Your loved one has passed away and you have been named as an executor or administrator. Do you know your responsibilities? In general, you are responsible for ensuring that the debts and assets of the estate are distributed and managed. To do this, you will look to your loved one’s Last Will and Testament as well as local, state and federal laws.
It is necessary that you perform specific tasks in your role as executor or administrator. You will do these things to ensure that probate goes smoothly. It is not required that you seek the assistance of an attorney, but it is highly recommended. Many people avoid hiring an attorney during this time, unaware that the estate will be responsible for paying the attorney’s fees.
You do have the option of declining to perform these duties. If you are unwilling or unable to act as the executor of your loved one’s estate, you should fill out a declination form with the probate division of your local court. The court will then appoint someone to fulfill the duties of this position.
Inventory and Manage the Estate
Once it has been determined that you are, indeed, the legal executor of the estate, it is your duty to protect the estate’s assets. To do this adequately, you must first conduct an inventory to determine what those assets may be. In order to show the court that you have carried out an inventory by the letter of the law, you will fill out an “Inventory of Fiduciaries” form. You typically have 90 days from the date of your appointment as executor to have this filed with the court.
At a minimum, your inventory should include both personal and real property owned by the estate. You will need to describe these items and list their values. There should also be a description of any real estate owned included in this filing.
The way in which the estate is managed will be determined by the value of the estate’s assets. In order to allow any creditors to state claims, the estate must remain open for a period of no less than six months from the day you were appointed as executor.
Once all creditors’ claims are paid, you may close the estate. If you fail to close the estate within one year of your appointment, you will be forced to explain to the court why you have not done so. This is done through annual accounting that describes any income gained and disbursements made by the estate.
Pay Debts and Taxes
One of the first things that you will do is see to the debts of the decedent. Check with the laws of your state to determine which debts take priority over others. In generally, you will first pay the administrative expenses, then taxes, and then funeral costs. You will pay for burial or cremation.
Once you pay these initial expenses, take a close look at any will that exists. If there is not enough liquid money to pay the debts of the estate, you will need to begin selling assets. Many people dictate which assets should be sold first for the purpose of settling debts within their will. If your loved one did not dictate which assets were to be sold, personal property will be first on the list.
If you do not want to make these difficult decisions on your own, an estate attorney can assist you. No matter which type of property is being sold, you must attempt to get the highest amount that you can. This means, for instance, that you cannot sell something valued at $500 for a single dollar in order to be able to say that you sold it.
It is also your job as the executor of the estate to obtain a federal tax identification number. You will use this number to file state and federal tax returns for the estate. You must file any tax returns required within nine months of your loved one’s death. If you are unable to do so, you may file an extension. If you fail to either file returns or file an extension, penalties will accrue.
Distribute the Estate
Once you have taken care of the above noted duties, you will distribute the estate. You will do this by doling out assets as directed by the decedent through his or her will. If your loved one failed to leave a will behind, you can assume that the remaining estate will be transferred to the next of kin or direct heir.
When your loved one has a small estate or no debt to speak of, you may choose to close and distribute the estate by filing a “Motion for Summary Administration”. Note that the form may be titled differently in your state.
In any case, to be eligible for this faster process, the estate can have no outstanding debt. No taxes should be owed, and all parties that may have stake to the estate must agree to follow this route. Once the court has approved your motion, the court will close the estate. You will forward the certificate you receive to the proper agency, and you will administer the estate as you see fit.
Being named the executor of someone’s estate is not often a simple assignment. There are legalities involved, both with the court system and the federal and state governments. If, at any point during the process, you have a question or become overwhelmed, it is in your best interest to consult an estate attorney.
Be aware that, depending on the laws of your state, you may be entitled to compensation for acting as the executor of your loved one’s estate. You are not privy to compensation, however, if you volunteer to administer the estate. Again, if you have any questions, please contact an estate attorney. He or she can offer you practical legal advice and help you navigate the process of closing your loved one’s estate.
Updated: October 2, 2014