What Is an Executor?
Let me explain what an executor is. I'm talking to you directly: if you're dealing with estate matters, you need to know that an executor is the person appointed to handle the last will of someone who's passed away. They manage the affairs and carry out the instructions in that will. This appointment comes either from the person who made the will—the testator—or from a court. As executor, you ensure all assets listed in the will are accounted for and then transferred to the right beneficiaries. These assets could be anything from financial holdings like stocks or bonds, to real estate, direct investments, or even collectibles.
Key Takeaways
Here's what you should remember: an executor takes charge of a person's estate after they die. You could be named by the testator in their will or appointed by a court. Your main job is to follow the deceased's wishes as outlined in their will or trust documents.
Executor Duties
You have to be over 18 and without any prior felony convictions to serve as an executor. It could be you—a friend, family member, or even a professional like a lawyer or accountant. Your duties include estimating the estate's value, using either the date of death value or an alternative as per the Internal Revenue Code. You ensure all debts of the deceased are paid, including taxes. You publish an official notice to creditors. And you fulfill the legal obligation to act in the interest of the deceased and meet their wishes.
Acting as Executor
If you're stepping into this role, make sure the testator has a list of their assets and debts—things like bank accounts, investment accounts, insurance policies, and real estate. You need to know where the original will and that asset list are kept and how to access them. Get the names and contact details of any attorneys or agents the testator named, and understand their functions. Discuss the testator's wishes for a funeral or memorial, including burial or cremation instructions. Talk about the will with the testator and, if you can, with the beneficiaries to avoid future issues. Keep copies of all documents. Gather all this information right after you agree to be the executor.
Estate Planning
Executors play a crucial role in estate planning for individuals and their beneficiaries. Estate planning is about how your assets get preserved, managed, and distributed after you die. People do this for reasons like preserving family wealth, providing for surviving spouses and children, funding education, or leaving a legacy to charity. Major tasks include completing or establishing a will or trust, limiting estate taxes by setting up trusts for beneficiaries, establishing guardians for dependents, naming an executor to oversee the will, updating beneficiaries on life insurance, IRAs, and 401(k)s, planning funeral arrangements, establishing annual gifting to reduce the taxable estate, and naming a durable power of attorney to direct other assets and investments.
Important Note on Retirement Accounts
Pay attention to this: beneficiary designations on retirement accounts like 401(k)s and IRAs override whatever is in the will or trust directives.
Disputes
Dealing with multiple executors can complicate things—it increases paperwork and might lead to disputes. Some might not have the financial know-how to handle creditors or estate taxes. If co-executors agree, others can waive their appointment, which works if they trust the one taking over. Alternatively, let a bank's trust department handle it, especially for large estates. Then there are intrusive heirs: in some families, they might raid the deceased's home for valuables against the wishes in the will. As executor, you might have latitude to distribute property or sell it and give cash. Secure the home and assets, and remind heirs that you have to follow the law.
Personal Liability
Serving as executor takes time. You have to contact places like the Social Security Administration to stop benefits, the IRS, or state tax authorities for income and death taxes. You can let an estate attorney handle a lot of this, but they'll bill the estate for their time. A CPA can prepare the final tax return. Remember, you must pay all taxes owed before distributing inheritances. Many states have death taxes too. Explain to eager heirs that you can't disburse anything until all claims against the estate are settled.
Is an Executor the Same as a Trustee?
These roles are similar, but not the same. As executor, you carry out the will, often under probate court supervision. A trustee handles a trust. Sometimes the same person does both, but it doesn't have to be that way.
Can an Executor Also Be a Beneficiary?
Yes, and it's common for the executor named in the will to also be a beneficiary.
What Is a Gift Given in a Will Called?
A gift specified in a will is called a bequest or a legacy.
The Bottom Line
In the end, as executor, you're the one who carries out the last will, making sure the deceased's stipulations and wishes are followed. Under probate court oversight, this includes distributing assets, paying taxes, and covering debts.
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