When an individual names an executor for her estate, she chooses someone she trusts to be honest and responsible. For that reason, many people consider it a great honor to be named as executor. If you’re one of those people, you should also realize that executor is far more than a ceremonial title bestowed on a trustworthy relative or friend. Serving as the executor of an estate involves a lot of hard work and considerable risk.
Depending on the complexity of the estate, the executor faces a 12 to 18 month commitment. During that time, he will have extensive dealings with the courts, the beneficiaries of the will and the Internal Revenue Service. And if minor children are included among the heirs, the executor may remain involved with the estate for several years as manager of the children’s money.
Understanding the Risks
We all expect our family members to conduct themselves with decorum after we die, but history has proven that funerals, like weddings, sometimes bring out the worst in families. In not-so-extreme scenarios, competing desires to possess, say, Mom’s fine china have come between even the closest siblings. And more than one executor has found herself in the middle of the dispute, along with the china.
For all his responsibility, the executor does receive payment – typically around three percent of the estate’s value, depending on state law. Whether the estate is settled without a hitch or is hotly contested, the executor’s payment remains the same.
If all goes well, the executor’s duties will end when the estate is settled. But if things don’t go well, he could find himself facing a lawsuit.
Tasks Assigned to the Executor
Before you agree to assume the responsibilities of executor, then, take a moment to make sure you understand exactly what is involved. The following are typical duties assigned to an executor; check with your local probate court for an official listing.
- Take a thorough inventory of assets. This means determining where all investments are held and establishing their worth, as well as identifying and obtaining appraisals on valuables such as cars, antiques, or collectibles. (Consider having the deceased’s mail forwarded to your address to ensure that you see any statements coming in – you’ll be less unlikely to miss any assets.)
- Obtain certified copies of the death certificate. You’ll probably need 10 to 15.
- Locate all beneficiaries. Everyone who is named in the will must be tracked down, even if it means hiring an investigator. No distributions can be made from the estate until every heir has been found.
- Notify financial institutions that hold the deceased’s accounts. You may also be required to place a legal notice in the newspaper to alert unknown creditors who may have a claim against the estate.
- File appropriate papers with the probate court.
- Secure the assets of the estate. This means pay the bills, manage the investments, keep the home and other property in good condition, maintain insurance policies, and safeguard the property so that heirs can’t help themselves to anything before the estate is settled.
- Prepare and file the federal income tax return on behalf of the estate within nine months after the date of death. There’s no room for error here – if you file late or make an error on the return, you will be held personally responsible for any penalties incurred.
- File the deceased’s final tax return.
A tall order, indeed. That’s why it’s a good idea to ask to see the will before you agree to assume the responsibilities of executor – it’s the only way you can really have an idea of what you’re getting into. For instance, the will may give you insight into potential conflicts, the amount of work required to manage the assets, and so on.
Many experts suggest you consider hiring an estate attorney. If you’re the main beneficiary of a simple, basic estate (e.g., house, bank account, insurance policy), you may be able to handle the paperwork yourself or with the assistance of the probate court clerk. But if the estate is complicated, if there is conflict among the heirs, or if guardianship of minor children is in question, you’ll do well to call in an expert. The attorney’s fees will be paid by the estate.
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