Many people appointed under a will have never had to serve as an executor of an estate. And most don't know that they can be held personally liable for their mistakes. To make matters worse, the job can range from very simple to difficult and complex depending on your state law and your case.
1
Verify The Document and Get Appointed
Make sure that you have identified the last will. There is nothing worse than discovering a document, probating the will and then discovering a more recent will. Conduct a thorough search. When you are certain that you have the most recent will, you should then determine whether or not a probate of the will and your appointment is necessary. For example, if all of the assets are either joint or transferred by beneficiary designation getting appointed as executor may be unnecessary.
If probate is required, consider whether or not you should act. It is much harder to resign once you have started than to renounce before you begin. If you are going to act, you will have brief process where the will is verified and you are sworn in as executor. The specifics required vary from state to state and depend in some cases on whether or not the will is notarized properly.
Before you go to the courthouse, be sure that you have the witnesses or the affidavits that your state requires.
2
Gather together the assets and get them valued
Gather, identify and safe guard the assets and make sure that they are adequately insured.
For example, if there is no homeowner's insurance and there is a fire, you may be sued for failing to properly carry out your fiduciary duty. Make sure that automobiles, vacation homes, and other assets are also insured.
Real estate and personal property should be appraised and stocks, bonds, bank accounts and other investments should be valued as of to the date of death. Be sure to talk to the person preparing the returns as the exact way of valuing such assets does vary from state to state and for federal estate tax purposes.
For example, the DOD value is the average of the high and low for a stock on a given day but for others it is the value of stock on the close of trading on that date.
You might also consider checking with your escheat office to see if the state is holding any of the decedent's assets.
3
Review the document for specific bequests and gifts
Your job as the executor is to carry out the decedent's wishes as documented in the will. So be sure to review the will carefully. Does anyone get a specific sum of money or a particular item such as a car or a clock? If so, make sure that the estate has sufficient assets to pay all enforceable debts, the taxes, and administrative fees before making distribution.
when you do make distribution of these items be sure to get a receipt for the items distributed and in most cases the agreement and receipt should also say that the beneficiary agrees to return or refund to you any assets that were distributed in error.
That clause will protect you if a valid debt surfaces. However, having the right to get assets back and actually getting them can be two very different things. So be sure to conduct a complete search of the records for debts of the estate.
4
File reports, notices, income tax and death tax returns
Many states require that you give notice to certian people such as children, spouses and other relatives. be sure that you comply with these laws to avoid later litigation. You may also want to follow state law and advertise an estate as this will often limit your personal liability as an executor after the passage of some time period.
Status reports are also often required and even when they are not required by state law it is often a good idea for you to keep the beneficiaries up to date.
Final lifetime income tax returns will be required and a state death tax return and a federl estate tax return may also be necessary. Failure to file these returns can impose interest and penalty charges against you and the estate. You should be sure that these liabilities are paid and that you have received a notice stating that the state accepted the returns as filed before distributing the assets. If a big tax bill comes back after you have distributed assets guess who is responsible?
5
Selling and Distributing Assets
In many cases, the will may require distribution of assets. In others, it will be entirely up to the executor to either sell the assets or to distribute them "In Kind." Most often, executor's will want to liquidate assets and distribute the funds to the beneficiary or to trusts under the will. However, make sure that the powers granted to you by your state's laws or under the will actually allow you to take the actions that you are intending to take.
For example, in some states, the sale of real estate must be approved unless the will specifically allows it. That is also true for the abandonment of property and in some cases state approval is required before distributions to charities.
The important rule, is be sure that the document and the law allow your choice of action.
when it is time to make distribution, be sure to see the next section on eding the estae.
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