What Exactly Does an Executor of a Will Do?
Many terms get thrown around when there's talk of writing a last will, testimony, and even living trusts. Namely, executor, trustees, beneficiaries, probate, and so on.
Arguably the most essential component of all wills and trusts in estate planning is the executor.
Most people don't quite understand that being named as the executor of a will or trust is a huge undertaking, filled with serious responsibilities and duties that must be carried out in the best interest of those named in the documents.
This article will discuss what an executor of a will is expected to do.
Read on to learn more.
The Duties and Responsibilities of an Executor
First and foremost, the executor of a will (also referred to as the personal representative of the will) is appointed by the testator—or the writer of the will. This person will be expected to carry out several tasks, from planning the funeral arrangements to the estate's security and, much more, acting on behalf of the deceased.
Being an executor means taking on a lot of responsibility. Therefore, when it comes to naming your executor, you want to choose someone you can trust. Otherwise, you run the risk of your entire estate being mismanaged after you've passed.
The executor or personal representative will be a close relative or friend in most cases. However, it's becoming increasingly popular to appoint your local Huntsville attorney as the executor of your will.
It should also be noted that because there is a significant amount of work involved in carrying out executor duties, this person is often compensated from the estate. This person will also be expected to work closely with your Huntsville attorney and associated tax professional as they'll be in charge of the finances of your estate and will also be speaking on your behalf in probate court.
The following are the duties and responsibilities of an executor of a will:
Filing the Petition for Probate Documents
The first thing your personal representative will be expected to do is open the estate by filing the proper Petition for Probate documents.
Essentially, this requires that your executor present an original Death Certificate and other specific documents to The Register of Wills or the closest legal entity. They must also provide documentation that includes the estimated time and date of death and the value of probate assets.
Once the estate is officially opened, the executor will obtain the official Letters of Administration. The Letters of Administration provide your executor with the legal authority to act on your behalf and on behalf of your estate. Without these letters, it'll be next to impossible for your executor or even family members to get any information regarding the assets of your estate.
Identifying the Assets of the Estate
The executor must take the next step after successfully opening your estate to correctly identify and collect all the assets included in your estate.
This would typically include the following:
Any property of value owned by you (the deceased) at the time of your death. This could consist of vacation homes, cars, artwork, collectibles, boats, jewelry, and so on
Real estate property interests or investments
Business interests
Bank accounts, including checking accounts and savings accounts
Brokerage accounts
Unpaid dues, such as interest or dividends
In terms of rounding up all the applicable assets within the estate, it's also the executor's responsibility to have everything adequately valued by a professional appraiser. An inventory report and information report must be filed accordingly with the official appraisal.
Opening the Estate's Bank Account
Once the estate is officially opened and inventory reports are filed, the executor will have to obtain a Federal Tax ID Number for the estate. This tax ID number will allow the executor to open a bank account—usually a checking account—on behalf of your estate.
Once the estate's bank account is opened, your executor can transfer the funds from your name (at the time of your death) to the estate account. From this new account, all expenses, taxes, debts, and any other fees regarding the administration of the estate can be paid with ease.
It should be noted that any funds remaining in the account must be distributed to the named beneficiaries of the estate once all the necessary expenses are taken care of. This includes any remaining assets.
Notifying Creditors of the Passing
Additional administrative duties that your named executor must carry out include giving legal notice of your death to any known creditors or potential creditors.
In the state of Alabama, creditors have up to six months during which they can legally file claims against your estate. Once those six months have expired, your executor should have paid off any legitimate claims against the estate.
It's important to note that any creditors that fail to file a claim against your estate within the designated time frame will forever be legally barred from making any future claims. It's also important to note that your executor must do their due diligence in ensuring the validity of any claims against your estate.
Accounting For Ongoing Financial Activity
The initial financial activity regarding your estate must be filed by the executor. These filings should include an itemized list of all payments and receipts regarding your estate. After the initial account filing, your executor will likely have to file subsequent accounts, depending on how long it takes to settle your estate.
As part of the probate court process, various fees can also be expected to crop up. For example, filing a report on the financial accounting activity will likely require the help of a Huntsville attorney or tax professional. These expenses will be paid from the estate's funds by the executor.
Preparing and Filing Tax Returns
Aside from taking care of the accounting for your estate's financial activity, the executor will also be responsible for preparing and filing any applicable state income tax returns and federal tax returns on your behalf. This could include a timeline from when you were still alive. However, once an individual passes away, their death cancels out that same tax year.
Put simply, this means that your estate will become a separate "taxpayer, and your executor will likely have to include the following different sets of tax returns:
Your final income tax returns
Any applicable federal and estate tax returns
Any appropriate state and federal income tax returns of your trusts and estate
Any applicable gift tax returns
Each set of tax returns will come with a specific deadline for filing, and in some cases, your executor may be required to file a tax return even if no taxes are due.
Distributing Assets and Closing the Estate
Lastly, once all the assets have been identified and collected and any claims or other debts are fulfilled, it'll finally be time for the executor of your will and trusts to start distributing your assets.
The distribution of assets must coincide with the terms and conditions of your last will and testament, any legal trusts, and the state's probate laws (if applicable). Once the court officially approves the final estate account and the assets have been successfully distributed, the estate will be considered legally closed.
Once your estate is legally closed, your personal representative's responsibilities will come to an end.
As you can see, whoever you choose to name as the executor of your last will and testament and any trusts will have a lot of responsibilities to contend with. That's why it's essential to choose someone you can trust to manage those responsibilities appropriately, as well as someone who is up to the task.
In terms of estate planning in Huntsville, Alabama, you want to ensure that your assets and family are in good hands. Contact us today to speak with Sarah S. Shepard or another experienced Huntsville attorney. We'll make sure your estate is handled correctly and with care.