What you need to know if you’re an executor of estate duties

How to fulfill your legal obligation to someone's estate.

Article published: April 04, 2024

By: Rodney Weaver Director of Estate Planning

Have you been named executor of estate duties for someone?

Though that may seem like an honor, it’s usually a thankless assignment – and often a difficult one too. And you might be asking yourself, “What are my duties as executor of estate?”

As important as it is to know what an executor does, it’s more important to understand what an executor cannot do.

As executor of estate duties, you have the legal responsibility to pay the deceased’s taxes, debts and creditors – in the proper order – from estate assets and then to distribute the remainder according to the decedent’s wishes as expressed in a will or trust documents.

That typically involves a great deal of paperwork and deadlines – and all the while you might have to walk a tightrope to avoid getting embroiled in family squabbles. Worse, you could even be sued if you don’t handle everything correctly.

The core responsibilities of executors haven’t changed much over the past century, but meeting them has grown more complex. In the past, an executor of estate duties would typically find estate documents in the deceased’s filing cabinet or safe deposit box. Today, such items are increasingly stored digitally. Even if you know their digital locations, you’ll also needyou may not be able to access the documents without usernames and passwords, which you should never ask for or accept to access the documents. If you’ve been named an executor for someone, ask right away where their important documents are kept, including wills, copies of financial statements, life insurance and annuity policies, homeowner’s and auto insurance policies and the names of their financial, legal and tax professionals. Be sure to ask for all of this in hard copy form rather than anything digital. Taking these steps in advance can make your job a lot easier later.

Laws in many states are unclear as to an executor’s ability to gain access to a deceased person’s digital property. Email providers often have terms that make it difficult for friends or family members – with or without executor authority – to open email accounts. Some email providers will delete an account once they find out the account holder has died.

Here are four more things you need to know if you’re an executor of estate duties:

1. Pay creditors at the right time and the right order.

Don’t assume that the deceased’s bills, such as credit cards and utilities, must be paid as soon as they arrive. Other obligations – including federal and state taxes and funeral expenses – take priority. Paying routine debts before others can be a breach of fiduciary duty for which an executor can be held liable.

For example, an executor might not know that the estate owes federal income taxes. If he or she pays other expenses, there might not be enough money left to pay the taxes, and the executor could be required to pay them personally.

Before paying any creditors, we recommend consulting with an estate attorney and tax professional who can help you in paying creditors in the proper order and time.

2. Keep control of assets.

Executors are charged with keeping all estate assets safe prior to distribution. In the days immediately following a death, visitors come and go, and household items can disappear. The executor is typically required to secure all physical propertiesy and monitor its their safekeeping, which may mean simply locking the home or possibly having the locks changed if the situation requires it.

3. Consider real estate involvements.

Disposition of real property can be a difficult task. One beneficiary might want to sell the deceased’s house quickly, while another might want to keep it in the family – and may even be living in it. If there’s an agreement to sell, the executor must decide the listing price and the amount of sales commission the estate will pay.

If a real estate agent recommends making improvements to a property to help sell it, the executor needs to reach an agreement with heirs before spending money on improvements. A financial advisor and estate attorney can help an executor resolve such issues amicably; otherwise, the executor might need to seek assistance from probate court.

Executors should obtain homeowners insurance on the deceased person’s house until it’s sold, but be aware that insurance companies don’t like to cover vacant properties for extended periods because of the risk of fires, vandalism and other damage, so it’s likely to require a higher premium.

4. Avoid investing estate assets in the market.

If you’re tempted to invest the decedent’s assets in the stock market until you’re able to distribute the money – discuss this with the estate attorney.

You could be held liable for any losses. Remember that your job is to protect the assets – not attempt to increase them. If the decedent has money invested in one or more accounts, contact an estate attorney and financial advisor for guidance.

A checklist for an executor of estate

Before you begin serving as executor of estate, you should understand that most major legal and financial tasks don’t have to be handled immediately. Take a step back. Dealing with such matters at a time when you might be coping with a personal loss is difficult. In the days following death, you could be involved in helping arrange the funeral, collecting information for an obituary, contacting clergy and other urgent tasks.

