What to Know About Serving as an Estate Executor: An Essential Checklist
When a loved one passes away, whether it’s unexpected or after a long illness, the process of grieving is often deeply personal and complex. But what happens if you’ve also been named as the executor of your loved one’s estate? The combination of grieving – coupled with new expectations (and even confusion) about what is required of you from a legal and business standpoint – can often feel truly overwhelming.
Serving as an estate executor while also navigating your emotions will inevitably have certain stresses. That said, it is also potentially one of the most significant and satisfying roles you can fulfill to honor your loved one’s final wishes for their legacy.
Here’s what you need to know to start feeling more secure and confident in your role as estate executor.
Understanding Your Role
As an estate executor, your primary role is to oversee and carry out the wishes of the departed’s will. This can also include organizing and protecting their assets, as well as overseeing their distribution, which can feel emotionally charged and draining even in the best of situations.
For this reason, many people choose a lawyer or financial professional to act as their executor, sparing their family members unnecessary stressors. That said, many families find meaning and purpose in keeping these duties in the family. Whichever you choose, I typically don’t recommend naming co-executors or trustees, and usually suggest naming only one individual (be it a professional or family member). If you have been selected by your loved one to serve as their estate executor, here are some initial things to know that can help make your time as executor as informed and comfortable as possible.
Overall, an estate executor is responsible for several different tasks when someone passes away:
Filing the Will
Your first step as estate executor is to file your loved one’s will and provide a copy of their death certificate to your state court. Your state can help determine if probate is necessary (more on that in the next section), or what further legal action, if any, is needed. You may also need to go through a process of validating the will, which helps determine if the will is legitimate and whether any revisions of the will exist beyond what is in hand.
Acting as the Estate Representative in Legal Proceedings
Unless the will is contested, the person appointed as estate executor will likely be the representative of the estate until it’s been appropriately distributed (or until it has passed through probate).
What is probate? Probate is the legal process of verifying someone’s will and helping to confirm the named executor. If the deceased has a will that’s up to date, probate may be relatively smooth sailing. If the deceased doesn’t have a will or beneficiaries named on their financial accounts, probate can be a long and arduous legal process to confirm assets and legal heirs, as well as begin distribution.
To best prepare for any legal proceedings, including probate, it can be helpful to prioritize these two main steps:
- Take stock of what assets are available and which are accounted for in the deceased’s will.
- Evaluate what bills and debts need to be paid out of the estate prior to distribution.
These two steps are not only the two main responsibilities of the executor, they can help you stay organized and move through legal proceedings in a more timely manner.
Locating All Assets and Taking Inventory
If the deceased has a well-organized estate, assets and inventory may be relatively easy to discover. But more often than not, there’s a significant amount of digging to be done when looking for all of the deceased’s assets and listing them for the court. Items you’ll want to look for in particular are:
- Bank accounts
- Investment accounts
- Trusts
- Insurance policies
- Prearranged funeral plans or payments (if applicable)
- Property
- Heirlooms
- High-value antiques or belongings
- Cars
- Business partnerships
Notify Key Parties and Institutions of the Decedent’s Passing
Banks, credit cards, financial institutions, beneficiaries, and heirs all need to be notified that your loved one has passed away. Be mindful that once you notify a bank or financial institution, that the account may become restricted. The court can help you determine who, exactly, needs to be notified. This can be especially helpful if there are any combined families or if there are questions about heirs and beneficiaries.
Pay Ongoing Bills and Debts as Necessary
If the deceased has ongoing bills that need to be addressed (i.e. utilities at a home or property listed in the will) the estate executor is in charge of ensuring those bills are paid until the property is distributed to the appropriate heir. Additionally, if the deceased had any outstanding debts, those can be paid from their estate to move forward with the distribution of assets. Be sure to keep a record of these expenses in the event any beneficiaries request proof.
Maintain Assets and Property Until Distribution
Similar to handling the bills of property or assets listed in the will, maintenance is also a responsibility of the estate executor. For example, this might include maintaining landscaping at the deceased’s home and making sure any routine maintenance is also done so the asset maintains its value until it can be distributed. If there are other assets that aren’t property, those can be maintained as well. This might include cars, collectibles, and family heirlooms.
Distribute Assets
Once the will makes it through probate and all debts are paid, assets can be distributed per the will’s instructions. You may be able to do this via check, having heirs pick up assets (or having them delivered), or having funds transferred directly to the heirs’ bank accounts. Collaborate with the court and the will’s beneficiaries to figure out the best, most efficient way to ensure everything is distributed properly.
Get Rid of Undistributable Property
When someone passes away, there is always leftover property that is not distributable or unwanted. This might be anything from house furniture to old photos. As the estate executor, you are technically in charge of these unwanted items. It might mean you throw them away or donate them. It could also mean holding an estate sale to generate cash flow from these items (if they have any value) so they can be distributed to the will’s beneficiaries (or used to pay down any debts held by the deceased).
Being Appointed Estate Executor
If you’re working with a loved one to help them set up their estate plan, or if they’re collaborating with an estate planning attorney, you may be notified in advance that you’ve been named the executor of their estate. However, sometimes a will’s “testator” (the person who created their own will but who has now passed away) may have only recently listed you as the estate executor in their will without notice.
It’s important to know that notice isn’t required for you to be named as an estate executor. However, if you feel strongly that you don’t have the capacity to take on the task, or you object to being the estate executor on personal or moral grounds, you can decline the role. To do this, you simply sign a Renunciation of Nominated Executor form and notify the court that you’ve chosen to renounce your duties.
Of course, if someone approaches you while they’re still living and you have reservations about being an executor of their estate, don’t be afraid to be honest with them. A polite but firm conversation can go a long way to clarifying everyone’s intentions, as well as prevent familial stress of trying to sort out who’s in charge of what after a loved one passes.
