An executor’s role in the estate planning process starts only after the death of the testator. However, the duties of an executor of a will ideally start way before then. This ensures the estate plan created by the testator is executed most optimally.
The executor plays a crucial role in this process to settle the estate, distribute the assets to the beneficiaries and protect the estate assets. Their duties start even before the death of the testator and continue for long after their death:
1. Understanding the duties of an executor of a will
An executor can make the best of their role only if they know what their responsibilities entail, and this is the first thing an executor of a will should do. It is extremely vital for someone appointed to this role to understand what an executor can and cannot do.
They can do this in a better way if they can talk to the testator beforehand. This can help them understand their duties on a more personal level.
2. Planning testator’s funeral
Similar to the previous duty, it helps if the executor is informed by the testator about how they want their funeral to be arranged. In case there are no instructions, however, the executor can take care of the funeral expenses with the help of the estate left behind.
In this process, it is necessary to remember that the same estate needs to be distributed to the beneficiaries as well and the finances need to be managed accordingly. Funeral planning usually includes, but is not limited to, selecting a funeral home, choosing the burial, and deciding the memorial service.
3. Obtaining and reviewing documents
One of the first things to do after the death of the testator is to locate and analyze important estate planning documents to execute the plan. This includes the death certificate of the testator, their latest will, and trust documents.
4. Submit to the local probate court
Depending on the executor’s legal expertise, they may or may not choose to get professional help during this process. Here, they need to make copies of the estate planning documents and file them at a local probate court.
Following this, the court will examine the documents for validity and officially appoint the executor in their role. This is when the executor’s legal duties and responsibilities start.
5. Prepare for Probate
Probate is the process of legally settling the testator’s estate. The executor’s responsibilities span throughout this process. The most important of them all is deciding what kind of probate is required. This depends on the type of assets the testator owned that need to be distributed.
Probate is also where beneficiaries can contest the will. The executor also needs to represent the estate in court for any legal action, excluding criminal and defamatory affairs.
6. Notify the death
Letting people know about the testator’s death helps the executor learn about the testator’s debts and even collect any money owed to the testator, including life insurance proceeds. This can even enable the executor to track any credit card frauds.
The executor can choose to either notify the organizations and individuals personally or publish an obituary in the local paper.
7. Stay in touch with beneficiaries
Perhaps the most important responsibility of the executor is to keep the beneficiaries updated with every step in the probate process. This includes the finances and the decision-making. Moreover, the beneficiaries can even hold the executor accountable for any inconveniences in the estate settlement process, making this step extremely important for the executor.
8. Keep records
The executor is answerable to the court and the beneficiaries. The probate closing process, too, requires the executor to produce detailed accounting of every transaction and step they took while executing the estate plan.
9. Value the estate
An estate comprises property, jointly held assets, possessions like artwork and jewelry, and money. The executor needs to estimate the financial worth of all these components of the estate. This can be done by using the date of death value or IRC’s alternative valuation date.
They also need to monitor a need to pay off any pending debts and taxes.
10. Manage Finances
Managing and settling the estate with proper organization and efficient methods can ensure the beneficiaries receive the maximum benefits from the estate. This includes:
- Forming a record-keeping system,
- Storing invoices and other important records,
- Creating a bank account in the estate’s name,
- Canceling unnecessary subscriptions and bills, etc.
11. Pay off debts and taxes
The estate can be distributed only after settling any debts and taxes owed by the estate. The executor needs to determine the authenticity of different bills, file any income taxes, estate taxes, gift taxes, or inheritance taxes that are applicable. Only the remaining estate after settling these bills can be distributed to the heirs and beneficiaries.
12. Distributing the Estate
After valuing the estate assets, and paying off debts and taxes, the executor needs to learn the interests of the beneficiaries and interpret the will correctly to distribute the assets to the right people. This can be done by dividing the estate value by each beneficiary’s share or simply by the instructions left behind by the testator if they are detailed enough.
13. Settling the estate
No beneficiary may want a particular asset or personal belonging. In that case, the executor needs to plan for the sale or donation of those items.
Sometimes, this may include real estate too. The executor needs to ensure the maintenance of the property until its sale. They also need to make sure the property is not sold to anyone, including themselves, below the market value unless they have permission from the beneficiaries.
14. Closing the estate
Once all responsibilities towards the estate are settled, the executor needs to close the probate process. This is done by submitting proper records of the entire estate settlement process and getting approval from the judge. The assets and distributed after this and the executor’s duties come to an end.
Digital Executor for a Digital Estate Plan
Most often, people tend to forget about their digital assets while creating an estate plan. More people than ever rely on the internet for day-to-day needs, leaving a large financial and emotional trail online, which needs to be protected from identity theft after one’s death.
You can do this by creating a digital estate plan that lets you pass on your digital assets like cryptocurrency and photo albums to your loved ones. And this plan can be executed by your digital executor.
Similar to an executor for an estate plan, your digital executor is responsible for distributing your digital assets. Moreover, a law called RUFADAA ensures your digital estate plan is executed effectively without compromising on your digital privacy.