Recently, an aging parent or relative asked you to be the executor of their estate. Not knowing what that meant, you started Googling and ended up here. To be named an executor is a tremendous honor, as it speaks highly of their trust in you.
However, we aren’t going to mince words – serving as an executor is a HUGE responsibility. From the moment your loved one passes away, you’ll be acting on their behalf in numerous capacities. From the funeral service to the closure of their estate, it can take months to wind down this person’s life.
What Is An Executor?
An executor is a legally-appointed person responsible for closing down the earthly affairs of a deceased person. Executors gain their authority by being named in the will of the deceased person (hereafter referred to as “the client”) in question. To officially assume the role, though, a probate court must certify you with an Order of Probate – more on that later.
Once legally endorsed, executors act on their client’s behalf in financial, legal, and other contractual matters. However, in many cases, they cannot make decisions based on their judgment. They must abide by the directions laid out in their client’s will.
Executors Have Many Roles
Our daily lives are far more complicated than we can ever realize. Bank accounts, credit cards, student loans, mortgages – over time, we amass scores of assets and liabilities. When we die, it falls to executors to sort out your entire life.
Below we’ll run down, from start to finish, the many duties an executor is responsible for.
Make Funeral Arrangements
It all starts the moment your client passes away. As their partner, children, and friends mourn, the task of organizing the funeral mostly falls to you. Contact a funeral home, as they can take care much of the heavy lifting.
At this point, you’ll refer to their will for the first time. In it, your client may have left instructions on burial, cremation, or even donating their body to science. Other details may include whether to have an open/closed casket, or the music you are to play at their service.
Apply For A Death Certificate
To access benefits to which surviving heirs are entitled, you’ll need a death certificate. Start by acquiring the medical certificate of death from the attending doctor or coroner. You’ll also need a family member and the funeral director to fill out a Statement Of Death.
Once you have these documents, you can apply for and receive an official death certificate from relevant government authorities. The above procedure varies by jurisdiction – when in doubt, ask your funeral director.
Contact/Communicate With Named Beneficiaries
Informing named beneficiaries is one of the first tasks you should undertake after opening your client’s will. Make a list of all privileged parties named in the deceased’s will, and begin the process of contacting them.
Most named parties are family members, so they should be easy to find. However, some may be estranged, or they may be friends/associates who may not be local. If you can’t track them down on social networks like Facebook, search for them on public databases.
Once you have established contact with a beneficiary, inform them of their share as mentioned in the client’s will. Never, under any circumstances, disclose what anyone else is due to receive. Also, never mention the value of the estate until the accounting of assets is complete and debts paid. When the probate court announces a hearing date, share it with your beneficiaries.
When the beneficiaries are together as a group, keep disclosures general. Again – you don’t want anyone to know who got what. If you reveal this information, it can open the door to bickering, fighting, and potential legal battles. As executor, you have the authority to make tough decisions. Never poll beneficiaries – while well-meaning, doing so will only sow conflict.
Determine The Deceased’s Assets And Liabilities
Next, you’ll have to determine the complete financial picture of your deceased client. To do this, you’ll have to find all sources of capital they controlled. Naturally, this starts with their checking/saving accounts, but remember that they may also have accounts with different banks. In your research, you may find investment accounts (e.g., Fidelity Investments) not directly aligned with their primary bank accounts.
To find assets of which you are not already aware, you’ll need to do a little detective work. Talk to their accountants and lawyers. Dig through statements in their filing cabinets/home computer. Search government departments like the U.S. Treasury and the IRS.
Once you’ve found every asset your client-controlled, outline their liabilities. These include mortgage debt, student loans, credit card balances, and so forth. If you’re worried you haven’t found all your client’s creditors, don’t worry – you can advertise for creditors. More on that later.
Assume Control Of The Deceased’s Online/Social Accounts
As with everything else in our society, wills are changing to reflect the technological age we live in. In your client’s will, you may gain access to their digital accounts. Log onto social accounts first, and (unless they say otherwise) inform followers of your client’s passing. If they direct you to do so, you can “memorialize” their Facebook account.
Then, secure assets contained in banking, work, gaming, and cryptocurrency accounts. You’ll need to pool this capital with other assets later, but for now, ensure you can access any named accounts.
Attend Probate Court
To execute your many duties as executor, a probate court must invest you with the legal authority to do so. They must also examine your client’s last will & testament to ensure its validity. Start by hiring an estate lawyer who will guide you through the minutia involved in this process. Once you’ve organized all necessary paperwork, apply for a Letter of Probate by filling out required forms in your state.
