Learn About the Role of an Executor or Executrix
Some Executor Duties Can Vary by State
An executor is an individual responsible for managing the affairs of a deceased person’s probate estate. A decedent can no longer own property, so everything owned at the time of 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 from the cash and assets left behind, then transferring ownership of what remains to beneficiaries.
Other Names for an Executor
"Executor" is the most commonly used term these days for any individual who serves in this capacity. "Executrix" is something of a holdover from more gender-specific days, when a woman serving in this capacity was tagged with a variation of the title.
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.
A decedent's assets are transferred according to state law rather than by his own wishes if there is no 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.
The executor must deal with beneficiaries, heirs, and professionals, such as accountants and appraisers. An executor's duties throughout probate occur in a somewhat chronological order.
Submitting the Will
The executor's first order of business is to submit the decedent’s last will and testament to the probate court for review and acceptance. 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 and meets the letter of the law in that state. It can contain no procedural errors.
This hearing also provides an opening in most states for individuals who have an interest in the estate to contest the will. They can then open a separate lawsuit to convince the court that the will is invalid and that its terms should not be honored.
Appointing an Executor
Decedents typically name their executors in their wills, and the judge will almost always appoint these individuals unless beneficiaries object, which 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 to oversee the estate. 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.” Executors provide these documents to entities such as insurance companies or financial institutions to confirm that they have the legal authority to act on behalf of the estate.
The executor must first identify all the decedent’s assets and gather them for safekeeping whenever 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.
Some or all of these assets might be mentioned in the decedent's 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 making the will, or might have overlooked or forgotten about some.
The executor must then maintain the assets when necessary after they've been gathered and identified. This can involve making sure that insurance policies don’t lapse, and that mortgages, car loans, and other installment loans are kept current.
The estate's money is used for this purpose. Survivors don't have to come out of pocket. The executor will set up an estate bank account, and the decedent's personal bank accounts and any other cash assets are then transferred into this account so the estate can operate.
The executor must submit an accounting of all the deceased's 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 cut off 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 be notified because the estate is responsible for paying all final bills and debts.
Family members, beneficiaries, and heirs typically aren't liable for a decedent's debts, no matter what creditors might insinuate. An exception exists if they're cosigners on a particular loan or account, and for spouses in some community property states.
The executor must first identify the deceased's creditors, often through the same methods used to pinpoint the assets. The executor must then send them a notice that the decedent has died, and most states also require running 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, those debts are paid from estate funds. The executor can also decline to pay certain debts if they don't appear to be legitimate.
The rejected creditor can then typically petition the court to override the executor's decision. This usually requires that the executor appears in court to defend the estate's position, often with the assistance of an attorney who's paid for by the estate.
Dealing With Taxes
The executor is also responsible for having all assets valued for tax purposes. This determines whether any estate taxes are due. An executor has two options here: Date of death values can be used, or the executor can elect to use an alternate valuation date six months later.
The Internal Revenue Code includes specific rules for using an alternate date, and this option can only be used for assets that have not been sold or passed on to heirs within those six months. If so, that property would be valued as of the date of distribution.
As a practical matter, an estate would have to be pretty large to be liable for estate taxes. Only those with values exceeding $11.4 million are subject to an estate tax on the balance over this amount for deaths that occur in 2019. This exemption is expected to be marginally adjusted upward in 2020 to accommodate inflation.
But 12 states and the District of Columbia also have an estate tax as of 2019, and these exemptions can be significantly less than $11.4 million at the federal level. The executor must prepare and file a federal or state estate tax return, or possibly both if the estate exceeds either of these tax exemptions.
The executor might also have to prepare and file an estate income tax return if any assets earn income during the probate period, and 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 made on behalf of the estate. The judge will then grant the executor authority to distribute the estate’s remaining funds and property to the beneficiaries named in the decedent’s will, assuming the accounting is approved.
Is the Executor Paid for All This?
It's quite a job, and yes, an executor is usually entitled to payment. How much can depend on the state in which the decedent has died and where the will is being probated.
Many people include instructions for their executor's compensation in 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 also beneficiaries under the terms the will and the estate aren't complicated.
The executor's payment comes out of the estate, decreasing the amount that's left to be transferred to beneficiaries. And payments for services rendered by the executor represent taxable income to that individual, whereas cash inheritances generally aren't taxable, at least not at the federal level.
These factors can make a larger inheritance the preferred method of payment.
Every Estate Can Be Different
Not all estates require all these steps, and some particularly complicated estates might require additional work. State laws can vary as well. This is a basic overview of what the job can entail. Consult with an estate attorney to find out exactly what will be required of you if someone has asked you to act as executor.