Who Should Be Your Executor and What Will They Do?
In creating your estate plan, you will select several individuals to help carry out your wishes. The person you choose to be your Executor* will be responsible for making sure your will and trust documents are administered properly after you have passed away.
The Executor can be any person of your choosing, and the first choice is often a spouse. Since your spouse presumably knows the details of your estate plan, assets, and your wishes, this can be an easy and wise decision. It is important to name successor Executors, however, in the event your spouse is not able or willing to serve as Executor upon your death. Other choices for your Executor may be a trusted friend or colleague. Selecting someone who has financial, accounting or legal experience can make the administration process smoother. The Executor can, and often should, be someone different from the person(s) you name as guardian over minor children. It is important to note that if you do not name someone, the Court will appoint an Executor for you—who may or may not be a relative or a person whom you would have chosen.
Your Executor has an obligation to preserve your estate’s assets, pay your debts and pay taxes due, as well as provide an accounting of actions taken and payments made. Eventually, the Executor will distribute estate assets to your heirs. The Executor owes a fiduciary duty to the estate and to the beneficiaries, meaning he/she could be held personally liable for failing to properly perform their duties. At any point in the process, your Executor can consult an attorney to assist in the administration process.
Immediately following your passing, your Executor will begin taking action by obtaining multiple copies of your death certificate and taking control of estate assets (“marshalling the assets”). The Executor will need to verify the value of assets, including financial accounts, personal and real property.
Your Executor must also notify all known creditors of your passing and verify debts. The Executor will prepare an Inventory of your estate and take action to preserve the value of your assets. This may include continuing insurance coverage for estate property. The Executor must also file (or hire an attorney to file) any applicable tax returns. Depending on the decedent’s residence and the location of assets, this might include multiple estate tax returns (state and federal).
The Executor is also responsible for preparing an Accounting that details all estate assets the Executor handled, any appreciation or depreciation of assets, all amounts paid for administration expenses, taxes owed by the estate, payments for the decedent’s debts and distributions made to the beneficiaries. The Executor is entitled to payment from the estate for performing these duties, which will be deemed ordinary income and should be included on the Executor’s personal tax return.
Our office routinely works with Executors to insure the necessary actions are timely and appropriately handled. Please call for an appointment if you would like a consultation about any of these matters.
*We are using the term “Executor” generically, to encompass all types of personal representatives, for purposes of this article.