Being
Named Executor of an Estate: What's Involved?
Acting as an
executor or administrator of an estate can involve a great deal of work,
depending on the estate involved. Many individuals agree to be named an executor
for a spouse or relative, and then are left with a task that is much more
complex and onerous than expected.
TIP: Use
our list of typical executors' responsibilities (below) to make an informed
decision as to whether to agree to be named executor.
NOTE:
Executors are bound by law to observe a strict standard of care in fulfilling
their duties, which can include, but are by no means limited to, those listed
below.
Here is a list of
the possible duties of an executor:
Inform various
persons of the death.
Cancel the
deceased person's credit cards and accounts.
Have the will
probated. Usually, this means having a lawyer petition the court to probate
(approve) the will. Once the will has been probated, the executor has the
power to administer the estate-i.e., to perform the rest of the duties in
this list.
"Marshal"
the assets. This means finding all of the deceased person's assets, which
may not be easy. (Imagine trying to find every asset you own right now-car
registrations, stock certificates, account statements, deeds, pension
benefits, mortgage papers, and IRA papers-would you be able to locate these
easily?)
TIP:
To ensure that your own assets will be more easily located after death, it's
a good idea to prepare a Post-Mortem Letter. The Post-Mortem Letter, a
document you can prepare yourself, tells executors and heirs where
everything they need to carry out your post-death instructions is located.
Be sure that
each asset is valued. Assets need to be valued both for estate tax purposes,
and to provide heirs with a tax basis. (Under the tax law, the tax basis of
an asset in an heir's hands is generally its "date of death
value.") Some assets, such as business interests, will require
appraisal.
File any tax
returns. Depending on the size of the estate, tax returns that will need to
be filed might include federal and state estate and death tax returns, the
decedent's final income tax return, a final gift tax return, and an income
tax return for the estate.
Make an
accounting of the estate's assets. (You'll need a professional for this.)
Determine and
pay the estate's debts.
Sell some of
the estate's assets (in certain circumstances).
Manage the
estate's assets (if substantial time elapses before the assets are
distributed).
Distribute the
estate's assets in accordance with the deceased person's wishes.
To sum up, the
complexity of the executor's job depends on the extent and complexity of the
estate's assets. Think your decision over carefully before accepting a position
as executor.
