The Duties of an Estate Executor

One of the important provisions of a will is naming an
executor or personal representative of the estate.

The executor is a person or a bank selected for a position of
special faith, trust and reliance. When an individual is designated
executor, it is important that she and the testator both understand the
requirements of the job.

During the administration of the estate, the executor will
have possession and control of all the assets of the estate, with the
primary duty of protecting and preserving them and investing the
property in the estate in a prudent and cautious manner. Asset
management includes, to the extent that the estate has excess cash,
investment of the assets, whether in bank accounts, government bonds or
other prudent forms of investment.

A further and more important consideration is liquidity
management. If cash available to the estate is not sufficient, the
personal representative is required to sell assets or borrow money on
behalf of the estate to meet cash requirements as they arise. These
cash requirements include payment of creditors, expenses of
administration and taxes.

If these duties are not properly or competently performed,
the executor may have to answer to anyone who may have been harmed as a
result.

Probate or administration of the estate commences with filing
the will for probate and preparation and filing of a petition for
probate. After the proper documents have been filed, the judge will
issue letters of administration, which are evidence of the legal
authority of the executor.

The first stage of administration, after the letters are
issued, is giving notice to those involved or interested in the estate.
Beneficiaries will receive this required notice by certified mail;
creditors by publishing a legal notice in the newspaper.

The next stage of administration is identifying, collecting,
inventorying, valuing, securing and investing assets of the estate.
Adequate insurance coverage of valuable property should be obtained. An
inventory of all assets and their value must be filed with the court,
and if the estate is of a size sufficient to require filing an estate
tax return, similar information must be provided for the local and
state governments and the Internal Revenue Service. The estate attorney
will assist in preparing the inventory list, obtaining the asset values
and preparing the necessary documents that need to be filed.

The executor must promptly arrange for and make payment of
all valid claims to avoid interest expense. Any claims not filed during
the period, which the state statute delineates, will not be legal
obligations of the estate, and, in most instances, cannot be legally
paid.

Another stage in the estate proceedings is the determination
of various tax returns that the law requires be filed for the estate.
The most common tax returns that will need to be filed are income tax
returns for the decedent that may not have been previously filed;
income tax returns for the estate if necessary; and an estate tax
return, required by law to be filed if the total taxable estate exceeds
a certain valuation, or to clear the title to any real estate by
establishing the fact that there is actually no state or federal death
tax due.

After all expenses have been paid, the final steps in the
Probate Court are distribution of the estate to the beneficiaries, and
the release of the executor by a final order of discharge from the
Probate Court.

To close the estate after distribution of the assets to the
beneficiaries, it is necessary to report to the court on all legally
significant activities that have occurred in the estate, furnish
evidence that creditors have been paid, certain taxes have been paid,
and the remaining property has been distributed in proper shares to the
persons entitled to that property. When this evidence has been
presented in proper form -- the lawyer's responsibility -- the judge
will sign an order discharging the executor from any obligations
regarding the probate.

The final responsibility of the executor is filing any final
income tax returns that the estate is obligated to file for the year in
which final settlement occurs. When the estate is closed, the estate
may have had taxable income for that year or otherwise be responsible
for the payment of taxes. Sufficient funds must be retained by the
executor to pay any taxes due.

In accepting the office and trust as an executor or personal
representative, an individual agrees to be personally responsible for
many. W.C. Fields told a story about a poor man who was tarred,
feathered and being ridden out of town on a rail who was heard to say,
"Except for the honor, I'd just as soon walk."

The executor of a will has important responsibilities, and
many times they are best handled by a friend, relative or other
individual who has good sense and who will retain competent
professional advice. However, in many other instances, a bank or trust
company is best equipped to deal with the complex issues described
above, and the individual should forego the honor.

Attorney Alan S. Novick is a wills, trusts and
estates lawyer.

© 2004 Scripps
Howard News Service. All Rights Reserve