Executor of Estate: The Complete Guide
The Executor of Estate may sound like a pro wrestler name, but there’s nothing fake about this legal concept. It’s how lawyers refer to the person appointed in a will to make sure the author’s wishes are met. Maybe you’ve been asked to serve as the executor for a friend or family member, and you’re wondering how it all works. Or you might be researching how to make a will for yourself and wondering how to choose the best person as an executor for your own estate. Either way, you’ll want to read up here about how this whole thing works.
What Is an Executor of Estate?
An executor of estate makes sure a will gets executed—hence the name. If you didn’t know, an estate just means somebody’s stuff and money. An executor of estate is also known as a personal representative, or in older documents an executrix to reference a female executor. If you take this role on for someone with a will, you’ll have several responsibilities:
- Getting the deceased’s assets to the beneficiaries (otherwise known as passing out their stuff as described in the will)
- Paying off debts
- Filing final tax returns for the deceased (the person who wrote the will in the first place)
- Notifying the Department of Health in the state of residence about the death of the testator
As you can see, it’s a job with plenty of duties—most of which touch upon money. So it’s not something to take on lightly. Anyone who becomes an executor of estate is required by law to do all in their power to protect the estate’s assets, sometimes known as fiduciary duty. So how do people wind up in such a role? Let’s see.
How Is an Executor of Estate Appointed?
Anytime someone dies, it always sets in motion a legal process called probate. The purpose of probate is to make sure the departed’s property and possessions go to the correct people, and any remaining taxes or debts owed get paid. When there’s a will in place, that process gets a lot easier for everyone. But not everyone takes the time to get a will in place, which can complicate things quite a bit. With or without a will, a probate judge will always follow steps to determine who should act as the executor of estate. Here’s what that looks like:
1. Find out if there’s a will.
Duh! Checking to see whether the person spelled out their wishes in a will before leaving this world is an obvious first step to appointing an executor of estate. Assuming the will mentions someone for the role, the search for an executor might be done. But there are some conditions to that . . .
2. Confirm the will is valid.
Even if there is a will, it can also be ruled invalid if it wasn’t properly witnessed or notarized, or if it doesn’t comply with certain state laws. In those cases, the judge will have to keep looking, and will likely skip to step 5 below. On the other hand, it could be ruled a valid will, but the judge could find that it fails to name an executor. They’ll once again skip to step 5 below. But let’s say the will checks out and actually names an executor. There would still be another step in confirming that person for the job, outlined in step 3.
3. Verify the executor named in the will is eligible.
The judge might have to override the testator’s choice for a few different reasons. A named executor can be passed over if:
- They’re still underage at the time of probate.
- They have a mental disability.
- They have a criminal record.
- They have a history of substance abuse.
If the named executor passes each of those tests, you’d think you’d surely pinpointed the right person for the job. But wait! You can’t assume they’re willing to do it!
4. Determine whether the person named in the will wants the job.
The court can’t compel anyone to take on the job of executor of estate. It’s a time-consuming project, it can potentially involve financial risk, and it’s customary to compensate anyone taking it on with pay from the estate itself. The court has to find out whether the person named is up for it. If the probate judge confirms that whoever the testator named is willing to serve, the search for an executor is over! But what if the person nixes the whole idea? Proceed to step 5.
5. Appoint someone as an estate administrator.
We’ve outlined several ways in which a probate can wind up deciding that there is no legally valid executor of estate at the time of death (invalid will, nobody named, ineligible or unavailable appointee). In situations where the judge can’t establish a legal executor of estate through a will, they’ll appoint someone to the job, usually a close relative. (In the case of a will that was overruled on a technicality, it’s possible the original executor will still be named and serve.) The title for this replacement will be estate administrator or personal representative, but they’ll still have the exact same role and duties as an executor.
What Are the Best Characteristics of an Executor of Estate?
Remember how we said above that being an executor requires the appointed person to exercise fiduciary duty? If you don’t know, the word fiduciary comes from the Latin word for trust—and being a good executor of estate is all about being trustworthy!
