Ask the Expert: I’m an Executor. . . Now What?

Q. My mother recently asked me to be the executor for her estate when she passes away. My sister and brother were hurt at first about it, feeling that she didn’t trust them or she thinks I am more capable. Then, upon reading about what’s involved, my sister explained that she believes that it may be a blessing in disguise that she was not the one who was selected. She told me that there is a lot to being an executor, and with everything that is going on in her life, she doesn’t think she could handle it anyway. My brother agreed. Their reactions make me nervous. Can you explain some of the responsibilities, so I understand what I am in for before I agree to it. Thanks for your help!

A. Contrary to what many people think, it is NOT an honor to be selected as an Executor of a Will (sometimes called a “personal representative”). Although It signifies that your mother trusts you to carry out her final wishes and to see to her legacy, it brings with it and extraordinary amount of unnecessary work, including the preparing and filing of horrifically complex court documents. If more people doing estate planning understood that a Will puts your estate through the “nightmare of probate,” more people would realize that naming someone as an executor is equivalent to torturing that person — not something that you wish on a loved one.

Role of an Executor

Many people think that the role of an executor involves using a loved one’s estate planning documents as a set of instructions for giving away their wealth. That is true. However, there is much more to it. An executor essentially steps in for the testator (the person who wrote the will) and sees to all the final arrangements, financial and otherwise. Given all that is involved, it is important to consider the responsibility of the position before signing on. Below is a brief description of some of the key responsibilities:

• Probate:  It is the Executor’s first responsibility to probate the Will, thus beginning the journey into the nightmare of probate, which involves filing of numerous documents with the court system, and the payment of probate taxes, executor’s commissions, and other costs and fees that will typically consume 5% to 8% of an estate. Often, funds cannot be disbursed without the approval of a probate judge or Commissioner.

Please note that if your mother has a Revocable Living Trust, it will protect her assets from having to go through probate, which is an expensive, public, and time-consuming nightmare.  Please see our web page about the Wills and Probate for more details.
Executor Duties

• Managing/Disbursing Assets: The executor locates, manages and disburses the assets of the estate. He or she determines the value of all estate assets such as real estate.  In many cases, such property will need to be liquidated in order to pay the estate’s debts.
• Burial Expenses: One of the responsibilities of an executor is to use the estate’s funds to pay for funeral and burial expenses. The funeral home will also provide the executor with copies of the death certificate, which will be needed for several purposes, including closing financial accounts, canceling any federal benefit payments, and filing the final income tax return.
• Debts: The debts of the deceased person become the debts of the estate, and the executor must pay them before making distributions be to beneficiaries.
• Taxes: The executor will also pay all required taxes from a bank account set up in the name of the estate.
• Care for estate’s assets: The executor must care for the estate’s assets until they can be distributed, by ensuring that property is properly cared for and that funds are invested prudently.
• Liability: If an executor mismanages estate funds and this results in a loss for the beneficiaries, the executor can be found personally liable.

Planning in Advance

Some estate administration details can be taken care of before a testator dies to make the process less cumbersome for the executor. For instance, an executor should make sure the testator is keeping a list of assets and debts, including bank accounts, investment accounts, insurance policies, real estate and so on. He or she should also be sure to know the names and contact details of attorneys, accountants, and financial advisors used by the testator, where the original will and the asset list is located and how to access them, and the testator’s wishes for burial or cremation (typically spelled out in the estate planning documents). Please see our “Information for Executors and Trustees” page for more details and a checklist.

Farr Law Firm Trust and Estate Administration

Depending on the type of the property owned, how it is titled, the provisions of the decedent’s will or living trust, and the applicable law, the executor often has complicated responsibilities that are often best carried out with the guidance and assistance of a knowledgeable legal advisor. The Farr Law Firm’s estate administration division handles all aspects of estate administration, employing a team of professionals with wide-ranging expertise. Our estate administration services include:

1. Preparation of Federal estate tax returns, Form 706, and applicable State inheritance/estate tax returns;
2. Preparation of judicial and non-judicial fiduciary accountings for trusts and estates;
3. Preparation of fiduciary income tax returns for trusts and estates, including income tax planning to minimize income taxes;
4. Preparation of Federal and State gift tax returns;
5. Post-mortem planning, including use of disclaimers, small business succession, and redemption of shares of closely-held businesses;
6. Working with executors, trustees, beneficiaries, and accountants to minimize estate tax and income tax;
7. Assisting executors in navigating through the estate administration process.
8. Assisting beneficiaries in resolving family disputes regarding inherited or inheritable assets.
9. Assistance with valuation of closely-held business interests to minimize estate tax.

Estate Planning

Being an executor of even a simple estate can be a complicated job.  Consulting a Certified Elder Law Attorney, such as myself, will make your job simpler and ensure that the job is done right. Has being asked to assume the role of executor made you think about your own planning? To begin your Estate Planning or to update your existing documents, please call us at 703-691-1888 in Fairfax, 540-479-1435 in Fredericksburg, 301-519-8041 in Rockville, MD, or 202-587-2797 in Washington, DC to make an appointment for an initial no-cost consultation, or sign up for one of our upcoming seminars.