Choosing an Executor for Your Own Estate
There may be few more personal decisions you make in life than naming the person who will honor your wishes when you are no longer living. There are many emotional, practical, and financial considerations to make, each with their own tradeoffs. I always suggest talking with the person you’re considering before appointing them as executor to make sure they are willing and able to fulfill the duties. Above all, honor your instincts and values, naming only someone you are truly comfortable with. Here are the three main factors you will want to evaluate to help you make that decision:
1. Find someone you trust
You may know immediately who you’d trust to be the executor of your estate. If that’s the case, let the person know they’re listed as your executor, or have a conversation with them to ensure they’re comfortable with the responsibility. This person should be someone who is close to you, who knows (or knows of) your various heirs and beneficiaries, and who you trust to execute your will with the intent to fully honor your wishes.
2. Consider family tensions and ties
One factor to explore before selecting your estate executor is how it will impact the future relationships of your next of kin. For example, if you are particularly close with one of your children, will having them as the executor of your estate exacerbate negative feelings between them and your other children? Could ties potentially be severed over such a decision?
Hopefully, your family and friends will all work together to support one another throughout the process and you can select who you feel most comfortable with. However, if you have any lingering concerns, you may want to talk with a trusted opinion – or even your family itself – about who you are thinking of electing to be your executor to avoid any long-term unhappiness.
You may also consider the financial burden that the executor may undergo as they fulfill their role. Some estate plans will designate a specific sum of money to the executor for their time. This is something you could consider doing or discuss with your financial advisor.
3. Look to outside parties
If the above resonates with you, looking to an outside party may be of interest. For example, you could have your estate planning attorney, accountant, or financial advisor be your estate executor and skip over any potential relationship awkwardness among your heirs that might stem from one of them being “in charge” of the estate. Note that if you use a third party, there may be associated fees with hiring someone to handle your estate for your loved ones.
Other Common Estate Executor Questions
Many questions will no doubt come up in your duties as executor. This is perfectly normal and to be expected. Some will be easier to answer than others, but the most important thing to remember is that unnecessary anxiety and worry about what you “don’t know” in this process will not serve you.
When unknown questions do arise, keeping a level head and consulting the appropriate professionals will help you make the best choices possible.
Here are several common questions that typically arise over the course of the process:
Is a “Reading of the Will” Required?
The “reading of the will” that so commonly occurs in movies and TV shows is, in reality, pretty rare. In fact, it almost never happens outside of Hollywood soundstages. Instead, depending on the state you live in, the will’s executor has roughly 60 days to inform heirs and beneficiaries that the deceased has passed away and that they’ve been listed in the will. Beneficiaries or heirs are often given access to a copy of the will to clarify what they can expect.
What if Someone Disputes the Will?
Anyone can contest a will if they have a valid reason or would be personally impacted by the outcome of the case. Often, siblings contest a will if they feel one of their family members have unduly influenced parents or grandparents in gaining favor. Alternatively, you may see a will contested by disgruntled family members outside of the nuclear family – especially if there are multiple marriages or potential heirs and beneficiaries with strained family relationships.
For a will to be effectively contested and “thrown out,” one of two things must be true:
- The will doesn’t accurately reflect the deceased’s wishes
- It doesn’t meet legal requirements
If a will is contested and “thrown out,” there are a few next-step options:
- A previously formulated will could be put in place by the court and executed
- The state may take over assets and distribute them to heirs and beneficiaries according to their state’s unique inheritance laws
No matter the outcome, you will likely want to consult with an estate planning attorney to determine the best way to navigate any contested will disputes. Because contesting a will so often involves family members, it’s also important to be aware of how family relationships can be adversely affected – sometimes indefinitely – and to be mindful of actions and words before taking or saying them.
How are Estates Taxed?
Estate taxes are typically the responsibility of individual heirs and beneficiaries. However, it may be wise to understand what taxes will be owed and make a plan among the beneficiaries to have taxes withheld from and paid by the estate. This can help to ensure nobody forgets to pay their estate taxes and ends up in trouble with the IRS.
Are There Risks of Being an Executor?
In a perfect situation, estate executors wouldn’t have to worry about personal liability. Unfortunately, when a loved one passes away, emotions tend to run high and not everyone acts as their best self.
For example, heirs can technically sue the estate executor if they feel the executor is stealing from the estate, failing to perform their duties, or making unnecessary transactions with estate funds. Some estate executors who perform executor services professionally may even have specific liability insurance coverage to protect themselves.
As an individual executor, this may not be necessary. Instead, carefully consider what risk you’re taking on by becoming the estate executor. Do your best to document all actions taken, payments made, and assets being maintained. Work to keep open lines of communication between yourself and potential heirs – especially if probate turns out to be a longer process than anticipated.
Seeking Professional Guidance
Being an estate executor is a significant task but not an impossible one. It can also bring a tremendous amount of satisfaction and accomplishment knowing you’re fulfilling the last wishes of your loved one. Whatever emotions visit you during the process, just know that it is extremely common to have a wide range of feelings throughout your time as executor and there’s no one “right way” to feel.
If you’ve been newly appointed an estate executor or are looking for guidance on how you can set up your own estate – reach out to an Abacus financial advisor for help. We can guide you through organizing your own assets or help you sort through your loved one’s, while also connecting you with estate planning attorneys who may be able to assist you even further. With a little knowledge and support, your time as an estate executor can be deeply meaningful and well spent.
Disclosure:
This material is not intended to serve as personalized tax, legal, and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Abacus Wealth Partners, LLC is not an accounting firm. Please consult with your tax professional regarding your specific tax situation when determining if any of the mentioned strategies are right for you.