Save 10% on your will with the RAMSEY10 promo code.
It’s quite common for a testator (again, that’s the person writing a will) to name their spouse as the executor of estate. But it’s often another family member or close friend. And it can even be one of the beneficiaries of the estate itself. For larger or more complex estates, it might make sense to name a professional party such as a bank or trust company to cover all the bases and head off legal headaches for your beneficiaries.
If you’re choosing someone to take this on for your own will, be sure they’re a person who would act not only in your best interests, but also in those of the people you’re leaving gifts to.
What Are the Limitations of the Executor of Estate?
This connects back to an executor’s fiduciary role: the duty to do everything in the best interest of the estate they represent. An executor of estate definitely cannot do anything that would knowingly . . .
- Delay or prevent the prompt payment of estate debts
- Involve the estate in tax evasion with respect to federal or state governments
- Deprive beneficiaries of their designated inheritance
It’s a role that comes with a lot of power, which is another reason why the person taking it on must be trustworthy. They certainly can’t do anything for personal gain, like paying themselves an enormous fee for service right out of the gate that winds up making it impossible to meet the estate’s remaining financial obligations. Such a self-serving act could involve serious legal consequences for a negligent executor.
Timing matters. No executor worth the name will refuse to pay legitimate creditors or hold back payments to beneficiaries as laid out in the will. Often it will be necessary for an executor to put the testator’s property up for sale in order to settle debts or pay beneficiaries. In that case, an executor is expected to have the assets independently appraised to ensure they’re sold for a fair market price at maximum benefit to the estate.
Another no-no? Something known as self-dealing, where an executor tries to pull a fast one for a huge financial gain. For example, taking advantage of what you know about the deceased’s home to purchase it for far under its assessed value and occupying it yourself.
An executor of estate needs to have a servant outlook as they go about the business of settling the decedent’s estate. There are a number of details they will need to keep in mind as they go about their duties. But an executor’s first goal should be to steer clear of legal troubles, both for their own sake and that of the estate and its beneficiaries.
How to Best Perform the Duties of Executor of Estate
There are quite a few things an executor of estate needs to be aware of going into their duties. Here we go!
File the will.
Yeah, don’t miss this all-important first step. We know the death of a friend or relative is hard, but an executor needs to file both the will and the death certificate with both the local health department and the local probate court quickly. In some states, you have a month, in other areas it must be done within a few days of the death.
Start the probate process.
You can probably do this the same day you file the will with the probate court. To get the ball rolling, the court will issue you a document known as letters testamentary that confirms your legal rights as the executor of estate. Although the question of which kinds of assets are required to go through probate varies by state, it’s always up to the executor to find out the laws where they live. Typically, the following kinds of assets do not require probate:
- Life-insurance policies
- Bank accounts
- Other payable-on-death accounts
Tell everyone who needs to know about the death.
Here’s a list of who you’ll be responsible for notifying of what’s happened:
- Beneficiaries listed in the will
- Local media for the purpose of posting an obituary
- Family and blood relatives who could have a legal claim on the deceased’s property
- Creditors who may be owed money by the estate
- Insurance companies
- Guardians of minors
- The Social Security Administration
- Medicare, if applicable
- The Department of Veterans Affairs, if applicable
- Banks and other financial institutions
- The U.S. Postal Service
Start a bank account for the estate.
Most of your activity on behalf of the estate will have to do with paying people—debts, taxes and beneficiaries. To protect yourself and keep everything legal and aboveboard, it’s worth considering opening a bank account designated specifically for conducting estate business.
Figure out what (and where) all the assets are.
Keep this in mind from the start of the probate: You, as the executor of estate, are ultimately responsible for delivering every cent or asset where it legally belongs. For that reason, you should make every effort to locate and secure all relevant documents, account details and pieces of physical property.
