You've Been Appointed Executor-Now What?
The executor of an estate is responsible for carrying out specific tasks during the probate process and for safeguarding the assets of the decedent. With the advice of a competent probate attorney, the process can be far less bewildering and stressful.
A widow who had three children dies suddenly, leaving a will that states her assets are to be divided equally amongst the children. But one of them predeceased her, and the will was never changed. So does that mean that the remaining two children each inherit half of the estate, or do they each receive a third, with the remaining third going to a grandchild, the child of the deceased sibling?
As the executor of the estate, it’s your sole and solemn obligation to make this determination. Being an executor is a big, responsible job, and without the advice of an experienced, competent probate attorney, you may find yourself in a quagmire of confusing, technical details and highly charged emotional issues.
First off, what is the definition of an executor, and what are your responsibilities?
The executor is chosen by the decedent (the person who has died) and is responsible for administering the decedent’s estate according to his or her wishes and for safeguarding the assets of the estate. Administering the estate includes finding and valuing the assets of the estate at the date of death and paying all of the estate and death taxes within certain time frames. It also includes distributing the balance of the estate to all of the beneficiaries according to the will.
Step One: Visit the Surrogate Judge
But before you embark on the management and distribution of the estate, you must first see that the will is probated. This means that you must bring the original will to the Surrogate Judge in the county in which the decedent died, so that the Surrogate can determine if the will is valid and if you are indeed the intended executor. As long as both are proven, the Surrogate issues a Certificate. Obtaining the Surrogate’s Certificate is crucial as you will need to present it to take further steps on the decedent’s behalf. You will also need to obtain death certificates from the department of health in the town in which the decedent died.
Step Two: Find and Value the Assets of the Estate
The next steps are to search the decedent’s home for all of the paperwork pertaining to bank, CD and brokerage accounts, stocks in certificate forms, real estate holdings and safe deposit boxes. In some cases the executor already knows exactly where all of these important items are, but more often then not, the papers and accounts of many decedents are scattered about in different places, regardless of the size of the estate.
Once you have gathered up all the paperwork, you need to find out the value of the assets at the date of death. This is where a probate attorney, who has the time and experience to pursue and organize a myriad of details and can provide continuity over a long period of time, is particularly helpful. Every financial institution must be contacted with a letter requesting such information as name(s) in which the accounts are registered, balance as of the date of death, present balance and withdrawal requirements. With every letter you must also include an original Surrogate’s Certificate and an original Death Certificate.
This a time-consuming process that may require follow-up letters and phone calls to track down all the information.
Step Three: Open a Checking Account
Equally important at the beginning of the process is opening a checking account exclusively for use of the estate. It may take one to two years to settle the estate, and during that time you will need to pay all reasonable bills. As executor, you will also have to provide the beneficiaries with a final accounting of all expenses incurred at the end of the process.
Step Four: Pay Bills and Taxes
At the same time that you are paying for reasonable bills of the estate, you are also responsible for having estate tax returns prepared and paid. These are two areas in which the advice of a competent probate attorney is very important, as a cavalier attitude on the part of the executor can lead to personal liability for errors.
What happens, for example, if the homeowner’s policy on the decedent’s residence has lapsed during the confusing and overwhelming aftermath of his death, and then the house burns down? The beneficiaries could hold you, as the executor, financially responsible and liable for their loss.
Similarly, you can be held personally liable for any under or over payment of New Jersey estate taxes and/or New Jersey Inheritance Tax Returns. This is not a job for your family accountant; at this point, it’s the job of a competent probate attorney to advise you on correct legal deductions for the estate. With the proper advice, you and the attorney can work to maximize the amount of assets that will ultimately be distributed to the beneficiaries.
Briefly, New Jersey estate taxes have to be filed for any estate exceeding $675,000. Federal taxes may come into play if the estate exceeds $3½ million, with the rate of taxation as high as 45%. And, New Jersey inheritance tax returns may have to be filed, depending upon the familial relationship between decedent and beneficiary.
Step Five and Six: Prepare a Final Accounting and Distribute Monies
Finally, you must prepare a detailed, final accounting of the estate. This should include a listing of the value of all the principal receipts-real estate, cash/bank accounts and miscellaneous items such as household furnishings and personal property- and the principal disbursements, such as utilities and taxes paid on property, real estate fees and funeral expenses. Your final job as executor is to determine what remains in the estate and to distribute it to the beneficiaries.
In short, the job of executor is complicated, confusing and fraught with pitfalls. If the job falls to you, a competent probate attorney can help you alleviate the stress and emotion involved with the probate process, ensure that the wishes of the decedent are carried out and protect the assets of the decedent for the beneficiaries.
ABOUT THE AUTHOR
Nicholas Giuditta is a trust and estates attorney in Westfield, N.J. He prepares estate plans for high net worth individuals to help them protect their loved ones and preserve their assets.