Has a loved one or close friend asked you to be the executor (also known as personal representative in some states) of his/her will? You may feel obligated to take on the job, but acting as executor of a will is an enormous responsibility and commitment. Most wills go through probate, a court-supervised legal process in which the executor must settle the deceased’s estate. That may include tracking down assets, maintaining property, paying debts and taxes, and distributing assets to heirs and beneficiaries. Probate typically takes nine to 12 months and requires a significant investment of time and effort on the part of the executor.
Estate-planning attorney Peggy Hoyt, JD, MBA, has helped scores of executors navigate the probate process. It can be a tedious, messy job in which you may encounter family drama, impatient heirs, surprise creditors and mountains of paperwork. Here, she explains exactly what the executor of a will does and the timeline…
Weeks 1 Through 4
Immediately After the Death
Locate the original will or trust, as well as other important documents, such as marriage certificates, military discharge papers, etc.
Secure the property. Make sure important documents and contents in the deceased’s home are safe, and don’t allow family members to remove items even if they were promised by the deceased. Reminder: Make arrangements for the care of pets.
Notify the deceased person’s family, friends and employers. Helpful: Create a database of the people you need to contact, including beneficiaries of the will. Have a record of each person’s address, phone number, e-mail address, relationship and any other information about that person that would be helpful.
Help plan the funeral, especially if the will contains instructions regarding custody of the body and service arrangements. Funeral costs typically are paid from the decedent’s estate. If the funeral is not prepaid and preplanned, then someone will have to pay for it and then get reimbursed from the estate.
Obtain a legal declaration of death, commonly known as the death certificate. Death certificates are issued through the state’s vital-records office in the city or county where the death occurred. Getting the death certificate usually takes a week to 10 days after the person’s death. It has to be signed by the attending physician who made the pronouncement or by the medical examiner, depending on the circumstances of the death. The number of copies of the death certificate needed depends on how many assets the individual had. Note: Some states have both long forms (with the cause of death) and short forms (without the cause of death). And some states, like Florida, do not allow the recording of the cause of death on the death certificate for privacy reasons. Due to suicide clauses in life insurance policies, insurers generally want a death certificate with the cause of death. Death certificates are not notarized, but they do carry a seal from the issuing agency.
File the will and death certificates with the probate court in the county where the death occurred. This allows you to get the will validated and to obtain a Letter of Testamentary authorizing you to act on behalf of the estate. Unless the estate is very small, you likely will need help from a probate attorney to file a Petition for Administration and to give notice to the beneficiaries…then the judge will issue the Letter of Testamentary or Letter of Administration.
Month 1 to Month 9
Administering the Estate
Assemble your support team. If the estate is under the state limits for a formal probate, you probably can handle the paperwork without a lawyer. But if the estate has many types of property, creditor or tax liability, and/or potential disputes among inheritors, look for a probate attorney. He/she can advise you about your duties…what should be done to maximize the value of the estate…and how to avoid costly administration mistakes. Cost: In most states, probate lawyers charge by the hour (about $250 to $500 is common)…a flat fee…or a percentage of the value of the estate. You could consider using the deceased’s estate-planning attorney—he/she may be the best choice since he/she prepared the will and already understands the details of the estate plan and the deceased’s intentions. Alternative: Ask for a referral from trusted family members, friends or your financial advisor or CPA.
Depending on the complexity of the estate, you may need to hire other professionals including an appraiser to help value high-priced items such as jewelry and artwork…and a tax accountant. It also may be important to get real property appraised for date-of-death valuations—this is relevant for future sales of the property due to step up in basis rules. As executor, you may be required to file the deceased’s final federal and state income tax returns.
Notify “interested parties,” in the probate case, including beneficiaries, heirs and identifiable creditors, to allow them to make claims against the estate and contest the will. The executor also establishes deadlines for interested parties to file those claims. Failing to provide proper notice can lead to penalties for the executor and allow creditors to file claims even after the estate is closed
Inventory the deceased’s assets and liabilities. This means creating a detailed list of all the assets in the estate (e.g., bank, accounts, real estate, vehicles, investments and personal property)…as well as all debts and bills.
