Who is an Executor?
The executor of a will is responsible for sorting out or distributing the finances of an individual after the latter’s death. They serve as a “legal personal representative” and manage the estate of the deceased in accordance with the terms stated in the will. They ensure that the debts and taxes on the property are paid and distribute the remains of the property to the heirs as stated in the will.
Sometimes, the executor needs to make decisions on when to sell the property so that the heirs receive a reasonable return. They may also be required to initiate and defend the legal proceedings on behalf of the property and the deceased. The legal process of making sure the property is distributed to the living relatives and the taxes and liabilities are paid is called probate.
Duties and Responsibilities of an Executor
An executor must possess honesty and diligence to carry out the fiduciary duty. It is when a person is required to act with good faith on behalf of someone else. The executor performs a number of duties that can vary depending on the complexity of the will. The duties are discussed as follows:
1. Submit the will in court
The first duty of the executor is to locate and understand the last will of the deceased person. They then need to submit the will to probate court to legally begin the process of opening up the estate that needs to be distributed. The process also involves deciding whether or not to sell the estate or securities owned by the person.
Once the will is submitted the court, the judge will decide if the will is legal and in accordance with the law and contains no errors.
2. Identify the assets and pay the liabilities
After the court’s validation of the will, the executor’s duty is to gather all the assets and liabilities of the deceased and ensure that they are accounted for on the will. It includes debit and credit card statements, certificates for real estate holdings, insurance policies, outstanding debts, or any other legal documents.
After the collection of all the deceased’s assets, the executor must use the estate funds to maintain insurance policies and make mortgage payments. The funds are also transferred to an estate bank account so that it can be used to operate the deceased’s financial assets.
3. Defend the assets of the deceased during legal proceedings
When the property of the deceased is to be distributed to multiple family members, it can often result in conflict and litigation that needs to be resolved in court. It is the duty of the executor to defend the estate should such a situation arises. Two types of litigation can occur as a result of a dispute among family members, namely:
- Contest the will
When a family member contests a will, it is usually because they believe they should receive a larger share of the property and are not in agreement with the terms stated in the will. The rules of contesting the will can vary by state. The duty of the executor is to successfully distribute the property as stated on the will, so if a member of the family contests the will, the executor should seek legal advice.
If a family member maintains a vested interest in the will, they can put a caveat on the terms of the will. It will occur if the person does not agree with the terms in the will and does not believe that the executor appointed is the right person to carry out the terms stated in the will.
4. Pay the required taxes
In addition to distributing the property, the executor is also responsible for managing the taxes of the deceased. They need to notify the tax office and establish a tax return policy if the person was earning an income before death.
An estate tax return may exist in some cases, but it applies only when the property carries a very high value. In the U.S. the property must be worth over $11.18 million to qualify for a tax return. The executor will also prepare an income tax return for the final year of the deceased’s life.
5. Close the estate
When the share of the estate that is to be distributed to the respective heirs is decided, an account of all the procedures undertaken will be provided to the court by the executor. Once it is approved by the judge, the funds will be distributed in accordance with the will.
Executors usually receive a commission for their work once the estate proceedings are complete. The commission can vary between 0.5% and 3% depending on the size of the estate and the amount of work undertaken.
An executor can be a member of the family or if the will is more complicated, a solicitor or accountant can be appointed as an executor as well. If there is no one available to act as the executor, the government will assign a Public Trustee to carry out the distribution of the estate.
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