THE ROLE OF AN EXECUTOR

The executor is the person, or persons, nominated in a Will to carry out the deceased person’s directions and requests as stated in the Will, and to perform certain obligations on behalf of the decedent and his or her estate, but can only act after being formally appointed by the court.

The executor is a fiduciary and therefore owes a duty of absolute loyalty to act as the Will directs. The executor must collect and bring into the estate all assets and property of the decedent; pay the decedent’s debts, including taxes; file the decedent’s final income tax returns and federal and state estate tax returns; account to the beneficiaries for his or her acts as executor; pay over or deliver to the beneficiaries named in the Will their legacies and bequests; and fund any trusts created under the decedent’s Will.

An executor has very broad powers to act under the law. He or she may accept additions to the estate; invest and reinvest property of the estate; keep in effect fire, rent, title and casualty insurance; and sell assets on terms that are advantageous to the beneficiaries.

While the following list is not exhaustive, proper estate administration requires the executor and/or his or her attorney to perform the following functions:

Consider Immediate Cash Needs of Family and Obtain Cash From:

*  Joint bank accounts

*  Pension/profit-sharing benefits

*  Life insurance proceeds

 

Secure Decedent’s Residence and/or Office

*  Have tangible property inventoried

*  Protect perishable assets

*  Review insurance coverage

*  Cancel credit cards

*  Take possession of checkbooks and passbooks, stocks, bonds and other assets

*  Get control of mail

*  Discontinue telephone service and other utilities when advisable

 

Commence Probate Proceeding

*  Locate Will

*  Identify any potential problems

* Identify decedent’s next of kin and their whereabouts

*  File Will with court

*  File for ancillary probate if any assets are out of state

 

Marshall the Assets

*  Search for assets

*  Arrange for safe deposit box opening, if any

*  Send letters to banks, brokerage firms, mutual funds, etc.

*  Apply for insurance proceeds

*  Transfer assets to the estate or beneficiaries

*  Examine decedent’s employment contract or deferred compensation arrangement

*  Review decedent’s financial records (e.g. tax returns, business interests)

 

Determine Cash Requirements of Estate

* Notify and pay legitimate creditors

* Pay funeral expenses

* Make preliminary estimate of estate and income taxes to be paid

* Consider liquidity problems of assets

* Open estate bank accounts

 

Determine Estate Tax Liability, if any

* 9 months after death – State and Federal payments of estate taxes are due and must file returns or an extension to file

* Consider alternate valuation of assets to reduce estate taxes

 

Administration of Estate

*  Collect all income and other money due decedent or estate

* Review securities owned by decedent

* Analyze market and investment trends

* Keep detailed record of all income, expenses and estate transactions

* Examine claims against estate and determine their validity

* Pay debts and legacies (the law in New York requires payment not later than 7 months from the date the executor was first appointed by the Surrogate’s Court)

 

Filing Tax Returns

*  File New York State Estate Tax Return if estate is $4,187,500 or greater

* File federal estate return if estate is $5,450,000 or greater

* File income tax returns for decedent

* File income tax returns for decedent’s estate

 

Estate Planning for Everyone

All too often when an accident or sudden illness debilitates a loved one, their family is left trying to figure out how to keep them from losing everything they’ve worked so hard for. This is why it is my firm belief that basic estate planning, asset preservation, and planning for a health catastrophe or death, is something that everyone should consider seriously.

Personal Estate Preparations

 Some estate planning can be completed on your own. The simplest form of estate planning is to have a bank or brokerage account that is either:

  • In joint names with right of survivorship with another person;
  • “In trust” for another person;
  • Payable on death to another person; or
  • Names someone as a beneficiary (as in a life insurance policy and IRA).

This course of action is the cheapest and the easiest way to direct assets upon your death and, although it may not be appropriate in every situation, in certain cases I would recommend it.

Additionally, there are 3 simple steps that everyone should take to save your loved ones’ time, money and unnecessary anguish after your death. The person of your choosing should know:

(1) Your financial set-up in case of an emergency;

(2) A list of where the bank books, insurance policies, deeds or mortgage papers are kept, which should be in an easily accessible place (not a safe deposit box); and

(3) The location and type of your health and/or disability coverage

Legal Documents For Estate Planning

 A method of leaving assets on death is by having a Will.  It can be simple or complex, depending on your circumstances and goals, and the bequests can be outright or in trust.  If you have a Will, it must be probated in the local surrogate’s court which results in probate fees paid to the court, the Will becomes a public document, legal fees often have to be paid, and there is some time involved to have the personal representative appointed and to make the necessary transfers.

Another way to leave assets on death is to use a trust or multiple trusts.  You can use testamentary trusts, which are created by a Will, living trusts (also known as inter vivos trusts) which can be irrevocable or revocable, Medicaid planning trusts, insurance trusts, marital trusts, charitable trusts, credit shelter trusts, etc.  Each person’s situation is unique. There are certain advantages to using trusts, both financially and in terms of asset control. It can also avoid involving the Courts.

If you decide not to create a Will or trust, upon your death the State where you live will decide who will administer your assets and to whom they will go.

In addition to planning for the transfer of your assets on your death, there are a number of very important documents that affect you while you’re alive that everyone should have.  The documents are:

  1. Health care proxy
  1. Living Will
  1. Durable Powers of Attorney, comprehensive long form

Together, these documents will ensure that the person of your choosing will make the medical decisions that you want and will avoid a guardianship proceeding by appointing your trusted relative or friend to act as your Agent under the power of attorney.  The powers can take effect immediately or upon the happening of a certain event or circumstance.

Contact us at 914-831-6250 or jgruner@grunerlaw.com to find out how an estate planning attorney can help you accomplish your goals.