Learn About the Role of an Executor or Executrix
Some Duties Can Vary But Most Are Common
An executor—sometimes referred to as an executrix when a woman assumes the job—is the individual responsible for managing the affairs of a deceased person’s probate estate. A decedent can no longer own property, so everything he owned at the time of his death must be legally transferred to living beneficiaries.
This is where probate comes in and what it accomplishes. It's the legal process of making sure the decedent's debts and liabilities are paid off from the cash and assets he left behind, then transferring ownership of what remains to his beneficiaries.
What's in a Word?
"Executor" is the more commonly used term these days for any individual who serves in this capacity, even when she's a woman. "Executrix" is something of a holdover from more gender-specific days gone by.
Sometimes the gender-neutral terms “personal representative” or "administrator" are used in place of either executor or executrix, but this is more common with intestate estates, those where the decedent died without leaving a will. In this case, his assets are transferred according to state law rather than by his own wishes as set forth in a last will and testament.
The Probate Process
Probate can last for months or even years in some cases if an estate is extremely complicated. The executor is responsible for managing the estate throughout the entire process. This typically involves seeking approval from the probate court before taking some actions, and it can involve numerous court filings and some court appearances.
Submitting the Will
The executor's first order of business is to submit the decedent’s last will and testament to the probate court. This officially begins the process of opening the probate estate.
The executor must then attend a hearing where a judge will determine if the will is valid—it meets the letter of the law in that state and contains no procedural errors. This hearing also provides an opening in most states for certain individuals who have an interest in the estate to contest the will. They can then open a separate lawsuit to convince the court that it's invalid and its terms should not be honored.
Appointing an Executor
A decedent will typically name her choice for executor in her will, and the judge will almost always appoint that individual unless beneficiaries object, and this also requires a separate lawsuit. Otherwise, if the will is silent or there is no will, a judge will usually appoint a close family member. Many states have statutes citing which relatives qualify and in what order of preference.
The judge will grant the executor authorization to act on behalf of the estate through “letters testamentary” or “letters of administration.” He can provide these documents to various entities such as insurance companies or financial institutions to confirm that she has the legal authority to act on behalf of the estate and its beneficiaries.
The executor must first identify all the decedent’s assets and gather them for safekeeping when it's feasible. This might be the case if the decedent left a valuable piece of jewelry or an item of artwork. Property of this nature can't be left unsecured so a family member or anyone else might freely walk off with it.
Part of this process can be a literal hunt for assets, such as bank and investment accounts, insurance policies, or safe deposit boxes. The executor will typically go through the deceased's personal papers and interview family members in an effort to track down all accounts that might exist so that he can take control of them.
Some or all of these assets might be mentioned in his will, but the executor can't simply assume that there are no other assets just because they're not bequeathed to anyone. The decedent might have acquired them after he made the will, or he might have overlooked some.
When all assets have been gathered and identified, the executor must then maintain them when necessary using estate funds. This can involve making sure that insurance policies don’t lapse, and that mortgages, car loans, and other installment loans are kept current. It will require setting up an estate bank account. The decedent's personal bank accounts and cash assets are then transferred into this account so the estate can operate.
The executor must submit a report or listing of all assets to the probate court in most states.
Making Notifications of the Death
The executor will make all necessary notifications of the death, including to beneficiaries named in the will if they're not already aware. This might or might not be a formal process.
Services, subscriptions, and benefits the decedent was receiving must be contacted and terminated as well. Credit cards should be officially canceled, and the Social Security Administration must be notified if the decedent was receiving benefits.
Paying the Decedent's Debts
The decedent's creditors must also be notified because the estate is responsible for paying his final bills and debts. Family members, beneficiaries, and heirs typically aren't liable for these debts, no matter what creditors might insinuate, unless they're cosigners on a particular loan or account. An exception exists for spouses in some states.
The executor must identify the deceased's creditors, often through the same methods she used to pinpoint all his assets. She must send them notice that the decedent has died, and most states also require that she run a newspaper notice to ensure that unknown creditors are also alerted.
Creditors can then make claims to the estate for payment. The executor decides if the claims are valid and, if so, she'll pay those debts from estate funds. She can also decline to pay certain debts if she feels they’re not valid. In many states, the creditor can then petition the court to override her decision. This usually requires that the executor appear in court to defend her position, often with an attorney paid for by the estate.
Dealing With Taxes
The executor is responsible for having all assets valued for tax purposes so it can be determined if estate taxes are due. He has two options here: He can use date of death values, or he can use an alternate valuation date six months later. The Internal Revenue Code includes specific rules for using an alternate date, and this can only be used for assets that have not been sold or passed on to heirs within those six months. If so, the property would be valued as of the date of distribution.
As a practical matter, however, an estate would have to be very large to be liable for estate taxes. Only those with values exceeding $11.18 million are subject to an estate tax on the balance over this amount for deaths that occur in 2018. This exemption is expected to be marginally adjusted upward in 2019 to accommodate inflation.
Twelve states and the District of Columbia also have an estate tax as of 2018. The exemption can be significantly less than $11.18 million in some states. If the estate exceeds either of these estate tax exemptions, the executor must prepare and file a federal or state estate tax return or possibly both.
She might also have to prepare and file an estate income tax return if any of its assets earn income during the probate period. She will prepare and file a personal income tax return for the decedent’s final year of life.
Closing the Estate
Finally, the executor will submit an accounting to the court detailing all actions and transactions he made on behalf of the estate. If the judge approves the accounting, he will then grant the executor authority to distribute the estate’s remaining funds and property to the beneficiaries named in the decedent’s will.
Is the Executor Paid for All This Work?
It's quite a job, and yes, an executor is usually entitled to payment. How much she might be paid depends on the state in which the decedent has died and where the will is being probated.
Many people include provisions for their executor's compensation in the terms of their wills. Courts typically honor these provisions if they don't fly in the face of state law, and state law takes over if the will is silent as to payment.
As a practical matter, many executors who are closely related to the decedent waive payment, particularly when they're beneficiaries under the terms the will and when the estate isn't complicated. The executor's payment comes out of the estate, decreasing the amount that's left over for beneficiaries. And payments for services rendered represent taxable income to the executor, whereas cash inheritances generally aren't taxable, at least not at the federal level.
In many cases, it can make more sense for the executor to forgo payment and accept a somewhat larger inheritance instead.
Every Estate Can Be Different
Not all estates require all these steps, and some particularly complicated estates might require additional work. This is a basic overview of what the job can entail. Consult with an estate attorney if someone has asked you to act as executor to find out exactly what will be required of you in your state.