responsibility to manage the assets and debts of the decedent and carry out instructions documented in his last will and testament. The executor is also responsible for distributing assets, explains the article “A Step-by-Step Guide to Being an Executor” from Kiplinger. If there are any claims against the estate, the executor might face personal responsibility if funds are not handled properly.
The learning curve could be steep, especially if the executor does not know a lot about the person’s finances and possessions, or is new to the tasks of managing money, corralling heirs or the legal processes that occur after someone dies. If the decedent didn’t tell the executor where his records and important papers are kept, things can get even more challenging.
Here’s what an executor needs to know, preferably before his or her services are needed:
- Get informed and up to speed. Read the will and see if the decedent’s intentions are clear. That’s not always the case. When one man became executor of his mother’s will, he and his sister had two different interpretations about what their mother wanted to happen to the family home. While they wrangled out the issue, there were property taxes to be paid and maintenance costs. A letter of direction explaining things clearly would have prevented many problems.
- Sit down and talk about it. It is a kindness to heirs to share information and intentions while you are still alive. Discuss the will with the immediate family to avoid any surprises or misunderstandings. Consider having an annual conference with children to ensure that they understand the estate, the will and what to expect. If you have an argumentative family, doing this in advance won’t guarantee smooth sailing, but it may lessen the fighting.
- Make an inventory. Managing an estate can be a long process with many curves along the way. You’ll make it easier if you create a list of all assets, accounts, debts and liabilities. Make a note of where tax records and insurance policies can be found. Include a list of all online accounts and digital assets, plus the names of your professional advisors, including the estate planning lawyer and CPA. Ideally, review the list with your executor.
- Should the executor change the locks? In a word, yes. Two kinds of theft happen while people are attending funeral and memorial services. Some family members will outright take items and thieves may break into empty homes. Remove anything of value and have a reputable locksmith install good locks. If the executor is technically inclined, an inexpensive videocam system would be a good idea.
- Get copies of the death certificate. Request multiple copies. Some institutions will require originals with a raised seal, while others will work with a copy or a scanned document. Better to have a few more than you need so you don’t have to keep buying new ones.
- Speak with an estate planning attorney. There are legal forms and tax forms that will need to be prepared. In some states, probate is straightforward. In other states, it is a complex and time consuming process. You don’t need to go it alone.
- Open an estate account. The estate is a legal entity and requires a separate tax ID. The executor needs to apply for a separate tax ID to use to open an estate bank account which is used to pay bills and deposit proceeds from assets.
- Distribute assets. The executor is responsible for keeping heirs updated. Heirs receive assets, as designated in the will. If there are collections or a home, they will need to be professionally assessed, before they can be sold.
Reference: Kiplinger (May 12, 2020) “A Step-by-Step Guide to Being an Executor”
