Q: What do I have to do if I am Executor of the estate for my parent, spouse, or sibling?

A:  Being an executor can be a big job, depending on the assets in the estate and the family dynamics.  This is a general list of the tasks required.

1. Finding the Last Will and Testament and hiring a lawyer to help with the probate and estate administration.

2. Probating the Last Will and Testament in Probate or Chancery Court with help of the estate lawyer.

3. Gathering and protecting estate assets. You can do this once you have Letters Testamentary from Court showing legal authority to collect assets. Also requires getting a tax ID number and opening a bank account for the estate.

4. Making an inventory of estate assets.  Make sure you identify and collect everything the deceased person owned. Good record-keeping is a big part of the job.

5. Determining value of estate assets. You must determine value of each asset on the date of death.  This information gets reported on estate and inheritance tax returns.

6. Acquiring legal title to assets in the name of the estate. For stocks and bonds, this means a lot of paperwork required by stock transfer agents and financial institutions.

7. Paying debts, taxes, and estate expenses. These must be paid before anything is distributed to beneficiaries.

8. Deciding what cash is needed to pay debts, taxes and expenses, and raising the cash by selling assets if necessary.

9. Making decisions on tax issues. Some decisions can be made after death that will save taxes for the beneficiaries. Getting good tax advice from a lawyer or accountant is important.

10. Filing tax returns. Several tax returns may be required: individual 1040, federal estate tax return,  state inheritance tax return, estate income tax return for each year open.

11. Keeping beneficiaries informed of your progress in the estate administration.  The best way to avoid conflict and misunderstandings among beneficiaries is to keep everyone fully informed.

12. Managing estate assets. Some estate property (like clothing) may be donated to charity. Other tangible items may be divided between beneficiaries or sold at an estate sale.  Real property may have to be readied for sale and put on the market.

13. Paying bequests.  Specific bequests to individuals or charities are usually paid before the residuary beneficiaries receive their share.

14. Transferring assets to Trustees (if required). Sometimes the Will directs that a trust be created to hold assets for the benefit of a surviving spouse or children. The Executor must make sure that the Trustee receives those assets.

15. Preparing Final Accounting and distributing all estate assets. Wrapping up the estate requires accounting for all of the estate assets and making final distributions to the beneficiaries. 

The job can take anywhere from a year to several years depending on the estate and any problems encountered during the administration process.  This is a job that requires follow-through, attention-to detail, perseverence and good organization.

The Job of Executor

Many people think that the job of being an executor for a friend or family member is more an honor than it is real work.  Not true.  The job can be very difficult, time-consuming and can strain relations with beneficiaries. 

Choose your executor carefully.  If you choose an individual, that person should have some business, legal or financial experience.  They should be detail-oriented and have time available to spend on the job.  If you don't have a friend or family member who meets this description, it may be best to choose a corporate executor, such as a bank or trust company.  A corporate executor will charge a fee but will do a careful and professional job and relieve your friends and family members of the responsibility.

Of course every estate is different, and it is the larger and more complex estates where the job can be particularly burdensome.  The poem below summarizes in a humorous way some of the problems.

THE EXECUTOR

I had a friend who died and he,
On earth so loved and trusted me,
That ere he quit this earthly shore,
He made me his executor.
He tasked me through my natural life,
To guard the interests of his wife,
To see that everything was done,
Both for his daughter and his son.
I have his money to invest,
And though I try my level best,
To do what wisely, I’m advised,
My judgment oft is criticized.

His widow once so calm and meek,
Comes, hot with rage, three times a week,
And rails at me, because I must,
To keep my oath appear unjust.
His children hate the sight of me,
Although their friend I’ve tried to be,
And every relative declares,
I interfere with his affairs.
Now when I die I’ll never ask,
A friend to carry such a task,
I’ll spare him all such anguish sore,
And leave a hired executor.

---Today and Tomorrow, Edgar A. Guest
(Chicago: Reilly & Lee Company, 1942)

The newspapers are full of stories about family fights over an inheritance.  Grief and loss can bring out the best and the worst in the survivors.  If you want to make sure your family is not torn apart by a fight over your estate, here are a few tips to incorporate into your estate planning:

1. Hire a lawyer who knows estate planning law.  Your neighbor who handles divorces or your cousin who is a corporate lawyer are not good choices.  Hire a lawyer whose practice is devoted to preparing Wills and administering estates.  You may pay a little more than if you have a friend or relative prepare the Will, but it will be well worth it.
2. Be smart in choosing the executor and trustee.  If hostilities may erupt among your children, do not appoint one of those individuals to be in a position of authority over the estate.  Consider hiring a professional corporate fiduciary, a bank or trust company, to serve as executor if you think a family feud may break out after your death.
3. Tell your family what you are planning.  No one likes to be surprised at the terms of a Will. Sit everyone down for a family conference and let them know what you have planned and why. It can defuse a potential fight if you make clear upfront what your wishes are.  This will keep family members from having expectations that will be disappointed and keep them from claiming later that a certain disposition was not what you intended.
4. If you have moved, make sure your Will takes into account the laws and probate system of your state of residence.   Make sure your Will is up to date and not a relic from the past that reflects your life 25 years earlier.

More tips to come in next posting.