Congratulations! You have been named the executor of a will. But what is an executor? What do you need to know? What do you need to do? Should you even accept the job? Do you have a choice? What if you are being asked to select an executor for your own will? This article will help answer those questions.
An executor is one kind of a “personal representative.” A personal representative is a legal term meaning one who is appointed by the court to oversee an estate of a deceased person — also known as a “decedent.”
The job of an executor is to take control of the decedent’s assets that are under the executor’s control, pay the decedent’s debts, and then distribute the remaining property to those entitled to receive it in the estate administration.
An executor is usually nominated by the decedent in the decedent’s will. That person will then petition the probate court for appointment as executor in a petition for probate. Once the court appoints the petitioner as executor, he has legal control of the decedent’s assets and has certain rights and obligations. He is also entitled to a fee for serving as executor. But more about that later.
The duties of an executor vary by situation. Generally, when a person is appointed as executor of an estate, that person becomes an officer of the court and assumes certain duties and obligations. These duties include:
If you are planning your own estate, you will need to select an executor of your will. Becoming an executor is not necessarily an easy job. For this reason, you will want to select someone responsible and trustworthy, such as a friend, member of your family, attorney, or accountant.
There are private professional fiduciaries who make a career of acting as trustees and executors of estates. These professionals have vast experience in these roles and are often an excellent choice.
A probate is not always required when someone dies, and therefore an executor nominated in a will may not need to petition for appointment. A properly planned estate, in fact, is designed to avoid probate altogether by utilizing revocable living trusts and methods such as the following:
Part of your job as executor is to make sure that all of the expenses of the estate and the decedent’s bills and debts are paid before making distribution to the beneficiaries. You must set up an estate account to collect the estate’s assets and pay estate expenses.
Items you will deposit into the estate account include outstanding paychecks, dividend payments, and any tax refunds you might receive on behalf of the decedent. Until the estate is closed, you will continue paying the estate’s bills from this account.
Items you may need to continue paying include the decedent’s mortgage, utilities, real property insurance premiums, and revolving debts. You may also need to file the decedent’s final tax returns.
The executor is always responsible to distribute the assets as the will directs. For example, if the will provides that each of the decedent’s two children is to receive an equal share of the estate, then once the executor receives court approval to make the distribution, he distributes those assets to the beneficiaries.
Each asset need not be divided equally, however, unless the decedent required that in his will. As long as each beneficiary receives an equal share of the estate, the executor has fulfilled his duty in this regard.
As part of this duty, the executor may have to sell securities owned by the decedent or perhaps sell the decedent’s home. The executor would then need to engage the services of a real estate agent to list and sell the property. In some cases, the executor will require court approval to do this.
An executor is entitled to compensation unless the will prescribes that he is not. Generally the executor is compensated on a sliding scale based on a percentage of the estate’s assets. This ensures that the executor’s compensation reflects, as closely as possible, the amount of work involved with regard to the size of the estate.
In conclusion, acting as executor of an estate can be a difficult assignment. That assignment comes with responsibility and, sometimes, liability. For this reason, great care should be taken when deciding whether to serve as executor and whom to appoint as executor of your own estate. It is always best to discuss these matters with experienced estate planning counsel such as the experts at Cage & Miles.