Along the same lines, nothing should be allowed to be removed physically from the decedent’s estate until you as the executor have determined who it truly belongs to. So nobody should be carrying away their dearly departed Aunt Agatha’s pearls, not even her niece who promises you she was always Aunt Agatha’s favorite. For all you know, those pearls belong to Cousin Cleo in Cleveland. If you let them out of your sight, you could be on the hook for a pretty pearl . . . err penny!
Don’t forget about larger property obligations either. Did the deceased have a mortgaged property? You’ll need to ensure payments continue promptly until the land is sold or otherwise settled on a beneficiary. Rental properties will also need oversight, including the collecting of rent and/or listing for sale. And be sure to keep the probate court informed of all such actions if you take them.
Cover taxes and debts.
In terms of taxes, there are a couple of things the executor should be aware of:
- Find out if the deceased still owed taxes and file their estate tax (Form 1041) return if necessary.
- For especially large estates, there might be a federal estate tax event. If so, the executor is responsible for getting that payment made.
Give the assets to their beneficiaries.
Don’t you just love giving? This part is—or should be—fun! Especially if you know and love the beneficiaries, helping to ensure that they receive their inheritance can be a real treat, and an honor! Remember the urgent need to first pay off all existing tax and debt obligations from the estate. Although no beneficiary will be held liable for a decedent’s debts or taxes, that doesn’t mean the executor won’t be!
But assuming you’ve taken care of business first (or if you’re super cautious, confirmed with the probate court that all tax and debt obligations are fulfilled), this could be the Oprah moment you’ve always dreamed of. That’s right, you can now get busy saying, “You get an inheritance! And you get an inheritance!” Have fun handing out the money and stuff to friends and family!
What Are the Main Issues That Come Up for Executors?
Sadly, we all know that a death accompanied by an estate process can also be a time of difficulty—or even dread! From family fights to legal issues, a probate isn’t always an easy thing to walk through. These are the main issues that can come up.
As an executor, all you’re trying to do is follow through on the decedent’s wishes as expressed in their will. Tragically, those good intentions are sometimes delayed or spoiled by greedy or selfish relatives. Even legitimate heirs may cause trouble if they disagree with the way property was divided in the will of a loved one. Emotions run high, but you have the right as an executor of estate to intervene and keep the peace.
As described above, be sure to secure the estate’s assets and property promptly after death and remind anyone arguing with your actions or trespassing on the deceased’s property of the legal reality. It can also help if you share with everyone the decedent’s specific wishes from the will.
Are you sure you’re the only executor of estate for this will? News flash: Some wills name more than one executor. In many families, a parent will appoint two or more children as co-executors. That’s a fine sentiment, but it can also lead to needless arguments about who should lead the administration of the estate, and how it should be done.
To avoid this problem, you have a few options. You could always consider dropping out of the process completely—after all, nobody is legally required to take on the role of executor of estate. But if it’s something you want to do, see if you can persuade the other co-executor(s) to waive their own appointment(s). If this doesn’t resolve the issue, you all might need to consider passing the executor responsibilities on to a neutral third party such as a bank.
If you’ve read this far, you’ve probably started to see that an executor of estate has a ton of responsibility—and that it can be a pretty big time sink. Don’t go into this assuming it’s a quick and easy task. If you’re already swamped, look into getting professional help or asking the probate court to seek a replacement.
Personal Liability to Cover the Estate’s Taxes
We touched on this above, but it’s worth repeating—if an executor of estate fails to meet the decedent’s tax obligations during the course of a probate, the responsibility for getting those taxes paid doesn’t just vanish. It becomes a personal liability for you. If that possibility frightens you, we understand! Just remember that it’s there before you commit. And if you do take on the role, be sure you know exactly what the tax obligations are as you get them taken care of.
Have You Considered Getting a Will?
Wouldn’t you rather have a clear plan in place for your own executor of estate, instead of leaving these questions for some probate court to decide? Of course!
Whether you’re simply shopping for a will and wondering who to appoint as your own executor of estate or taking on that role yourself, you need a will! And if you didn’t see that before, taking on executor responsibilities will probably convince you of the need to take care of end-of-life issues today!