Managing Other Financial and Legal Matters
Notify relevant agencies and financial institutions of the death. The funeral home typically contacts the Social Security Administration and Medicare. Also: You will need to contact the Bureau of Motor Vehicles to retitle the deceased’s vehicles. Call financial institutions that the deceased person dealt with, including mortgage providers, banks and credit card companies. Reach out to pension providers and life insurance companies.
File for any eligible survivor benefits including government-provided death benefits, veteran benefits and insurance benefits. If there are survivor’s benefits, a meeting with the Social Security Administration may be required.
Handle bills, services and income. Have the deceased’s mail forwarded to you. Open a bank account in the estate’s name to manage estate finances and pay ongoing essential bills such as mortgage payments and homeowner’s insurance premiums, as well as to receive an income from the estate such as stock dividends. Cancel unnecessary services such as cable TV and Internet. If the home is rented, contact the landlord and let him/her know when everything will be removed. Some of this can be done by a surviving family member if they are co-owners of the account or co-signers on a lease.
Months 9 to 12
Distribution of Assets
Pay debts and taxes. Taxes and valid claims must be paid out before distributing assets to the beneficiaries.
Distribute the remaining assets according to the instructions in the will. Be careful not to change the terms of the will or favor certain individuals.
Caveats for Executors
If you know ahead of time that you will be named as an executor, ask the testator (the person who creates the will) to take steps to make the process easier for you and the family. Ask the testator to do the following…
Not name co-executors. Naming multiple people as executor may seem like a good idea to share the workload or prevent hurt feelings. Reality: It often leads to administrative delays, disagreements and increased costs for the estate.
Disclose the location of the original will. Is it in a safe at home? At the office of the attorney who drafted the will? You must have the original will, not a copy, to file with the court and start the probate process.
Keep a master list of financial accounts and passwords.
Consider ways to discourage litigious beneficiaries if relationships in the family are contentious such as inserting a no-contest clause in the will that disinherits a beneficiary who contests the will in court and loses. But keep in mind—no-contest clauses are not valid in all states.
Not every estate must go through probate. In many states, if the total value of the estate is below a certain threshold, typically $40,000 or less, and contains no significant real estate, the estate qualifies for “small estate administration,” which makes the distribution of assets quicker and less expensive. For more information about laws pertaining to small estates, go to Justia.com/probate/probate-administration/small-estates/small-estates-laws-and-procedures-50-state-survey.
Also: The executor does not have to probate many common assets that a deceased person may leave outside the will, including bank accounts registered in “payable on death” forms to beneficiaries…real estate and other assets owned in joint tenancy to a surviving joint tenant…IRA and 401(k) accounts at brokerage firms left to beneficiaries…and assets held in revocable or irrevocable trusts.
Expect to be compensated for your work as well as reimbursed out-of-pocket expenses in administering the estate such as mileage for your travel. These costs are paid out of the probate estate, and the fees can vary widely. Depending on the state, they may be determined by the will, state law and/or a court’s approval of what’s reasonable. The amount you are paid may be calculated as a percentage of the estate, a specific flat fee dollar amount or an hourly rate. Example: In Florida, reasonable compensation for an executor might be 3% of the value of an estate up to the first $2 million and then a lower percentage over that. If taking money from a loved one’s estate feels awkward…or it is a small estate and there will be little left for the beneficiaries…you can waive payment as an executor.
Brace yourself for family conflicts. Serving as executor is more than just carrying out financial and legal tasks. You may have to manage the emotions and relationships of various beneficiaries who may be resentful of the authority you’ve been given or even accuse you of favoritism, incompetence or dishonesty. To avoid mistrust, provide heirs with regular updates, even if nothing is happening in a particular month. Be transparent about the steps you are taking to get beneficiaries their inheritances as fast as possible.
Important: Often the greatest conflicts and aggravation for an executor come when divvying up small, sentimental possessions from the deceased. Make sure you have a fair system in place for heirs to divide up these items.
Reminder: You can decline to be executor, and you can resign at any time even if you do initially agree to serve. To formally decline or resign: File a renunciation form with the probate court. If there is no alternative executor named in the will, the court will appoint a successor executor, likely a family member, to oversee the administration of the estate.
