DO YOU REALLY KNOW WHAT YOU’RE GETTING INTO?
Someone you love has named you the executor of their estate in their will. Aside from feeling pleased that they respected your wisdom, maturity, and competence they also expected that you will faithfully carry forward their wishes and administer their estate.
When your loved one passes away, as executor, you have work to be done. No need to feel guilt by getting started almost immediately. Remember, they appointed you as executor to handle the estate matters in a professional, business-like manner.
Your first step is to get a copy of, and read the will. Next, begin making arrangements with the attorney representing the estate to have the will probated. In the probate process, the state declares the will valid, allowing you to begin settling the estate – paying off creditors, collecting debts, filing taxes, and eventually distributing assets as directed by the terms of the will.
It’s not a quick process. While probate usually lasts only a few weeks, settlement can take a year or more. Count on two years if estate tax is due, since the IRS must approve the estate tax return. If the estate has claims or litigation and is substantial, ready yourself for the possibility of more than two years before a full settlement.
Speaking of estate tax, you’ll be in charge of paying it within nine months. This year, estate taxes are owned on any estate valued at more than $675,000 or less if all or some lifetime gifting exclusions have been used. Of curse, no estate taxes may be due if everything in the estate is inherited by a spouse. You must file a final income tax return for the deceased (federal, state, and sometimes local), and other income tax return for the estate. In some states, you’ll also owe inheritance tax. You may have to sell assets to raise cash for tax payments. All this activity could be a bit more than you bargained for, especially if you have a full-time job, a family, or live out of state. One solution to these type of logistics problems is to appoint a capable co-executor.
Many banks have trust departments that are accustomed to providing either a support role, or if necessary, handling the full administration of an estate. Bank One, for example, is often named a co-executor. This designation can either be written into the will, or added later in a petition to the court when the will is submitted for probate.
Large trust departments are accustomed to handling estate and probate issues as a matter of routine. Often, however, an individual family executor may be walking through the entire experience for the very first time.
Many families want both: someone they know and trust and someone that knows the ins-and-outs of the probate process and that can explain each step along the way. Developing a solid relationship with a trust manager can achieve both objectives for the family. These estate specialists can handle, among other things, court filings, asset valuations, estate accounting, tax returns, investment advise and execution by working with your either the existing estate attorney and accountant, or arranging and managing these services for you. As an independent third party, many families discover that a trust manager or band are perceived as being fair and objective by quarrelsome beneficiaries.
But while the load will be lightened with a professional co-executor, remember you will still need to approve important decisions and documents. As the decedent’s personal representative, you are legally responsible for making sure the will is executed as the decedent wished. After all, it is the reason why your loved one chose you in the first place.
If you need help with your will or even more complicated succession planning REGENERATION can help.