You go to an estate planning attorney to draw up your will and know exactly who gets what when you pass away. Then the lawyer asks you who you want to be the executor of your will, and you ask the most logical of questions: “What is an Executor?”, or, perhaps, you have been named as the executor in a friend’s or family member’s will, but are unsure as to where to begin. This article will attempt to answer commonly asked questions relating to the role of an executor of an estate.
An executor is usually a relative or close friend, but can sometimes be a trusted advisor or even a financial institution, who is responsible for collecting the decedent’s assets, paying the debts, and distributing the net proceeds of the estate in accordance to the terms of the will. It is important to note that an administrator of an estate has similar duties to an executor, but is appointed by the court when a person dies without a will.
Once the will of the decedent has been admitted to probate, the legal process of validating a will, in the Surrogate’s Court of the county in which they lived, the executor can begin fulfilling their duties. The executor begins by looking through documents, bank records, and personal belongings, as well as communicating with the decedent’s financial and legal advisors to find out what the decedent owned and the value of those assets. Those assets could include real estate, bank accounts, vehicles, furniture, collectibles, artwork, stocks and bonds.
The executor then opens an estate checking account and begins depositing the assets of the estate in this account. The debts and expenses of the estate will be paid from this account. Typical expenses for an estate include attorneys fees, court fees, credit card bills, medical bills, and funeral expenses, as well as the decedent's final tax return and tax returns for the estate. An executor must keep detailed records of every transaction.
Upon collecting all assets and accounting for all debts, the executor then works with his or her estate attorney to prepare an accounting and receipt, release, and refunding agreement to give the beneficiaries of the will a snapshot of the estate’s finances. Once all the beneficiaries sign off, or the judge issues a decree in the case of a judicial accounting, the proceeds can be released to the beneficiaries.
An executor of an estate not only has the above referenced duties, but most importantly, a duty to act ethically. As a fiduciary of the estate, her or she is required to act for the benefit of the estate and without self-interest or favoritism. An executor that is found to have breached this fiduciary duty can be held liable for any losses to the estate and its beneficiaries, and can be required to pay the money back to the estate. If fraud or embezzlement is found, criminal charges can arise.
New York laws allow for executors to be paid for their services, the details of which we will discuss in a future article. Many times, beneficiary spouses or family members that are also major beneficiaries do not accept this compensation since it is taxable income.
If you have been appointed the executor of an estate, it’s a good idea to contact an experienced New York estate attorney for guidance and ease throughout the probate process. Our office is available for free phone consultations.
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