What Is the First Thing an Executor of a Will Should do? – Annapolis and Towson Estate Planning

Serving as an executor can be like having a second job. The size of the estate and your relationship to the deceased can make it a bit overwhelming, especially for adult children handling the estate of their last surviving parent. Those executors typically distribute not only financial assets, but decades of personal property, says the article “What to Do When You’re the Executor” from Yahoo! Finance. If the family is prone to arguments, or the estate is large, or both, the job of the executor can be even more challenging.

The first thing to do is obtain the death certificate. Depending on your state, the funeral home or state’s records department in the location where the death occurred will have them. Get five to ten originals, with the raised seal. You will need them to gain control of assets.

Next, file the will and the death certificate with the county probate court. The deadline for filing the will varies by state. However, it can range from ten to ninety days to six months to one year after the date of death. If probate is necessary, you will also need to obtain a “Letter of Testamentary.” This court-created document says you are the legally authorized person to manage the estate. Until you have this letter, you cannot move forward with any of the assets.

Build your team of professional advisors. An experienced estate planning attorney will help navigate probate court. You may also need a CPA and a financial planner. If possible, contact the estate planning attorney who drew up the will, because they are probably familiar with the will, the estate and possibly with the deceased.

Inventory assets. After death is when we learn a lot about those we loved. Were they hyper-organized, keeping records in an easily understood system? Did they file insurance policies under the name of the insurance company, or leave papers in a stack in no order whatsoever? Go through every box and file cabinet to make sure you do not miss anything.

Protect personal property. If the estate included a home, you must make sure that mortgage and tax payments are made. If you do not know who had keys to the house, investing in the services of a locksmith and a new set of locks and keys could save you from unscrupulous family members who believe certain items belong to them. If a car is sitting in the garage, it will need to be cared for and the title of ownership will need to be dealt with.

Obtain a federal EIN number from the IRS and use it to open an estate bank account. Until the estate is settled, the executor needs to pay bills and make deposits. A separate bank account prevents co-mingling funds, makes it easier to track transactions and is useful, if there are any challenges to your decisions as executor.

Pay any outstanding debts. The executor may be personally liable if debts from the estate are not paid before the estate assets are distributed. You are also responsible for filing state and federal tax returns for the last year the person was alive, as well as a federal tax return for the estate.

To head off potential animosity, stay in touch with beneficiaries. Let them know what you are doing, especially if the process is taking a while. Keep excellent records to reflect your activities.

Distributing assets may require court approval, depending on where the decedent lived. If the will contains specific directions for personal items, you will be in better shape than if there are no directions. If not, review the inventory of assets to see how things can be equitably distributed. Do not underestimate the emotional response to this part of the process. Families have battled over items of little monetary value.

It is a good idea to get a release from beneficiaries acknowledging they have received their inheritance. An estate planning attorney can help with preparing the language to help minimize any challenges in the future.

Reference: Yahoo! Finance (Oct. 29, 2021) “What to Do When You’re the Executor”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What Should I Know About Being an Executor? – Annapolis and Towson Estate Planning

You’re named executor because someone thinks you’d be good at collecting assets, settling debts, filing estate tax returns where necessary, distributing assets and closing the estate.

However, Investopedia’s article from last summer, “5 Surprising Hazards of Being an Executor,” explains that the person named as an executor isn’t required to accept the appointment. Prior to agreeing to act as an executor, you should know some of the hazards that can result, as well as how you can address some of these potential issues, so that being an executor can run smoothly.

