The Role of Executor
The unsettled estate of a deceased celebrity is back in the news. We recently discussed the problems surrounding Aretha Franklin’s multimillion dollar estate, which is now in probate. Had she established a living trust instead of leaving a handwritten will, the estate would not have gone through probate court. As a second generation estate planning law firm, Phelps LaClair advises our clients in Chandler, Mesa, Phoenix and Scottsdale to avoid probate by establishing a will within a living trust. This is due to the extra legal costs and the delay of distribution of the estate’s assets when an estate is in probate. But those are not the only problems with probate, as this week’s news story reveals.
Sabrina Owens, a niece of Ms. Franklin’s, resigned as executor of the estate. It is always a very demanding task for those who have been appointed as executor of a will. When family is involved, it can also be devastating to relationships. What is the role of Executor of an estate and what is it that makes being an executor such a complicated task?
The Role of Executor
An executor is a person who has been named in a will or designated by a probate court to carry out the desires of the deceased as stated in the will. The executor is in charge of protecting the assets of the estate, paying the debts and taxes of the estate, and distributing property according to the terms of the will. In carrying out these duties, the executor must examine and understand the will, locate all relevant documents, notify all interested parties and apply for probate in order to secure the authority to carry out the business of the will.
Responsibilities of the Executor
The responsibilities of an executor demand time and organizational skills. If you are named as Executor, one of your first responsibilities is to pay for funeral and burial expenses. These are paid out from the estate’s funds. The funeral home will provide you with the death certificate. You will need this to close financial accounts, cancel federal benefits, and file the final tax returns.
Property management is the next big responsibility. As the executor, you must ensure the safety of all of the estate’s property. You will need to list all of the estate’s assets and liabilities, collect any property in the possession of others, and hire an appraiser to determine the value of all of the assets. If the estate includes a business, it will be your responsibility to see that the business continues to run well. This may involve hiring a business consultant or manager. It is also your responsibility to see that any profits generated by the business are invested prudently.
Debt settlement is another financial duty that you are responsible for. You will need to determine who the creditors are and what is owed. The debts of the deceased are the debts of the estate, and are paid by the funds of the estate. If there is insufficient liquidity to settle debts, then some or all of the property may need to be sold to pay the creditors. You, as executor, are not required to pay out of your own pocket. And if the debts are more than the estate is worth, the heirs are not responsible to pay either.
When the taxes and the creditors have been paid, it is your responsibility to distribute the assets according to the terms of the will. This may involve setting up a trust for the beneficiaries. It may include real estate transfer and filing deeds. Or it may require all property to be sold and the assets divided as cash payouts to the heirs. Whatever is needed, it will be your responsibility to do.
As Executor, you will have kept detailed, accurate records of everything you have done to settle the estate. You will need to provide these records and all relevant documents to the beneficiaries and the court. When you file your final accounting with the court, they will close the estate and your role as executor will be finished.
Are you prepared for the position?
The ultimate responsibility of an executor is to work for the benefit of the heirs of the estate. If you do not feel you have the time or skills to carry out the duties, you may decline the position, as Ms. Owens has done. If you do decide to take it on, you are entitled to fair compensation to be paid from the estate.
We Can Help!
At Phelps LaClair, we have handled will and trust administration for 40 years. If you are named an executor of a will, especially if family is involved, we can confidently say without hesitation that your best option is to hire a professional to help you get through all of the complications of probate. And when it comes time for you to develop your own estate plan, we encourage you to come see us first. We offer a no-obligation, free first consultation. We will discuss your goals and desires, and offer superior options to meet your needs. With a well designed living trust, there is no need for you or your heirs to suffer the slings and arrows of outrageous probate.