Estate Planning: Your Executor - Who's That? What's That?
"Wanted: Professional person with experience in business, accounting, investment management, estate planning, taxes, and personal counseling. Must have a proven track record, be willing to commit for the long term, be available at all times, and be ready to start immediately."
If you were to place the above advertisement in your local newspaper, you probably would not get much of a response. The position requires too much expertise, in too many different areas, with too much of a time commitment. Yet, that is exactly what you need when it comes to choosing an executor or personal representative for your estate.
What is an executor and what does an executor do? Your executor is the person you name to carry out the intent and directions contained in your will.
When you die, your executor will usually be called upon to help make funeral arrangements, locate your will, meet with the estate attorney and arrange probate of the will, meet with family members to ascertain their immediate requirements, make arrangements for support and maintenance payments to be paid to dependents during the period the estate is being settled, and seek court authority to act as your executor.
Once your executor becomes "official" and once Letters Testamentary have been issued, the real work begins. Your executor must:
- Take control of your assets and manage, sell, or distribute them as you have indicated in your will
- Pay your debts and collect any debts owed to you
- Notify Social Security and the appropriate insurance companies of your death
- File for any death benefits owed to your estate
- Manage your business or your real estate holdings
- File your final personal income tax returns
- Choose a tax year for your estate, which is a decision with important tax ramifications
- File state inheritance and estate tax returns (if any)
- Complete and file federal estate tax returns (if required)
- Keep extensive records of all estate transactions and submit a detailed accounting to the probate court and to your beneficiaries
In conclusion, the decision of whom to appoint as your executor is an important one, and one that will have a direct effect on the efficiency and effectiveness of the estate settlement process.