When adult children agree to serve as the executor of their parents’ estate, they often underestimate the amount of work involved. The executor’s job is to manage and wind down the deceased person’s estate. This includes resolving any debts, distributing assets to heirs, and filing legal paperwork.
Establish Good Communications
If you’ve agreed to be named the executor in your parents’ will, you should be prepared to have some frank conversations with them. Some families find it difficult to discuss end of life issues, but not doing so increases the potential for time-consuming complications. Lack of communication also makes it more difficult to carry out your parents’ wishes after they’re gone. Here are some of the questions you’ll want to ask your parents:
- Where is their financial information?
- Where is their will?
- Where do they keep their bank statements?
- Do they have online accounts and where is the information to access them?
Executor’s Duties – What to Expect
In general, estates take an average of nine months to settle. To get a better understanding of what’s involved in the role of executor, here is a brief overview of some of the overlapping steps.
- Find and Inventory all Estate Assets and Debts
One of your first jobs as executor is to determine all assets and debts related to the estate. Assets are anything of value such as real estate, stocks, mutual funds, jewelry, furniture, cars, etc. Debts include things such as mortgages, car loans, outstanding credit card balances, utility bills, etc. While entities that are owed money usually make themselves known, there may be property or other assets that haven’t been identified. Sometimes it requires extensive detective work, such as checking for safe deposit boxes or searching for unclaimed property sites.
- Notify All Parties
There are a variety of organizations you’ll need to notify about the death, such as banks, credit card companies, IRAs and other beneficiary accounts, post office, membership organizations, etc. Each of the financial institutions you communicate with will require a death certificate in addition to other documentation before they will allow you to access the account. Plan on ordering 10-15 death certificates, which you can obtain from the funeral director.
- Manage Assets
One of your duties as executor is to protect and maintain the estate’s assets. If your parent owned a home, you would need to make sure it’s maintained properly until it’s sold. This may entail things such as keeping insurance policies up to date and getting the grass cut regularly. It could also include protecting property from siblings who might have their own ideas about how your parent’s belongings, such as household items, should be distributed.
- Resolve Debts & Pay Taxes
For debts, you may want to pay them all off before distributing any assets, although if the value of the estate clearly exceeds what is owed, this probably isn’t necessary. An executor is also responsible for filing final personal income tax returns for the decedent. These returns are due at the normal time (typically April 15 of the year following death), but only cover the preceding year until the day of death, after which time the estate becomes responsible and must submit its own tax returns.
- Distribute Assets
After resolving debts and paying any taxes due, the executor should distribute the remaining estate to the heirs in accordance with the instructions in the will, or as dictated by the court.
Pay Yourself
You have the option to pay yourself a fee for overseeing the disposition of the estate. While state laws vary, payment options may include a flat fee, an hourly rate, or a percentage of the estate’s total value. You should work with the attorney or courts to determine an appropriate fee and to learn about requirements for keeping track of your time and expenses. The income would be taxable.
Get Help When You Need It
While it’s not necessary to have legal or financial expertise to serve as an executor, it’s a good idea to consult with legal or tax professionals as needed.
If you have questions about this topic or would like to know how to create an estate plan that minimizes the burden on your loved ones, contact The Planning Center. We can help you create a comprehensive plan, and we have a variety of resources to assist families after the loss of a loved one.
