Estate Planning - Estate Executors and Administrators

When deciding on an Executor, it may be beneficial to appoint someone with no potential conflict of interest, who doesn’t stand to gain from the will. This can forestall challenges from Beneficiaries who might accuse the Executor of using his/her role unfairly. However, if you don’t anticipate this type of issue, it may be better to make one of your Beneficiaries the Executor, as they usually waive the executor’s fee, which saves the estate money.

Be sure to discuss the responsibilities with the person(s) you have chosen for the role of Executor to verify that he/she is willing to accept the job, before naming him/her in your will. Also, when possible, name a Successor Executor. These provisions will help prevent the choice of selecting an Executor from passing into the court’s hands.

Naming co-executors is common with small business owners; they name their spouse or another relative to take care of their personal matters and a second Executor with business knowledge to manage the business matters. Co-executors can also be suitable when the main Beneficiary resides in a different state and is unable to travel regularly to oversee the estate.

For larger estates, worth over a million dollars, or involving the running of a business, it may be worthwhile to hire a professional Executor, such as the estate planning department of your bank, your accountant, or your attorney.

To avoid potential problems, do not appoint a minor, a felon or a non-U.S. citizen as an Executor.

Laws governing the removal of an acting Executor vary from state to state and removal is not easy. Serious misbehavior must be proven to the court. In general, the courts will only remove an Executor if the beneficiaries can show that he/she is unable to perform his/her duties; is unsuitable for the position; or has become disqualified since the decedent appointed him/her.

If the Beneficiary of the estate believes any of these situations to be true, he/she can petition the court for removal of the Executor from the position. The request must be made by a party with a stake in the estate and he/she must present evidence that removal is necessary.

The Executor will have the opportunity to show why he/she should not be removed, if the courts decide that the petitioner has a valid claim.

Typical duties of an Executor include the following.

• Obtain and read a copy of the will.
• Determine whether or not probate court proceedings are required.
• File the Will in the local probate court. This is generally required even if no probate proceeding is required.
• Petition the court for letters of proof that the Executor has been legally appointed.
• Request certified copies of the death certificate.
• Collect all the decedent’s assets, household property, personal effects and other personal property. Check for cash and other valuables that may be hidden around the home. Inventory the items.
• After inventorying all assets, arrange for appraisal of items.
• Open and inventory the contents of all safe deposit boxes.
• Consult with banks and credit unions in the area to find all of the decedent’s accounts. Close bank or brokerage accounts that the decedent solely owned and open a checking account for the estate to pay the estate’s debts and other obligations as needed.
• Re-title property as necessary. If there are securities, continue to collect dividends and interest on behalf of the decedent’s heirs.
• Locate and inventory all real estate deeds, mortgages, leases, and tax documents.
• If there is rental property, set up immediate rental management.
• Arrange additional administration for any property located in a different state.
• Collect any money or other property owed to the deceased and check interests in estates of other decedents.
• Locate insurance policies; file claims for benefits; and collect all life insurance proceeds payable to the estates.
• Safeguard and manage all business interests, valuables, personal property, important documents, and all real estate.
• Obtain and review bookkeeping records and investment portfolios to determine liquidity needs. When necessary, sell appropriate assets.
• Pay any valid claims against the estate (such as debts owed by the decedent at the time of death) and reject any improper claims.
• Determine whether the estate qualifies for any specific tax breaks.
• File income tax returns for the decedent and the estate; and when necessary, federal estate tax returns and state death and/or inheritance tax returns. If required, make various tax elections and pay any tax due.
• Prepare statement of all receipts and disbursements. Pay attorneys’ fees and executor’s fees.
• Keep Beneficiaries informed of actions taken on behalf of the estate
• Contact the nearest Social Security office about survivor benefits.
• Establish a Testamentary Trust (or “pour over” into a Living Trust), when appropriate.
• Retain the services of an attorney or other professionals when necessary, such as accountants and financial advisors, to accomplish these tasks.
• Allocate specific bequests and the remaining assets; obtain tax releases and receipts as directed by the court.
• Close the estate after ensuring that claims against the estate are paid and the remaining assets have been distributed to the Beneficiaries.