Navigating a clear course toward your financial security.

Being an Executor

As you grow older, you probably will be asked to serve as executor of a loved one’s estate—a spouse, a parent, or a good friend. .  In some cases, you may not even be asked, but simply find yourself named in the deceased’s will. .  Before you accept the appointment out of love and duty-bound honor, be aware of the many duties and challenges of this job.

And it can be a job.  Serving as an executor can be a time-consuming, complex, emotionally frustrating and exhausting experience, even for a modest-sized estate. .  It even carries legal responsibilities. .  As a “fiduciary,” you must act with the utmost honesty, impartiality and scrupulousness on behalf of the deceased and the estate’s beneficiaries. .  This all comes on top of the fact that you a’re going through the emotional loss of the loved one. . 

Fortunately, you can hire professionals who can provide advice and do much of the actual work. .  Still, you, as executor, must ensure that all work is accomplished and done properly. .  So keep the following in mind when deciding whether to accept the role.

Role of an Executor - called a "personal representative" in some states — is to ensure that the deceased’s estate is properly settled. .  To adequately accomplish this task, you should have the time and live near the deceased's residence because you wi’ll need to go through their records and work with local officials and state laws. .  You should be an organized person, with financial savvy and attention to detail. .  You should be fair minded (especially if you a’re one of the beneficiaries), yet strong enough to handle squabbles among heirs.

As executor, thoroughly read the will and any letter of instructions from the deceased. .  You may need to register the will with the court. .  You must determine the estate’s heirs. .  The next step is to inventory all property and financial assets. .  Once the inventory is completed, you may need help from an attorney to see what passes via the will versus what goes directly to an heir outside of the will (such as life insurance or retirement plan proceeds). .  Are there any existing trusts or trusts created by the will, for which you or someone else serves as trustee?

All property and financial assets, ranging from insurance policies to bank accounts and real estate, need to be identified and valued, either by you or by outside professionals. .  This process may be relatively simple if you’re you are the deceased’s spouse and records are in good order. .  On the other hand, a poorly managed estate for which you have little or no direct knowledge can be a nightmare to inventory.

You must manage estate assets until they are used to pay ongoing estate bills and debts, or they are distributed to the heirs. .  This is one area where liability can arise. .  You a’re not legally responsible just because the value of some assets might decline under your management (markets go down as well as up). .  But you could be held responsible if you mismanage assets. .  For example, the three executors of the estate of a world-famous artist were assessed millions of dollars in damages and fines by the probate court because they sold the estate’s paintings at well below market value.

You will ’ll need to determine valid creditor claims and ensure the estate pays any just debts.

You are responsible for filing and paying the estate tax returns, which probably will be an income tax return on behalf of the deceased. .  If the estate is large enough, federal and possibly state estate tax (returns??) may be required. .  The federal estate tax threshold may vary from the state's threshold, and the state threshold variesies from state to state. .  The current federal estate tax exemption equivalent is $1.5 million. .  If the estate is valued at less than this threshold, a federal estate tax return is not required. .  Beware: many state estate tax thresholds are lower than the federal threshold.

Naturally, you will see to it that the estate’s remaining assets are properly distributed to the heirs. .  Here’s Here is where conflicts can erupt, with heirs fighting over personal possessions or other assets. .  If you a’re also a beneficiary, you might be accused of partiality. .  Some battles end up in court. . 

You can dramatically reduce the potential for problems by working with a financial planner and, if possible, by ensuring the person who has named you as executor has a well prepared estate plan.

For all your trouble, you may collect a fee as executor (two to five percent of the estate’s value is common), though you may waive the fee because it is better financially for the estate’s heirs (of which you might be one). .  Of course, you can simply decline to serve as an executor in the first place and a successor executor will be identified. .

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