Naming the right person as the executor of your estate is one of the hardest and most important decisions. Knowing what to do if you've been named an executor can feel overwhelming. Being named an executor is an honor - it means that someone trusted your judgment and your ability to handle complex tasks on their behalf. But it is also a complex responsibility, requiring a fair amount of time and energy. Some estates take years, even decades, to settle depending on the size and complexity of the estate.
If you are appointed executor of an estate, your first task, according to a recent Forbes article, "What an Executor of an Estate Needs to Do," is to identify an experienced estate planning attorney who can guide you through the complex process of settling an estate.
When settling an estate, an executor is in charge of these basic functions:
- Locating, collecting, and being responsible for the estate's assets until they are distributed to the beneficiaries.
- Paying the decedent's debts and estate administration expenses.
- Handling tax matters, including filing the decedent's and the estate's income tax returns and paying the income taxes, if any.
- Distributing the remaining assets in accordance with the terms of the will.
The financial responsibilities of an executor mean that he or she must make an investment analysis of all assets in the estate to determine which to sell and how the estate's cash needs will be met. The majority of the administrative work in handling an estate is recordkeeping.
The executor must first arrange for his or her court appointment in probate court to obtain "Letters Testamentary," which permits the executor to represent the estate to third parties such as banks and financial companies to collect, liquidate and distribute assets and other tasks. The executor must compile information about the decedent's finances and then sell or divide certain assets among those named to receive them in the will or to pay taxes.
In addition, the executor must cancel the decedent's credit cards, have utilities turned off and pay expenses such as rent, taxes and insurance premiums. Home repairs or maintenance may also be needed. The executor will also need to open an estate bank account to hold the collected assets. These funds are used to pay the bills.
An estate planning attorney can be a huge help with this process to ensure that everything is done right and that the decedent's estate is settled in an efficient manner.