  1. Conflicts with Co-Executors. Parents will frequently name more than one adult child as co-executor, so they don’t show favoritism. However, for those who are named, this may not work well because some children may live far way, making it difficult to coordinate the hands-on activities, like securing assets and selling a home. Some adult children may also not have the financial ability to deal with creditors, understand estate tax matters and perform effective accounting to satisfy beneficiaries that things have been properly handled. In addition, multiple executors mean additional paperwork. Instead, see if co-executors can agree to allow only one to serve, and the others will waive their appointment. Another option is for all of the children to decline and allow a bank’s trust department to handle the task. Employing a bank to serve instead of an individual as executor can alleviate conflicts among the children and relieves them from what could be a very difficult job.
  2. Conflicts with Heirs. It’s an executor’s job to gather the estate assets and distribute them according to the deceased person’s wishes. In some cases, heirs will land on a decedent’s home even before the funeral, taking mementos, heirlooms and other valuables. It’s best to secure the home and other assets as quickly as possible. Tell the heirs that this is the law and share information about the decedent’s wishes, which may be described in a will or listed in a separate document. This Letter of Last Instruction isn’t binding on the executor but can be a good guide for asset disbursements.
  3. Time-Consuming Responsibilities. One of the major drawbacks to be an executor is the amount of time it takes to handle responsibilities. For example, imagine the time involved in contacting various government agencies. This can include the Social Security Administration to stop Social Security benefits and, in the case of a surviving spouse, claim the $255 death benefit. However, an executor can permit an estate attorney to handle many of these matters.
  4. Personal Liability Exposure. The executor must pay taxes owed, before disbursing inheritances to heirs. However, if you pay heirs first and don’t have enough funds in the estate’s checking account to pay taxes, you’re personally liable for the taxes. Explain to heirs who are chomping at the bit to receive their inheritances that you’re not allowed to give them their share, until you’ve settled with creditors, the IRS and others with a claim against the estate. You should also be sure that you understand the extent of the funds needed to pay what’s owed.
  5. Out-of-Pocket Expenses. An executor can receive a commission for handling his duties. The amount of the commission is typically determined by the size of the estate (e.g., a percentage of assets). However, with many cases, particularly smaller estates and among families, an executor may waive any commission. You should pay the expenses of the estate from an estate checking account and record all out-of-pocket expenses, because some of these expenses may be reimbursable by the estate.

Being an executor can be a challenge, but somebody must do it. If that person’s you, be sure to know what you’re getting into before you agree to act as an executor.

Reference: Investopedia (June 25, 2019) “5 Surprising Hazards of Being an Executor”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What If Your Executor Doesn’t Want to Serve? – Annapolis and Towson Estate Planning

When you’ve finally come to determine who you trust enough to serve as your executor, you’ll need to take the next step. It involves having a conversation with the person about what you are asking them to do. You’ll need to ask if they are willing, says the Pocono Record in the article “Don’t assume person is willing to be your executor.” People are often flattered at first when they are asked about this role, but if they don’t fully understand the responsibilities, they may decide not to serve just when you need them the most.

Once your executor has agreed to act on your behalf and you have a last will and testament prepared by an estate attorney, tell your executor where your will is stored. Remember that they need to have access, in addition to knowing where the document is. If the will is kept at home in a fire-proof box or a document box that is locked, make sure to tell them where the key is located.

If you feel that the will would be safer in a bank’s safe deposit vault, you have a few additional tasks to complete. One is to make sure that your executor will be able to access the safe deposit box. That may mean adding them to the list of people who have access. They may be technically permitted to enter the box with a bank representative solely for the purpose of obtaining the last will and testament.  However, you should check with your branch first.

Once they have the last will and testament and it is filed for probate, the Register of Wills issues Letters Testamentary, which says that the executor has the authority to open the safe deposit box to inventory its contents, after proper notice is given to the state’s authorities. The executor must complete an inventory form for the authorities and any personal property in the safe deposit box must be appraised for fair market value as of the date of death. Inheritance tax will need to be paid on the value, if there is any due.

Communication is very important in the executor’s role. You may or may not want to allow them to see the will before you pass, but they will need to know where the original document can be found.

To make the next part of the executor’s job easier, create an inventory of your assets and include information they will need to complete their task. They’ll also need to know contact information and account numbers for homeowners and car insurance, veterans’ benefits, credit cards, mortgage, pensions, retirement accounts and any other assets.

Some people store their information on their computer. However, if the executor cannot access your computer or cannot get into the computer because they don’t have your password, you may want to create a hard copy document, as well as keeping information on your computer.

Taking on the role of an executor is a big job. You can show your appreciation, even after you are gone, by making all preparations for the information needed.

Reference: Pocono Record (May 1, 2019) “Don’t assume person is willing to be your executor”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys