What is an Estate Executor?
Technically, an executor is a man appointed to carry out the wishes of someone who has died and manage their estate. If a woman is chosen for this task, she is called an executrix. But for simplicity’s sake, we will refer to administrators of all genders as executors since this is the more commonly known term. Sometimes the deceased person will have chosen the executor (often while writing their will). Other times, when an executor has not been selected, the court will appoint an executor.
Who Can be an Executor?
Anyone over 18 with no prior felony convictions can be an executor of an estate. They will be dealing with much financial math and the law, which is why an accountant or a lawyer is often chosen. It is also common to select a relative they trust.
What Does an Executor Do?
One of the first things they must do is pay off all the deceased’s debt (with money from the estate, of course), including taxes. Then, the executor will estimate the estate’s value and transfer assets to the estate’s heirs.
What are the assets?
- Financial assets such as bank accounts and retirement accounts
- Investments like stocks and bonds
- Art and collections of coins or stamps
- Real estate
- Any other items of value
What Does an Executor Do First?
The testator is the person who will die and need their estate executed. Hopefully, long before this happens, the testator will prepare the executor to administer their estate according to their wishes. This will involve several things:
- The testator should make a complete list of their assets and debts. This should include real estate holdings, insurance policies, bank accounts, safe deposit boxes, and investments. You can see now why an executor must be someone trustworthy.
- The testator should keep this list of assets and copies of any keys to things listed on the list, and a current will in a safe place that the executor can access in the event of their death.
- The testator should discuss their will with the executor, and if possible, with their beneficiaries. This clarifies their wishes with all involved parties. It ensures the executor can abide by their wishes. It can prevent strife between beneficiaries in the future.
- The testator should explain their ceremonial wishes. Family and executors need to know funeral or memorial service plans and whether the decedent wants burial or cremation.
- The executor should have a list of the names and contact information for the testator’s attorneys.
Have copies of important documents, including:
- Beneficiary Designations
- Letter of Intent
- Healthcare Power of Attorney
- Guardianship Designations
- Durable Power of Attorney
To find out more about these documents, and estate planning, read our recent article, “What is Involved in Estate Planning?”
Being an executor is not all glory and esteem.
Some things can make the task of administering someone’s estate difficult. The most frustrating of these hazards is a conflict between parties involved in the process. Most people have seen a TV mystery involving disputes between heirs.
Most of these depictions are more dramatic than in real life, but it is not uncommon for heirs to begin going through the decedent’s things before the body is even cold. This can result in hurt feelings and longtime feuds. Often the executor can get caught in the middle of these conflicts.
To prevent this, secure the decedent’s home and assets. Let the heirs know that this is the law.
Sometimes people will appoint multiple executors. This is a recipe for trouble. Not everyone has the financial and legal savvy to handle all that is involved in administrating the estate. Multiple executors add much paperwork to the process, and because of circumstances that various executors find themselves in, there will be a power imbalance, which always leads to problems.
It is essential to find one executor who is up to the task and have all of the heirs sign off on the designation.
Financial Problems for Executors
In administrating the estate, the executor must pay estate taxes before making disbursements to the heirs. If the executor does this the other way around and comes up short when it is time to pay the taxman—they will be personally liable for the owed taxes.
To prevent this, the executor should withstand any pressure the heirs try to exert. They will receiver their inheritance when the estate has paid all of its debts.
While the executor is permitted to receive a small percentage of the estate as compensation for their services, smaller estates often ask the executor to waive any payment, something commonly done. But before an executor signs off completely, they must be reimbursed for any out-of-pocket expenses they incur in their service to the estate. This would include:
- Copy fees
Being an Executor is Time-Consuming
An executor must deal with various government agencies, such as the Social Security Administration, the IRS, and the state’s unclaimed property departments. You also need to contact utility companies, debtors, and people who are indebted to the estate.
The executor can hire an attorney or a CPA to assist with these tasks, but the estate must pay for these services. So, the executor will have to decide the best way to proceed. The heirs will want the executor to minimize any estate expenses, which can be exhausting for the executor.
Choosing an Executor
It’s essential to choose someone who is up to the task of administering the estate. They should have the needed skills to not only deal with the functions but also the people. Testators should do whatever they can before they die to make the executor’s work as easy as possible for them. So, before agreeing, a potential executor should consider all aspects of the job and whether they will be up to it when the time arrives.
White & Associates is an experienced team of estate lawyers in Elk River, Minnesota. Whether you are planning your estate or are an executor needing help administering someone’s estate, contact White & Associates today.