First things first, you should know in advance if you are named as the executor of any estate. Sounds obvious doesn’t it? You’d be surprised how little thought is given to something so simple. So, ask your parents whom they are naming. If they haven’t thought about it, initiate the conversation. Then decide if you want the responsibility.
WHAT DOES AN EXECUTOR DO?
An Executor is legally responsible for protecting the assets of the decedent, or deceased, until the probate process is completed and the assets are disbursed. This is a good news bad news kind of thing. The good news is that acting in good faith won’t get you in trouble if the assets in the estate drop in value. The bad news is you could be found liable if you allow assets to be tampered with before the probate process is complete or you sell off assets at fire-sale prices to raise cash. You’ll be happy to know that if you are named, but don’t want to be the Executor, you can politely decline. No harm no foul, as long as you make sure the Executor that takes over respects your parent’s true wishes.
WHAT HAPPENS NEXT?
At the time of death, the executor takes over. This means you must make the funeral arrangements before anything else. The first question a funeral director will ask is how many copies of the death certificate you require. You’ll need copies when you notify financial accounts, life insurance, Veterans Administration or Social Security Administration, if applicable, and for filing the final tax return. It never hurts to have more than you need so be generous with the number. You will be glad you did.
IS THERE A WILL OR TRUST?
If there’s a will and no trust, you will need a copy for the probate court. This should be filled out within a few days of death to be safe.
If there is a Living Trust probate may be avoided. Hooray! This will make everyone’s life considerably easier. It will also avoid court costs and result in a larger inheritance. Furthermore, trust assets can be disbursed immediately without court approval.
SHOULD YOU HIRE PROFESSIONAL HELP?
Even if your parent’s have a living trust, the process of executing their wishes can be complicated. Many times there is money set aside to hire a professional to help advise the Executor. This is a very good thing. Even if there is no money, I recommend consulting a estate attorney, tax accountant, appraiser, Real Estate broker if there’s property and anyone else who can help expedite your work.
If the estate has to go through probate, the courts will look more favorably on an attorney who has everything lined up properly. After all, being organized saves the court time and taxpayer dollars.
WHAT’S THE LAW ON BILLS AND TAXES?
The estate is responsible for paying bills and taxes period. These are paid either through probate courts or by the Executor if there is a trust. They also must be paid before heirs may see any inheritance. Here’s the potential nuclear bomb. What happens if there are not enough assets to cover all debts? Well, at that point you pay as much as you can on behalf of the estate. The state will determine which creditors will be paid and how much they will receive.
HOW DO YOU MAKE EVERYONE HAPPY?
The first inclination of most executors is to try to make everyone happy. Guess what? That is nearly impossible. Perhaps you will have relatives pressuring you to distribute funds before you are ready. Make them wait. Take the time to get organized. Set up a separate filing system to stay on track with everything that needs to get done. Of course what’s most important is to keep copies of everything.