Soon after, the probate court will notify you of a hearing date – ensure all named beneficiaries are aware of this fact. Once successful, you’ll get a Letter of Probate that contains an Order of Probate. This declaration gives you the legal authority to execute many of the duties involved in dispersing your client’s estate.
Deal With Financial Accounts & Deal With Creditors/Claimants
Before you can disperse your client’s assets to named beneficiaries, you’ll need to pay off any outstanding balances. Before you begin settling bills with creditors, open a new bank account for your client’s estate. Fill it with the capital you find in their bank accounts, investment accounts, online accounts, and cash raised through the sale of physical assets.
Once you’ve done that, you’ll be ready to advertise for creditors. We strongly recommend doing this, as it will allow affected parties to make a claim. You may be wondering, though – why give part of your client’s estate away to unaware creditors?
The answer is simple – you don’t want to encounter nasty surprises late in the process. If a creditor finds you after you’ve dispersed the estate’s assets, guess what? You’re still on the hook for any debts your client owed. After you have satisfied the biggest creditors, deal with smaller accounts. These may include income taxes, unpaid/ongoing utility bills, and any other outstanding balances.
Manage Or Sell Properties/Businesses
For most of us, our homes are the biggest asset we own. Unless your client has chosen to bequeath their property to a beneficiary, you will have to liquidate it. Before that happens, though, you’ll have to pay utility bills/municipal taxes and maintain the property. You’ll have to do this from the assets of the estate. As a result, don’t dawdle on the sales process, lest you incur anger from impatient heirs.
Similarly, your client may also direct you to bequeath ownership of a business to a beneficiary. Or, they may choose to liquidate their shares after death. This process can get complicated, as either action may require the consent of a Board of Directors. In these cases, consult with your lawyer for further guidance.
Liaise With Insurance Companies
There’s a good chance your client had a life insurance policy in place. To get a payout, though, you’ll need to provide them with proper documentation. At a minimum, you’ll need a death certificate to proceed. However, the life insurance provider may also request additional documentation.
Life insurance payouts are usually non-probate assets. If the deceased named a specific beneficiary in their policy, the proceeds go directly to that person. However, if they named their estate as the beneficiary, or if there’s no beneficiary, the payout becomes an estate asset.
Set Up Testamentary Trusts
Often, when someone with a will dies, they leave behind a partner. Usually, a significant portion, if not all of their assets, goes to them. However, the will-maker may want to ensure that, no matter what, their children are taken care of.
When a spouse gains 100% control of assets after their partner’s death, they can do whatever they wish with them. A testamentary trust avoids this problem, as it sets aside capital for other beneficiaries (usually minor children).These structures hold assets until a later date; when it arrives, the trust disperses its funds to named beneficiaries.
There are other reasons for setting up testamentary trusts. From saving on taxes to ensuring a spendthrift heir does not squander their inheritance, these structures can be incredibly useful tools.
To set up a testamentary trust, you must first go through the probate process as outlined above. Once it is complete, you can set up the fund per the instructions of your client. Many banks offer this service – inquire at the financial institution where you set up your estate account.
Close The Estate
After months of hard work, you’ll finally reach the light at the end of the tunnel. At long last, it’s time to close out your client’s estate. The first step in doing so involves distributing inheritance checks to all named beneficiaries. Before doing so, have them sign a release, as this document will protect you from litigious parties.
After you pay out all available funds, close the estate’s bank account. Once you run out of tasks as outlined above, your duties as executor conclude. However, your status as “executor” remains in perpetuity. Let’s say that, ten years later, you uncover a long-lost bank account belonging to your client. In this instance, it would be your legal responsibility to divide its contents among named beneficiaries.
In most cases, though, once you conclude your duties, you’re in the clear.
Do I Have To Be An Executor?
No. You can choose to abdicate the role of an executor if you so choose. Don’t allow others to guilt you into taking this role – as we said at the start, it’s a huge responsibility. Being an executor involves tons of work, and the pressure to act in everyone’s best interests can be immense.
If you choose to step aside, consult with family members to determine your successor. Otherwise, the courts will decide the matter.
State Law (Usually) Entitles You To Compensation
Typically, the executor of an estate is a family member of the deceased. As such, they formally forego payment for their services, despite the work involved. We recommend against this – being an executor is a brutal job.
In most states, the law entitles executors to a portion of their client’s estate. Usually, the law legally permits an executor to take a fee worth 1-5% of the will maker’s assets. If there is any doubt, the probate court hearing will determine the rate.
It’s A Tough Job, But Someone Has To Do It
Being an executor is anything but easy. Between mourning a loved one and managing the sky-high expectations of heirs, things can get hairy. By taking things one step at a time, maintaining legal counsel, and practicing self-care, you can get through this process in one piece.