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Although the time and effort involved will vary with the size of the estate and the family dynamic, being named the executor of a deceased individual’s estate is a thankless job that can be time-consuming and complicated. An executor is an individual who is nominated in a decedent’s will to be responsible for carrying out the wishes of the decedent. Alternatively, where a decedent dies intestate (without a will), an administrator can be appointed by the court to administer the decedent’s estate. It is important to note that a nominated executor or proposed administrator does not have to accept the position.
As a fiduciary, an executor can be found personally liable for the mismanagement of estate funds that may result in a reduction of a beneficiary’s interest in the estate. Accordingly, an executor must be careful when carrying out their fiduciary duties. Even prior to appointment, the nominated executor has certain preliminary duties they may have to perform to marshal the decedent’s assets. Most notably, the responsibilities of an executor include the following:
Locate the decedent’s Will
If not already in the possession of the nominated executor, they may have to search the decedent’s belongings and contact the decedent’s attorney to confirm whether a Will exists. If only a copy of the Will is in possession of the nominated executor, they may need to contact the attorney draftsman to obtain the original. A nominated executor will also need to obtain certified copies of the decedent’s death certificate.
Hire a professional
As previously stated, the responsibilities of an executor can be a complicated one. While the executor is not required to hire an attorney and accountant, mistakes made by an executor can be costly. Accordingly, hiring an attorney and accountant can help the executor make sure all proper steps are taken, deadlines are met, and the executor is protected both as a fiduciary and as an individual. It is important to note that the expenses associated with hiring professionals can often be paid by the estate and not the executor individually.
Submit the decedent’s Will for probate
If a valid Will exists, the executor typically submits the original Will for probate in the surrogate’s court located in the county in which the decedent resided. If the court finds the Will to be valid, they will issue Letters Testamentary to the nominated executor, officially beginning the work of the executor and providing the executor with the authority to marshal and distribute the decedent’s probate assets. If there is no Will, then the proposed administrator can apply for Letters of Administration.
Notify all interested parties
Part in parcel of the probate proceeding is the requirement to notify the beneficiaries of the Will and the decedent’s heirs who may not be provided for under the Will. If there is no Will, then the administrator must still notify the decedent’s heirs of the administration of the decedent’s estate.
Once appointed, an executor or administrator may have to perform the following notable fiduciary duties:
Protect, preserve, and marshal the assets that comprise the decedent’s estate
The executor or administrator must make sure the decedent’s property is kept safe and must prevent any loss of value. Should anything occur on the executor or administrator’s watch that may depreciate the beneficiaries’ interest in the estate, the executor or administrator can be held personally liable. Typically, the executor or administrator will establish an estate account and consolidate the liquid assets of the decedent or, in the case of brokerage accounts and mutual fund accounts, transfer the account in the name of the decedent’s estate.
Identify and satisfy the debts
One of the responsibilities of an executor or administrator is that they must determine the creditors of the decedent’s estate and satisfy the debts for which the estate is liable. The executor or administrator should use the estate’s fund to satisfy any valid creditor claims and should not be personally liable for said claims, except for their own malfeasance. Specifically, if an executor or administrator had reason to know of a valid creditor claim but chose to distribute the estate prior to payment of said claim, that executor or administrator can be held personally liable for the claim. Valid claims include, but are not limited to, funeral expenses, probate and administration fees, taxes, and debts and liabilities of the decedent. A fiduciary may also reimburse themselves for probate or administration expenses paid out-of-pocket.
File tax returns and pay taxes of the decedent’s estate
As a fiduciary, the executor or administrator is responsible for filing the decedent’s final individual income tax returns, the estate tax returns, if applicable, and the estate’s fiduciary income tax returns according to their respective deadlines. In addition, the fiduciary must make sure that all taxes are paid in full and any refunds are received.
Distribute the assets that comprise the decedent’s estate
Once the creditor’s claims are paid-in-full and the assets of the estate are collected, the executor must distribute the estate’s assets according to the terms of the decedent’s Will. The same applies to an administrator, but the administrator will distribute the assets that comprise the decedent’s estate according to the laws of intestacy (New York Estates, Powers & Trust Law 4-1.1).
Keep accurate records
Beneficiaries of an estate are entitled to an accounting of the actions performed by the executor or administrator in the course of their duties. As such, it is important that the fiduciary keeps detailed and accurate records as to their actions, including but not limited to financial transactions, expenses paid, and distributions made. If the beneficiaries so choose, the fiduciary may have to file a final accounting with the court to close the estate.
As one can see, there are many fiduciary duties and obligations that an executor or administrator must account for and, if not careful, can be in danger of breaching said duties and obligations, resulting in personal liability to the beneficiaries of the estate. As such, it is important that a nominated executor or proposed administrator consult with and retain an attorney to assure that they are correctly and faithfully fulfilling their responsibilities of an executor and are protected every step of the way.