The Role and Duties of an Executor
August 22, 2024 | Sage Capone
The passing of a loved one is a difficult period of life. As a successor trustee or executor, it’s even harder as you are responsible of carrying out the duties of distributing the assets. This can take the role of selling a home, closing financial accounts and being impartial and fair amongst all siblings and parties involved.
The most important way to effectuate this responsibility is to locate your parent’s estate planning documents. This could be located at a bank security box, personal storage area or originals from the performing estate attorney. Next, make sure to get at least 10 copies of death certificates and have all mail forwarded to your residence.
Checklist of financial documents
- Estate Planning documents
- Bank statements
- Life Insurance policies and beneficiaries
- Investment and Retirement accounts
- Real estate properties and tangible assets
- Any outstanding debts, mortgages, credit card or unpaid bills
- Contact credit card bureaus
- Notify social security (usually done by the funeral home)
Importance of an Estate Plan verse a Living Will
The estate attorney will be crucial in evaluating if your loved one had any designations appointed in their estate plan or policies. If assets owned by your parents were not passed through a beneficiary designation like a retirement account, estate plan or life insurance policy then everything will need to go through probate. Probate is a lengthy and expensive process of appointing an executor and distributing the assets. It’s important to realize that a living will does not designate tangible assets and only an estate plan document completed by an attorney is essential in entrusting all assets are distributed tax free to heirs.
An Executor needs to create an Estate Account
If your parents or grantor created an estate plan, then your role becomes simplified as an executor of the trust. It’s crucial to open an estate account with a bank. You will need to get a separate Employer Identification Number (EIN). This will allow you to pay any expenses and collect income owed. If your parents didn’t receive their last required minimum distribution (RMD) from retirement accounts this will enable payments to this account.
Real Estate and Asset Distributions
Other tasks involve real estate considerations. Should your parent(s) lived alone then you will need to contact a real estate attorney to discuss federal capital gains.
Here are guidelines to follow:
- Discuss the process of liquidating real estate
- Contact Insurer if home is vacant for continued coverage
- File federal and state tax return on inheritance tax earned by estate usually due nine months after date of death
- Notify beneficiaries once assets have been valued to distribute assets after taxes have been paid
- Non-retirement assets can be eligible for step-up in basis which will reduce taxes for the beneficiary.
Final Steps in Settling Estate and Assets
Once most of the steps are fulfilled above, the final distribution of assets can be completed. The estate plan/trust can be distributed in many ways. Some executors can decide to do partial distributions depending on creditors. Retirement accounts should pass directly to the heirs. These can be listed in the trust along with real estate and a pour-over will is common to distribute the assets. Once you receive your inheritance, it’s important to make smart financial decisions. A financial advisor or an estate planning consultant can help you create a plan for yourself and make informative legal decisions.