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PERSONAL FINANCE

Executors FAQ

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An executor is the person you name in your will to handle your property after death. The executor must be prepared to carry out a long list of tasks, prudently and promptly.

What Does an Executor Do?

Essentially, the executor's job is to protect the deceased person's property until all debts and taxes have been paid, and see that what's left is transferred to the people who are entitled to it. The law does not require an executor to be a legal or financial expert or to display more than reasonable prudence and judgment, but it does require the highest degree of honesty, impartiality and diligence. This is called a " fiduciary duty" - the duty to act with scrupulous good faith and candor on behalf of someone else.

Executors have a number of duties, depending on the complexity of the deceased person's estate. Typically, an executor must:

  • Decide whether or not probate court proceedings are needed. If the deceased person's property is worth less than a certain amount (it depends on state law), formal probate may not be required.
  • Figure out who inherits property. If the deceased person left a will, the executor will read it to determine who gets what. If there's no will, the administrator will have to look at state law (called " intestate succession" statutes) to find out who the deceased person's heirs are.
  • Decide whether or not it's legally permissible to transfer certain items immediately to the people named to inherit them, even if probate is required for other property.
  • If probate is required, file the will (if any) and all required legal papers in the local probate court.
  • Find the deceased person's assets and manage them during the probate process, which may take up to a year. This may involve deciding whether to sell real estate or securities owned by the deceased person.
  • Handle day-to-day details, such as terminating leases and credit cards, and notifying banks and government agencies - such as Social Security, the post office, Medicare and the Veterans Administration - of the death.
  • Set up an estate bank account to hold money that is owed to the deceased person - for example, paychecks or stock dividends.
  • Use estate funds to pay continuing expenses - for example, mortgage payments, utility bills and homeowner's insurance premiums.
  • Pay debts. As part of this process, the executor must officially notify creditors of the probate proceeding, following the procedure set out by state law.
  • Pay taxes. A final income tax return must be filed, covering the period from the beginning of the tax year to the date of death. State and federal estate tax returns may also be required, depending on how much property the deceased person owned at death and to whom the property was left.
  • Supervise the distribution of the deceased person's property to the people or organizations named in the will.

How do I choose an executor?

An executor doesn't need special financial or legal knowledge. Common sense, conscientiousness and honesty are the main requirements. An executor who needs help can hire lawyers, accountants or other experts and pay them from the assets of the estate.

The person you choose should be honest, with good organizational skills and the ability to keep track of details. If possible, name someone who lives nearby and who is familiar with your financial matters; that will make it easier to do chores like collecting mail and locating important records and papers.

Many people select someone who will inherit a substantial amount of their property. This makes sense because a person with an interest in how your property is distributed is likely to do a conscientious job of managing your affairs after your death. He or she may also come equipped with knowledge of where your records are kept and an understanding of why you want your property left as you have directed.

Whomever you select, make sure the person is willing to do the job. Discuss the position with the person you've chosen before you make your will.

Are there restrictions on whom I may choose as my executor?

Your state may impose some restrictions on who can act as executor. You can't name a minor, a convicted felon or a someone who is not a U.S. citizen. Most states allow you to name someone who lives in another state, but some require that an out-of-state executor be a relative or a primary beneficiary under your will. Some states also require that nonresident executors obtain a bond (an insurance policy that protects your beneficiaries in the event of the executor's wrongful use of your estate's property) or an in-state resident to act as the executor's representative. These complexities underscore the benefits of naming someone who lives nearby. If you feel strongly about naming an executor who lives out of state, be sure to familiarize yourself with your state's rules.

Does the person named in a will as executor have to serve?

No. When it comes time, an executor can accept or decline this responsibility. And someone who agrees to serve can resign at any time. That's why many wills name an alternate executor, who takes over if necessary. If no one is available, the court will appoint someone to step in.

Does the executor get paid?

Obviously, the main reason for serving as an executor is to honor the deceased person's request. But the executor is also entitled to payment. The exact amount is regulated by state law and is affected by factors such as the value of the deceased person's property and what the probate court decides is reasonable under the circumstances. Commonly, close relatives and close friends (especially those who are inheriting a substantial amount anyway) don't charge the estate for their services.

Must the executor hire a lawyer?

Not always. An executor should definitely consider handling the paperwork without a lawyer if he or she is the main beneficiary, the deceased person's property consists of common kinds of assets (house, bank accounts, insurance), the will seems straightforward, and good self-help materials are at hand. Essentially, shepherding a case through probate court requires shuffling a lot of papers. In the vast majority of cases, there are no disputes that require a decision by a judge. So the executor may never see the inside of a courtroom, but will certainly become familiar with the court clerk's office. The executor may even be able to do everything by mail. Doing a good job requires persistence and attention to tedious detail, but not necessarily a law degree.

If, however, the estate has many types of property, significant tax liability or potential disputes among inheritors, an executor may want some help.

There are two ways for an executor to get help from a lawyer:

  • Hire a lawyer to act as a " coach," answering legal questions as they come up. The lawyer might also do some research, look over documents before the executor files them or prepare an estate tax return.
  • Turn the probate over to the lawyer. If the executor just doesn't want to deal with the probate process, a lawyer can do everything. The lawyer will be paid out of the estate. In most states, lawyers charge by the hour ($150 - $200 is common) or charge a lump sum. But in a few places, including Arkansas, California, Delaware, Hawaii, Iowa, Missouri, Montana and Wyoming, state law authorizes the lawyer to take a certain percentage of the gross value of the deceased person's estate unless the executor makes a written agreement calling for less. An executor can probably find a competent lawyer who will agree to a lower fee.

If an executor doesn't want to hire a lawyer, is there any other way to get help?

Lawyers aren't the only source of information and assistance. Here are some others:

  • The court.

    Probate court clerks will probably answer basic questions about court procedure, but they staunchly avoid saying anything that could possibly be construed as " legal advice." Some courts, however, have lawyers on staff who look over probate documents; they may point out errors in the papers and explain how to fix them.

  • Other professionals.

    For certain tasks, an executor may be better off hiring an accountant or appraiser than a lawyer. For example, a CPA may be a big help on some estate tax matters.

  • Paralegals.

    In many law offices, lawyers delegate all the probate paperwork to paralegals (non-lawyers who have training or experience in preparing legal documents). Now, in some areas of the country, experienced paralegals have set up shop to help people directly with probate paperwork. These paralegals don't offer legal advice; they just prepare documents as the executor instructs them, and file them with the court. To find a probate paralegal, an executor can look in the phone book under " Typing Services" or " Attorney Services." The executor should hire someone only if that person has substantial experience in this field and provides references that check out.

Copyright 1999 Nolo.com Inc.

Last updated: Oct 25, 1999




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