When those tasks are completed, take time to get a clear understanding of the estate. And realize that you don’t have to do everything by yourself. But don’t ask other family members or friends to help. Instead, enlist the aid of three specialists: an estate attorney, your financial advisor and the deceased’s accountant. (Contact us if you need a list of estate planning attorneys in your area.) Some states let you appoint co-executors who have special expertise to serve alongside you.

It’s impossible to provide an all-inclusive checklist for executors. Each family situation is unique, and legal requirements vary from state to state. So here is a basic list to help get you started:

  1. Gather all the deceased’s important documents – starting with the will, if one exists. Ideally, the decedent would have told you where to find all the legal, tax and financial documents you need. Don’t assume the decedent told you everything – look for bank safe deposit boxes, insurance policies and other items that can lead to unknown assets. Interview family members to help your search.
  2. Contact an estate planning attorney and tax professional. They can help you prepare and file the the deceased's will with the probate court. Make yourself a few copies first.
  3. Get several certified copies of the death certificate. You’ll need one every time you must provide proof of death (although you may find that a few institutions now accept copies).
  4. Notify the post office, utility companies, credit card companies, banks and other businesses of the death so that recurring charges are stopped. Have the deceased’s mail forwarded to you.
  5. Notify the Social Security Administration, unions and any other organizations that had been providing benefits to the deceased. Payments made after the date of death will have to be returned.
  6. Inventory all assets and have valuable items appraised. The inventory is needed for probate court.
  7. Determine whether full probate is necessary by totaling the value of property subject to probate and checking your state’s rules on what estates qualify for simplified procedures. An estate attorney can help you conduct a probate court proceeding if one is needed.
  8. If there’s a living trust, work with the trustee(s) to coordinate the appropriate tasks. Executors are not always the trustees, so know where your responsibilities (and rights) stop.
  9. Notify the heirs and beneficiaries. The estate attorney and probate court can help you. Stay in touch with them. See if the deceased’s state requires that they receive a copy of the will.
  10. Safeguard estate assets until you distribute them. Never commingle estate assets with your own.
  11. Get the consent of beneficiaries before taking major steps. Otherwise, they may suspect wrongdoing. Even during a lull in activity, let them know the status. Don’t startle them with surprise announcements.
  12. Collect all money owed to the estate, such as the deceased’s final wages and insurance benefits. Deposit these funds in the estate bank account. (Yes, you need to create a bank account for the estate. Close the deceased’s accounts – once you’re sure that all recurring deposits and withdrawals are ended – and transfer the funds to the estate account.)
  13. Follow your attorney’s counsel to pay the estate’s bills in proper order. You are not obligated to pay any of the deceased’s debts personally. Your attorney should have already determined if the estate will have enough money to pay all of its debts. But if youhave doubts once you’ve begun addressing these debts, stop paying bills and ask your attorney for further guidance.
  14. File the decedent’s final income tax returns. Consider hiring the deceased’s tax preparer to help.
  15. If the estate exceeds $13.611 million in value, work with the estate attorney and a tax professional to determine if filing a federal estate tax return is required. It’s possible that taxable lifetime gifts or other circumstances may have reduced the remaining estate tax exemption, so seek professional advice.
  16. Distribute the assets. After all creditors are paid in full, pay remaining funds to the heirs and beneficiaries, including distribution of such items as furnishings, jewelry and other valuables.
  17. Congratulate yourself and breathe a sigh of relief. You’ve done a service to the deceased and their heirs.

1 IRS. (2023, November 27). Estate Tax. Retrieved March 1, 2024, from https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax

The information regarding estate planning should not be construed as tax or legal advice and is for general informational purposes only.

 

Neither Edelman Financial Engines, a division of Financial Engines Advisors L.L.C., nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.


Rodney Weaver

Director of Estate Planning

I have over 20 years of experience working with high-net worth clients from around the country, educating them on federal and state estate tax strategies as well as trust planning, charitable gifting, and various advanced estate planning techniques designed to increase estate transfer efficiency, reduce costs, and implement overall estate objectives. I am licensed to practice law in New Hampshire. I reside in New Hampshire with my wife and two children.



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