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

 

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