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Dealing with the aftermath of the death of a loved one can be an incredibly emotional time. That said, it’s also a very important time financially, for you and for other people named in this person’s last will and testament.
If you’ve been named the executor of an estate, duties include making sure all of your loved one’s belongings are collected and distributed in accordance with their wishes. Being named an executor of a will is a big honor, but it’s also a big responsibility.
Follow these steps to make the process go as smoothly as possible.
Start by finding the original will. “There’s only one original document, or there should be,” says Mari Galvin, a partner at the law firm Cassin & Cassin, who specializes in estate planning. “That’s presented to the court to be verified as the true wishes of the decedent, done according to the statutes.”
The deceased person’s attorney will typically have the will. If this person didn’t have a lawyer, or you don’t have their lawyer’s contact information, check file cabinets, safe deposit boxes and desk drawers.
Once you find the will, keep it in a safe place where you’ll have continuing access to it. If there’s no will, a probate court will appoint an executor to administer the will in accordance with the state law. If you’ve been named estate executor but don’t want to do the job, the court will appoint someone else.
If your loved one has left behind an empty home, it’s important to make sure that the property is protected. Remove any tangible items of value and change the locks on the doors. That way you’ll ensure no one can enter the property without your permission..
You’ll also want to forward any mail to yourself, and update the insurance company that the property is now vacant. If damage occurs to the property while it’s in probate, the executor of the will could be liable for the costs if she hasn’t taken reasonable steps to protect it.
If family members or others ask about specific items in the home, it’s your legal responsibility to inventory everything first. If any creditors are owed money from the estate, they should get paid first, even if other distributions are explicitly outlined in the will. Otherwise, you might end up without enough cash on hand to settle outstanding debts, Galvin says.
While it’s possible to fulfill your duties as an estate executor without professional help, it’s not recommended. Serving as an executor of a will is a complicated legal process. Especially if you’re not particularly familiar with that process, it’s best to get professional help.
“An estate attorney can quarterback the whole process for you,” says Anthony Criscuolo, a certified financial planner, portfolio and client service manager with Palisades Hudson Financial Group’s Fort Lauderdale, Fla., office.
The lawyer who drew up the will is an obvious choice to help you administer it. If that person isn't available, ask family and friends to recommend a lawyer to help you through the procedure. Interview a few lawyers before making a hire, so that you can compare fees and personalities to find the right fit.
Most large estates (and those without a lot of jointly held assets, which are easier to disburse because they just go to the surviving spouse) typically need to go through the probate process. That’s the official process of administering a will.
In order to begin the probate process, you’ll need the court to officially recognize you as the executor of the estate. File a petition with the court, proving that the will has named you as executor. The court will want to see that you’ve already notified any potential heirs or creditors about the existence of the will and your role as executor.
Some states also require executors to publish an advertisement notifying potential creditors that the estate is entering probate. Once the court grants your petition, you’ll receive letters of “letters of testamentary,” which you can use to open a bank account on behalf of the estate and request the transfer of assets into it. That makes it easier to collect all of the assets and pay the estate’s ongoing bills.
Start going through all of your loved one’s financial accounts and transferring the assets into the estate’s bank account. Your loved one’s estate lawyer may have a list of assets that you can use as a starting place. If not, you might uncover accounts by keeping an eye on the mail that you’re having forwarded.
For more complicated estates, collecting all the assets can take months. You may need to sell real estate or other tangible property, or have it appraised so that you can enter the value into the estate.
“You need to go through all the papers in the house to see whether it’s a lead to find assets,” says Eileen Moynahan, estate organizer with Legacy Estate Organizing. “Once those documents are gone, they can be really hard to recreate.”
Remember that any account with a named beneficiary should go directly to that beneficiary and won’t be part of the estate you’re responsible for distributing. That includes a 401(k), IRA or life insurance policy. (Note that heirs receiving an IRA might have to take an immediate distribution.) Likewise, any joint accounts automatically transfer to the other surviving account holder.
Before you’re able to send payments to people named in the will, you’ll have to settle any existing debts to creditors. Note that there may be a state deadline for doing this.
Generally speaking, you’d use the assets belonging to the estate to pay off this person’s debts. If there aren’t enough assets to cover outstanding loans, then the credits typically don’t get repaid in full. (In some states, you’ll need to submit an accounting of all the assets and payments to creditors.)
The exact details of paying off someone’s debts can be complicated, so you’ll probably want to work with an attorney throughout this process. For example, if any of the loans had a cosigner or a joint account holder, that person might be on the hook. Similarly, rules may vary depending on whether or not you’re doing this in a community property state.
In addition to paying off debts, you’ll need to pay any ongoing bills associated with maintenance of property or other expenses, such as final medical bills or legal fees.
Once approved, you’ll distribute whatever’s left in accordance with the directions in the will. If there is no will, you’ll follow the distribution rules in state law. Here, again, a good lawyer is essential. He or she can help you make sure you’re adhering to the will and help you settle any potential disputes among family members.
If you need to disburse money, that’ll generally entail writing checks from the estate’s bank account. Real estate and car distributions will involve the transfer of title or deed. For tangible assets, you should get a statement from the recipient accepting the item and its appraised value, Criscuolo says.
For items or money left to a minor, you’ll have to make the distribution to a trust fund or a custodial account on behalf of the child.
While it can be tempting to rush through the process, it’s important to make sure you’ve completed all these necessary tasks. That includes making sure that you’ve filed and paid taxes on behalf of both the deceased person and the estate. (Is life insurance taxable?)
You should also wait a while for any creditors to make their claims. The recommended time varies by state, but creditors typically have six months to a year after an estate enters probate to make a claim. Most lawyers advise waiting for the end of that claim period before closing the estate. After that, if a claim arises and you’ve acted in good faith, you’re not liable.
When you’re sure that you’ve settled all outstanding debts and complied with the wishes outlined in the will, you can “close the estate” by shutting down its bank account.
It’s true: Being named executor of an estate can feel like an overwhelming task, especially if you’re also grieving. But during this trying time, it can help to remind yourself that you’re doing a final good deed for someone who was important in your life—and for the people that person wanted to care for, as well.
Fabric exists to help young families master their money. Our articles abide by strict editorial standards. This article has been reviewed and approved by a compliance professional who is a licensed life insurance agent.
This article is meant to provide general information and not to provide any specific legal advice or to serve as the basis for any decisions.
Fabric isn’t a law firm and we aren’t licensed to practice law or to provide any legal advice. If you do need legal advice for your specific situation, you should consult with a licensed attorney and/or tax professional.
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