6 Things to Expect When You Have Been Named an Executor

Before assuming the executor’s role, make sure you have the bandwidth to serve in this capacity. Depending on the complexity of the estate, the process of settling it can take anywhere from six months to multiple years. It could be helpful to engage with the deceased individual’s financial advisor early on as you learn about the role and its responsibilities. As their financial advisor, it is likely they would be aware of the nuances and intricacies of the late person’s estate. In addition, if you have a financial advisor, reaching out to them for support as a trusted resource could be beneficial especially if you are set to inherit assets as part of the estate.

If the document and local law allows, you can be paid to fill this role. While your instincts might be to avoid taking money from the estate of a friend or family member, the services you will provide are valuable for the estate. If the will does not state a specific payment for the executor, state law may dictate the fee that can be charged. In New York, for example, the allowable fee for an executor’s services is 5% for estates valued at less than $100,000.¹ The fee declines incrementally, depending on the size of an estate. For estates valued in excess of $5 million, the allowable executor fee in New York is 2%.

It is also not unreasonable to let a probate court know you cannot perform the duties required. Many changes may have happened in your life from the time a friend or family member asked you to serve in this role and the moment when their death made it a reality. The court can appoint someone else, if necessary.

If you do have the time and wish to honor the late person’s request, the following are the key tasks you will have to perform while settling the estate.

1. GATHER ALL THE NECESSARY DOCUMENTS

The first step will be to get your hands on the original will. Ask family members or the attorney who drafted it to give you the original, so you will know the full extent of the person’s expressed wishes. You will also need to file the original will with the probate court in the state/county where the person lived. The probate court oversees the legal process of settling the estate. With the submission of the will, you will also need to include a copy of the death certificate, which can be obtained from the funeral home used by the family.

As additional first steps, you will want to gather the late person’s financial statements and records. Aim to have at least the last three years’ worth of their bank, credit card, and investment account statements, as well as their tax returns and any life insurance policies. If family members do not have these documents readily available, reach out to the professional advisors who supported them. Family members may know the names of these advisors, or they may appear on statements the late person stored in their personal files.

2. IF NEEDED, ASSEMBLE A TEAM OF ESTATE PLANNING/ADMINISTRATION EXPERTS

Remember, you do not have to do all this alone. If someone’s estate is complicated, you can obtain support from professional advisors including estate planning attorneys, accountants, financial advisors, insurance agents, and bankers, including members of a bank trust department that might have worked with the late person. For example, if the deceased was working with a financial advisor, they might be a dependable resource to lean on, as they are familiar with the wealth and financial circumstances within the estate. The cost for the services of any professional advisors you select can be billed to the estate.

3. LOCATE AND INVENTORY ESTATE ASSETS

You will have to gather the records that indicate the full value of the person’s estate. In addition to collecting the financial records noted above, that might mean gathering the deeds and mortgage statements for any real estate and the titles to other assets like vehicles. Once you collect all these details, for most states you will have to submit an inventory of the person’s assets to the probate court.

Remember, not all assets have to go through probate. When one or more individuals are designated as the beneficiaries of retirement accounts, like 401(k) plans and IRAs, or life insurance policies, those assets can pass directly to the appointed beneficiaries. Assets held in a living trust can also pass to the trust’s beneficiaries. A person named as the trustee of the trust will oversee the trust administration process, but it is a separate role from the estate executor.

4. ADMINISTER THE ESTATE AND MAKE ONGOING PAYMENTS

Before the estate is settled and all assets are distributed to beneficiaries, it will be “in probate.” Probate is the partof our court system which governs the execution of wills, conservatorships, and guardianships to ensure the wishes of the individual who has passed are met.

As a first step, you will want to make sure any organizations that were making payments to or expecting payments from the deceased person are notified of the death. For example, you may have to notify the Social Security Administration and credit companies. Check with an attorney to determine what the relevant state’s rules are for notifying creditors of a death. Obtaining multiple copies of the death certificate from the funeral home will help you deliver the proper notification to creditors and other organizations. If no one is still residing in the late person’s home, you will also want to let utility companies know they can cease any services that are not necessary to maintain the house until it is sold or passed to beneficiaries.

Ongoing bills, like a mortgage, will also have to be paid while the estate is being settled. If the person made estimated quarterly tax payments, you will need to make sure those taxes are still paid during the probate process. If the person had significant wealth, federal and state estate and/or inheritance taxes may be due. Federal estate taxes are due nine months after the decedent has passed away. The executor will have to make sure those taxes are paid from the estate. To make all these various types of payments, you will likely need to set up a bank account for the estate.

Estate and inheritance taxes apply to everyone but are especially relevant to high-net-worth and ultra-high-net-worth individuals. It is true that federal estate taxes, as of 2023, are assessed only when an individual’s estate is worth more than $12.92 million and double that amount for couples.² Still, 11 states have a state estate tax, five more have an inheritance tax, and one–Maryland–has both (Iowa, however, is currently phasing out its inheritance tax, and it will end in 2025).³ The state estate taxes often begin at much lower levels than the federal threshold. In Massachusetts and Oregon, for example, the state estate tax kicks in for estates valued at just $1 million or more.^4,5

5. ADDRESS ANY FAMILY DISPUTES THAT ARISE FROM THE WILL

Not everyone may be happy with the terms of the will. One beneficiary may be upset that another received a greater share of the estate or a treasured heirloom. As executor, you may be the one who will have to hear those complaints and provide reassurances about what the late person’s intentions were. If someone files a dispute, you may have to represent the estate in court. In complicated circumstances, an estate planning attorney may be needed to address the claims made when a will is contested.

6. DISTRIBUTE THE ESTATE ASSETS

Once all the obligations from the estate, like taxes, creditors, and outstanding payments, are met, you will help oversee the process of distributing the estate assets. That will mean making sure payments from retirement accounts or life insurance policies are made to the appropriate beneficiaries or that a house, or the proceeds from the sale of one, is passed to the designated beneficiary or beneficiaries.

 

Honoring the memory of a loved one

Serving as an executor can be time-consuming and demanding. While meeting all the required administrative tasks, you can take great satisfaction in knowing that you are helping to fulfill the wishes of your late relative or friend, while also providing an invaluable service to their beneficiaries. Professional advisors are always available to help you navigate the process and make the workload more manageable. If the deceased had a financial advisor or if you have a financial advisor, engaging with them is a great place to start as you work through the requirements and take on the role of executor.

Reach out to your financial advisor to learn more and understand how City National Rochdale can help.