Planning for the future isn’t just about creating a will or setting up a trust (though that’s a good start). It can also be about helping to ensure a trusted individual carries out your wishes once you’re gone. This person, known as the executor of the estate, plays a critical role in managing the settlement process.
From locating assets to distributing property to beneficiaries, the executor of your estate can make the process much more manageable for those left behind. We believe understanding this role is essential, whether you’re the executor or you’re looking to appoint someone.
Understanding the Role of an Executor
An executor acts as the legal representative of a deceased person’s estate. This person is in charge of everything estate-related and must act in the best interest of both the estate and its beneficiaries. You can name nearly any competent adult as your executor, whether a trusted friend, close family member, or a professional such as an attorney.
What Does an Executor of an Estate Do?
An executor’s primary job is to carry out the instructions included in a deceased person’s will. The role also involves coordinating assets not specifically listed in the will, including some of the following tasks:
- Gathering assets by identifying all property, accounts, investments, and personal items belonging to the deceased.
- Obtaining a death certificate, which is necessary to notify the decedent’s bank, insurance, or any creditors of the estate holder’s passing.
- Filing a copy of the will in a probate court, in the event the deceased didn’t have a living trust.
- Paying debts and expenses, including loans, credit card bills, final medical expenses, and funeral costs.
- Filing taxes, including personal income and estate taxes.
- Distributing assets by transferring property, money, or other assets to beneficiaries as outlined in the will.
- Maintaining records by keeping detailed accounts of all transactions made on behalf of the estate for legal and tax purposes.
How Do Executors of an Estate Locate Assets?
If you’re appointed as an executor, you may need to conduct a thorough search for assets, especially if the decedent did not maintain organized financial records. Since you’ll need to review financial documents, including bank statements, retirement account information, insurance policies, mortgage and car loan documents, and property deeds, you may have to do a bit of digging. Here are a few ways to uncover assets:
- Check email accounts, computer files, and any hard copy records.
- Perform a public records search for any hidden asset or unclaimed property.
- Check with employers, financial institutions, or government agencies if needed.
- Open any mail or bills addressed to the deceased.
- Check with the local probate court for any titles or deeds.
- Reach out to a lawyer or tax accountant who may have worked with the deceased.
- Ask family or friends to help with the search.
In some cases, you may need to work with a forensic accountant to locate hard-to-find assets. When you’re creating your own estate plan, keep organized records to make the process significantly easier on your executor and beneficiaries.
Challenges Executors Often Face
Serving as an executor, particularly for a large or complex estate, can be emotionally and logistically demanding. The position requires navigating financial complexities and personal dynamics. Even with a clear will, disputes can arise. The executor has a legal duty to follow the will’s instructions precisely, which may not align with everyone’s expectations. Common challenges include:
- Family conflict or disputes among heirs that can delay distributions and create tension.
- Complex estates that include multiple properties, international assets, and large investments.
- Legal and tax hurdles that can be confusing without professional support.
- Time commitment of managing an estate can take months or even years, depending on the complexity of the situation.
Build Your Estate Plan with Confidence with a Financial Advisor
Whether you’re updating your own estate plan or you’ve been appointed executor of a loved one’s will, a financial advisor can help reduce the burden. This person can guide you through the complexities of an estate, provide insight on minimizing taxes, and advise you on what to expect. To get started, match with a trusted advisor today.
FAQs
What is the purpose of an executor?
An executor of an estate helps ensure that a deceased person’s estate is settled according to their will and applicable state laws. That may include distributing assets to beneficiaries and paying outstanding taxes or debt.
What does an executor of an estate do first?
The first thing an executor does is secure the deceased’s property and locate the most recent version of the will. They must also obtain death certificates, contact the probate court to open the estate, and petition for official authority to act on behalf of the estate.
How much does an executor get paid?
Executor of estate fees typically range from a small percentage (2% to 5%) of the total estate value or a flat fee, depending on state law and the estate’s size and complexity. Check with your state for specific rules.
Can an executor also be a beneficiary?
Yes, an executor can also be a beneficiary, and this arrangement is very common in family estates. However, executors who are also heirs must act impartially and fulfill fiduciary duties to all beneficiaries, regardless of personal interests.
What happens if an executor does not fulfill their duties?
If an executor neglects their responsibilities or mismanages the estate, they may be removed by the probate court and held personally liable for financial losses.
All information herein has been prepared solely for informational purposes. This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. The opinions are those of the writer, and not the recommendations or responsibility of Cetera Wealth Services, Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.
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