Over the years, you may accrue a considerable amount of assets that are spread out across money, property, and investments. If you want to determine what happens to your assets when you pass away, you can do so by creating a will and estate plan. At this time, you'll also need to name an executor of the will, which is a person who carries out your wishes when you die. In this guide, you'll learn what an estate executor is and why you need to name one when creating a will.
What Is an Executor?
An executor of estate duties is someone who's responsible for carrying out the decedent's wishes in regard to their will and estate. If the will that you've made is deemed legally valid, the judge overlooking the estate will approve your decision. The executor is then tasked with everything from distributing assets to paying any remaining debts.
What Are the Duties of an Executor of a Will?
The executor of will responsibilities can be highly varied based on how complex your estate is. For example, the estate of an affluent individual who owns a business and has multiple pieces of real estate in their name will likely be challenging to manage for the executor. The executor will need to handle any details or wishes you placed in your will. Before your estate is taken through probate, the executor will need to file income taxes, inform relatives and heirs of an open contest period, and obtain copies of the death certificate. If you're about to be named as an estate executor, you should know what this title entails.
Opening the Estate
Before an executor is appointed, the estate will be opened to the probate process. At this time, the will is reviewed to make sure it's legally valid. If it is, the executor who's named in the document will be officially appointed by a judge.
The first role of an executor is to file paperwork that indicates they will represent the estate during and after probate. Once the executor has filed the necessary paperwork, they can start fulfilling their duties. For example, the executor must inform creditors and other interested parties about the death.
Depending on where you live, creditors can either be notified with a public letter in the newspaper or a certified letter that's sent directly to them.If the executor makes a mistake in notifying creditors or beneficiaries, a lawsuit could be filed against the estate. One of these parties could also consider contesting an executor of a will, which requires proving that the executor isn't fit to fulfill their duties. Keep in mind that the court can assist the executor in identifying and locating beneficiaries.
Inventory of Assets
When a person creates a will, they're able to detail the specifics of how they want all their assets to be handled after they die. If the executor doesn't adhere to these wishes, a lawsuit could be filed against them, which is why this individual must identify and inventory every asset that's part of the estate. These assets include all financial accounts, properties, heirlooms, and antiques. Once a list of these items is made, the court will review it. During this process, supporting documentation and legal records will be reviewed as well. It's crucial that the decedent's holdings are accurately recorded.
Administering the Estate
Once the executor has inventoried the assets, they will administer the estate to creditors and beneficiaries. Debt collectors are paid before anyone else. If the decedent was owed money or other items at the time of their death, the executor will need to collect them. All collected debts will become part of the decedent's assets. If the decedent owned a business, the executor may need to sell or manage it until a beneficiary is able to take over these duties. If you own a business that you wish to place in your will, make sure the executor of your choice is someone who has business knowledge.
Tax Management
Tax management is another important aspect of an executor's responsibilities. They are tasked with calculating estate taxes and filing returns. The tax return needs to be correct to avoid issues with the IRS. If the estate receives a tax refund, it will be passed to beneficiaries.
Closing the Estate and Allocating Assets
Once assets have been distributed, it's up to the executor of a will to officially close the estate. To complete this process, the executor needs to prove that any outstanding taxes or bills have been paid from the estate's assets. This proof can be shown in the form of financial records, which the executor must keep track of. When the executor distributes assets to the beneficiaries, they may also need to prevent contests to the will and set up trusts.
What Is the Difference Between Being an Executor and Having Power of Attorney?
There are clear differences between a power of attorney vs executor of estate. An executor will manage the estate during the probate process, which means that their responsibilities start when the estate is opened and end when the estate is closed. These individuals pay debts, distribute property, and manage assets according to the decedent's wishes.
A power of attorney is someone who has been given the legal ability to act on a person's behalf while they're still alive. There are several different POA types, which include healthcare and financial ones. The primary difference between an executor and power of attorney involves the responsibilities they each have. Powers of attorney are mainly active while the person is still alive but may not be able to make their own decisions.
Selecting the Best executor
When you're looking for the best executor, choose someone who you know will be able to effectively manage your entire estate. They will be tasked with distributing all your assets and handling any complications that arise. There's also a possibility that they'll need to deal with challenges to the will, which can be complicated. Keep in mind that executors can hire other professionals to help them during the probate process. While many people hire family members or friends, consider asking an attorney to act as your executor.
Hiring a professional is almost essential when dealing with a more complex estate. By choosing the right person for this job, you can be confident that your wishes will be followed to the letter. To learn more please call (800) 662-0882 or visit Contact Us.
