Being elected as an executor of an individual’s Will is an important responsibility. Administering a Will can be time-consuming, and it requires strict adherence to details and deadlines. While each state has different rules and regulations concerning the administration of a Will, the general principles remain the same. It is essential, however, to make sure that you are aware of your individual state’s requirements and deadlines.
If you are named executor of your sister’s Will – or her personal representative – and she unfortunately passes away, you must now take steps to properly administer the estate. Because your sister had a Will, it would need to be probated in the Probate Court – sometimes called the Surrogate Court – of the county where your sister was living. “Probate” is the court-supervised process of authenticating a Last Will and Testament. Most states have a waiting period before probate begins. For example, in New Jersey, there is a 10-day waiting period after someone dies before a Will can be admitted to probate. Typically, you present the Will along with a death certificate to the probate court. Usually the Court requires notice to be given to all heirs and beneficiaries. The executor is responsible for sending out these notices. The purpose of the notice is to give people an opportunity to object to the Will. If no one objects and if the Will is properly signed and witnessed, the Court will issue letters testamentary, meaning that you proved you are the executor of a Will and were approved as such by the Court.
Depending upon the nature of your sister’s estate, you may have a lot of work to do or only a minimal amount. In particular, if your sister’s estate contained joint bank accounts or accounts that were marked payable on death, or if her property was titled as joint tenants with right of survivorship, these types of assets will not pass through probate but will transfer immediately to the joint tenant or named beneficiary. The same is true with life insurance, stocks and bonds, and retirement plans if they name beneficiaries.
However, for items that are not immediately transferable on death, these items will need to be probated. These items could include real estate, bank accounts and other assets. As executor, it is your responsibility to open a bank account for the estate where money can be deposited and checks and can be written to pay estate expenses. Next, you will have to file state and federal taxes. In some states, the state requires the transferred inheritance tax and an estate tax. It is always a good idea to seek professional assistance when dealing with estate taxes.
An executor must also notify the social security administration. In some situations, the funeral home may take care of that for you. Additionally, you would need to notify the post office and any life insurance companies or pension plans.
As executor, it is also your responsibility to settle debts and distribute assets. Often executors are told to wait for four to six months before making distributions under the Will because of potential claims by creditors. Of course, the timing of the distributions depends on the nature of the assets. If there are no known creditors and the estate has very little in it, the entire process could be handled relatively quickly. Generally speaking, it is the more extensive, more valuable estates that contain multiple types of assets including trusts, real property, investments, and businesses that can take a much longer time to administer. For example, assume someone dies owning multiple car dealerships with a total estate valued around $20 million. This individual also has a wife and ex-wives and numerous children and stepchildren. It is not unheard of for an estate of this type to take five or more years, and generally a lot of litigation, to be resolved.
A few other responsibilities of an executor include locating missing beneficiaries of the Will and preparing a final accounting of the estate. That accounting is going to include a breakdown of all distributions. In many states, inheritance tax is due eight months after the person’s death and federal taxes are typically due nine months after death. Keep in mind that tax implications vary from state to state and there are threshold limits that trigger the need for tax filings. It is possible that an estate may fall below the threshold.
Finally, as part of the final distribution of assets, the executor may be responsible for listing items for sale including property and the decedent’s primary residence. A situation like this typically occurs when there are multiple beneficiaries to a piece of property. In most cases, the beneficiaries want to sell the property and split the profits. Generally speaking, it is the executor’s responsibility to do that.
Some states do allow an executor to take a small fee for their time and it varies by state. To learn more about how an executor is compensated, click here to read our article about it.
The role of the executor is an important one. The amount of work that the executor needs to do really depends upon your individual state’s laws and the nature and value of the decedent’s estate. It is best to make sure that the person you are going to act as the executor for tries to do as much work as possible before he or she passes away. To learn more about legal and financial issues concerning aging, visit our resource center.