Over the years I’ve had clients who knew they’d been named in estate planning documents as executor of an estate, and I’ve had others who found out only after a relative died that they had to settle an estate. In most cases, I’d get a call asking, “What do I do?”
Here are some things I’ve learned working with clients who have been thrust into the executor role.
Read the document
Reading the document helps you understand the wishes of the deceased. It also tells you what you have to do—settling with creditors, fulfilling bequests, distributing to heirs, etc. Be prepared. Some of it may be easy; some may not. Being an executor is work.
If you know ahead of time that you will be executor of an estate, request that the estate owner prepare a letter of direction to go along with the will to clarify wishes that may be vague in the legal document.
Get certified copies of death certificates
You’ll need certified copies of the death certificate for just about everything involved in settling the estate—closing accounts, filing life insurance claims, etc. The funeral home can order copies for you. Some organizations only require a copy of the death certificate, not a certified copy. Be sure to ask which is needed.
Request letters of testamentary
A letter of testamentary is a document issued by the probate court showing that you have the legal authority to act on behalf of the estate. Many organizations require a letter of testamentary as well as the death certificate.
Find the stuff
This may be the biggest job early on. You can’t settle the estate unless you know what there is to settle. You’ll need records and statements for:
- Bank accounts
- Investment accounts
- Credit cards
- Mortgages
- Car loans
- Other installment loans
- Tax returns
- Insurance policies
- Retirement accounts
- Utility bills
- Mobile phone bills
- Magazine subscriptions
As with almost everything else, financial providers will require proof of death and proof that you are authorized to deal on the estate’s behalf. Some may require that you mail the proof documents. Others will allow you to fax or email those documents.
In this phase, you need to be very organized. You need to have a really good process, because this can be a long process. And if anything is discovered after the estate is closed it will require a lot of work on your part to reopen the estate, make the distribution and close the estate again.
If you know ahead of time that you will be executor of an estate, encourage the estate owner to prepare an asset/liability inventory:
- Bank accounts
- Investment accounts
- Retirement accounts
- Credit cards
- Deeds
- Mortgages
- Other loans
- Insurance policies
- Safe deposit box(s)
- Business documents
- Passwords
- Military documents
- Anything that needs to be handled after the passing of a spouse
The inventory should include account numbers, telephone numbers, email addresses, a contact person, if possible, the location of documents (for example, safe deposit box, filing cabinet in the bedroom, etc.), any information that will make it easier on the surviving spouse to settle your estate after you’re gone.
The inventory should also include a list of passwords so you can deal with digital assets.
Open an estate account
You will need to open an estate account for bank accounts. Get a tax ID number from the IRS. Now you can pay the estate’s remaining bills and deposit proceeds that come into the estate.
You will also need to open an estate account for any investment accounts. It makes it easier for investment dividends and interest to come into the estate. It also allows the firm holding the assets to record the date-of-death value of the investments so the heirs will receive a stepped-up cost basis.
Change the locks
It sounds mean, but change the locks. You need to secure physical possessions. As executor, you have a responsibility to make sure that the deceased’s wishes are carried out. And if the will says an heir is to receive a certain item, and that item disappears, you may be liable.
I’ve seen cases where family members got into a deceased’s house and carried off heirlooms that were intended for someone else. It created conflict, finger pointing, and in some cases, damaged relationships beyond repair.
Meet with the family
Sometimes heirs have no idea what’s in a will. So, it’s up to the executor and the estate’s attorney, if there is one, to explain it. Keeping everyone in the loop avoids confusion. Heirs may not like some of the things in the will and they may not like the timing of the distribution, but everyone will have the same information.
Create a calendar
Creating a calendar keeps you on track. You will have deadlines for notifying creditors, filing inventories with the court, filing a final tax return, notifying heirs, etc. The calendar is in your best interest as the executor.
Distribute the assets
Don’t be in a rush to distribute the assets. As I said before, some of the heirs may not like the timing and think the distribution is taking too long, but as executor, you are responsible for making sure it’s done correctly. You need to make sure all the creditors have been paid and there’s no claim against the estate.
Dividing up cash and investments should be relatively easy. But with antiques or valuable collections, work out a distribution method with the family ahead of time. Maybe something as simple as the heirs taking turns at choosing antiques, collectables and heirlooms.
Don’t be afraid to ask for professional help
Being an executor can be overwhelming. If you find yourself in the position of not knowing what to do, hire a professional who specializes in estate settlement to answer questions and point you in the right direction. It will help you fulfill your duties as executor.