Being asked to serve as an executor or Personal Representative is a big compliment with potential pitfalls, advises the recent article “How to Prepare to Be an Executor of an Estate” from U.S. News & World Report. You are being asked because you are considered trustworthy and able to handle complex tasks. That’s flattering, of course, but there’s a lot to know before making a final decision about taking on the job.
An executor of an estate helps file paperwork, close accounts, distribute the deceased’s assets, deal with probate and any court filings and navigate family dynamics. Some of the tasks include:
- Locating critical documents, like the will, trusts, deeds, vehicle titles, etc.
- Obtaining death certificates.
- Overseeing funeral arrangements and memorial services, if any.
- Filing the will in probate court.
- After obtaining an estate tax number (EIN), create an estate bank account.
- Notifying organizations, including Social Security, pension accounts, etc.
- Paying creditors.
- Distributing assets.
- Overseeing the sale or transfer of real estate
- Filing estate tax returns and final tax returns.
If you are asked to become the executor of an estate for a loved one, it’s a good idea to gather as much information as possible while the person is still living. It will be far easier to tackle the tasks if you have been set up to succeed. Find out where their estate planning documents are and read them to make sure you understand them. If you don’t understand, ask, and keep asking until you do. Similarly, obtain information about all assets, including joint assets. Find out if there are any family members who may pose a challenge to the estate.
Today’s assets include digital assets. Ask for a complete list of the person’s online accounts, usernames, and passwords. You will also need access to their devices: desktop computer, laptop, tablet, phone, and smartwatch. Discuss what they want to happen to each account.
Many opt to have an estate planning attorney manage some or all of these tasks, as they can be very overwhelming. Frankly, it’s hard to administer an estate at the same time you’re grieving the loss of a loved one.
As executor, you are a fiduciary, meaning you’re legally required to put the deceased’s interests above your own. This duty includes managing the estate’s assets. If the person owned a home, you would need to secure the property, pay the mortgage and property taxes and maintain the property until it is sold or transferred to an heir. Financial accounts need to be managed, including investment accounts.
The amount of time this process will take will depend on the complexity and size of the estate. Most estates take at least twelve months to complete all administrative work. It is a big commitment and can feel like a second job.
A few things vary by state, including Convicted felons are never permitted to serve as executors, regardless of what the will says. A sole executor must be a U.S. citizen, although a non-citizen can be a co-executor if the other co-executor is a citizen. Rules also vary from state to state regarding being paid for your time. And pay the executor received must be considered earned income and reported on tax returns.
Be very thorough and careful in documenting every decision made as the executor to protect yourself from future challenges. This is one job where trying to do it on your own could have long-term effects on your relationship with the family and financial liability, so take it seriously. If it’s too much, an estate planning attorney can help.
Reference: U.S. News & World Report (Dec. 22, 2021) “How to Prepare to Be an Executor of an Estate”