With the aging baby boomer population, more and more people will be asked to manage and close estates. With this task comes great responsibility. If you find yourself in this position, you may find these “4 tips for an executor of an estate” helpful.
An executor of an estate makes sure the will is carried out properly IAW a loved one’s wishes and laws. This is according to Randy Kessler, founding partner of the law firm Kessler & Solomiany. They gather all the information for the assets making sure they’re distributed properly IAW the will. A will won’t always name an executor and it’s a paid job that you can decline. If you do decline, the court will appoint a successor executor.
What To Do If You’re Asked To Be An Executor Of An Estate?
If you’re asked to be an executor for a person still living, Kessler suggests talking to the person before he or she dies to best understand their wishes. Moreover, identify assets and accounts, the location of the will, and make sure there is a list of all security information like combinations for safes, usernames/passwords if appropriate, and the location of keys for cars and safety deposit boxes to make your job easier.
In addition, executors shouldn’t do it alone and many people recommend hiring a certified public accountant and an attorney in the state where the estate’s located to assist you. An attorney may also help reduce taxes or lower costs for administering the estate. Finally, an accountant can help file different returns for the estate and individual.
How long this job takes depends on the complexity of the estate—the assets and debts—and the number of heirs, says Kessler. “Know who the heirs are and how to find them.”
Remember that being an executor is a privilege, says Randy Michel, family law and estate planning attorney in College Station, Texas. “This is a serious position that requires your attention and time. Organization skill is a must and pays attention to details. You’re in a fiduciary relationship. The judges know that and will hold you accountable.”
If you find yourself in the executor position, here are expert steps on how to maneuver through closing an estate:
4 Tips For An Executor Of An Estate
Step #1: Present the Will
You present a will for probate so that the correct people receive the estate. “You have to prove the person has died, typically with a death certificate,” says Michel. After a short, typically 10 to 15-minute hearing, the judge signs an order, and the court clerk issues Letters Testamentary. “It’s a piece of paper that says a person has the authority to act on behalf of the estate and has been formally appointed by the judge,” says Michel.
Some assets can bypass a will and don’t go through probate, like accounts with beneficiaries or a Transfer on Death (TOD) deed, as well as any assets in a living trust. “Any assets that go through the will have to go through probate while anything with a beneficiary goes to the person directly,” says Ted Sarenski, certified public accountant, financial planner, and CEO of Blue Ocean Strategic Capital.
Once probate is complete, the executor can access accounts and safety deposit boxes, communicate with the IRS regarding tax issues, transfer the estate’s real estate to a buyer, transfer vehicle titles, and buy insurance policies to protect assets. The estate can then begin to receive royalties from certain investments. “Companies can communicate with the executor as if they were the deceased person,” says Michel.
Step #2: Gather Assets
The executor must lead the way in dealing with personal items, which may mean selling parts of the estate. Make a list of the assets that have titles, like real estate, cars, and boats, along with a list of bank accounts, investments, and securities, recommends Michel. “Change the locks and get insurance to cover the assets.” Get insurance for the homes and vehicles until you sell them.
As you inventory the estate, Michel suggests giving a broad sweeping value to personal effects like clothing and furniture. Include any antiques, art, stamp collections, and coin collections in the inventory—an appraiser can help value these so you receive a fair market value.
“If you’re not able to personally handle the time-consuming aspects of clearing out the house and selling it, maybe you want an estate sale and an auction,” says Stewart.
If you need to manage an estate-owned business, you may have to ask probate or superior court if you can set up a trust, says Robert Meyring, family law and estate planning attorney in Atlanta, Georgia. “It’s the best interest of the estate and recipients to receive a good operating business or an ongoing interest in that business.”
According to Michel, real estate located in a different state can also add complications since a will executed in one state will not cross state lines and dictate what happens to this property. The executor would have to open an estate in that state to administer the property and may have to probate the will again. “You may need to get an attorney in that state to help you if you plan to sell it.”
Step #3: Pay the Estate’s Debts and Taxes
Any medical bills and other debts that the estate needs to pay. “The executor isn’t personally liable for the estate’s debts unless they make a personal promise to pay,” says Meyring. An executor of an estate should never make a personal promise to pay. Before paying anything, experts suggest knowing whether it’s a valid and legitimate debt of the estate.
The executor is also responsible for filing tax returns for the individual and the estate, says Stewart. The estate pays the taxes out and not by beneficiaries.
Step #4: Distribute Assets
The executor will distribute specific gifts to individuals as listed as well as the other personal items, says Meyring.
If the will doesn’t specify who should receive certain items, Stewart suggests considering the family relationships before selling it. Consider individual situations and find out if anybody’s interested in distributing certain assets to certain people. “The will may be flexible enough to split the estate. Give the house to the child living in it and give the other assets to the other children,” says Stewart.
Once the assets have been distributed IAW the terms of the will, the next step is to go back to court. You must ask the judge to close the estate and discharge you as the executor.
In summary, we hope you found these “4 tips for an executor of an estate” helpful. If you have any questions regarding these 4 tips feel free to reach out to Tim anytime here.
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