Your Last Will and Testament is likely the most important document you will create during your lifetime. When creating your Will you must make a number of important decisions relating to the disposition of your estate assets after your death. You will also need to make another, equally important, yet often overlooked, decision – your choice of Executor. All too often people appoint someone as the Executor of a Will without giving the matter much thought, a mistake that can have far-reaching negative consequences. What you may not realize is that the Executor of your Will directly impacts the success, or failure, of your entire estate plan, making it one of the most important decisions you will make when creating your Will. A more thorough understanding of the various duties and responsibilities the Executor of a Will is typically charged with may help you to better understand the importance of choosing the right person for the job.
Testate vs. Intestate Estates
If you execute a valid Last Will and testament prior to your death your estate is referred to as a “testate” estate. If you fail to leave behind a valid Will at the time of your death your estate you are said to have died “intestate.” In a testate estate, the individual responsible for overseeing the entire probate process is usually the individual appointed by the decedent to be the Executor of the estate. Ultimately, the court must approve the appointment; however, the court almost always approves the decedent’s appointment. In an intestate estate, any adult may come forward and volunteer to be the Personal Representative of the estate. If no one comes forward, the court must appoint someone. The duties and responsibilities of an Executor and Personal Representative are almost identical.
The Executor’s job begins the moment he/she is notified of the death of the Testator. If the Executor has an original copy of the Will he/she is required by law to present the Will to the appropriate court and initiate the probate process.
Identifying, Locating, and Securing Estate Assets
As soon after the decedent’s death as possible the Executor must begin the process of identifying, locating, and securing all estate assets. This may include both real and personal property such as real estate, vehicles, household furnishing and personal items. It also includes both tangible and intangible assets, meaning all bank accounts, securities, retirement accounts, businesses assets and anything else of value in which the decedent had an ownership interest at the time of death must be account for and secured. Depending on the size of the estate, and how well organized the decedent was, this alone can be a daunting task. The Executor is also required to obtain a “Date of Death (DoD)” value for all estate assets and file an inventory with the court. This may require the assistance of professional appraisers.
Notifying and Paying Creditors of the Estate
Next, the Executor has a duty to notify all creditors of the estate. Known creditors are notified personally while unknown creditors are notified by publishing a copy of the Notice of Probate in a local newspaper. Creditors then have seven months within which claims against the estate must be filed or are forever barred. The Executor is required to review every claim and approve or deny the claim. If the claim is approved, the Executor must pay the claim out of estate assets. When insufficient liquid assets are available to pay claims, the Executor must decide which assets to sell to raise the funds necessary to pay the claims.
Defending the Estate
Sometimes, challenges to the estate arise. A Will contest, for example, might be filed by a beneficiary, heir, or other interested party. If that occurs, the Executor is responsible for defending the Will throughout the ensuing litigation. The entire probate process effectively comes to a halt while the Will contest is litigated because the outcome determines what happens next.
Winding Up Probate — Preparing and Paying Taxes and Distributing Assets
Before estate assets can be transferred to the intended beneficiaries, all taxes, both personal and estate, must be calculated and paid by the Executor. Tax returns may also be required to be filed while the estate is going through the probate process. An error in the calculation of tax liabilities, or a failure to file on time, can be extremely detrimental to the estate’s value. Once all tax liabilities have been paid, and a final inventory filed with the court, the Executor must prepare any documents, or take any steps, necessary to effectuate the legal transfer of the remaining estate assets to the intended beneficiaries or heirs of the estate.
Although most Executors retain the services of an experienced New York estate planning attorney to help throughout the probate of the estate, the Executor has the ultimate responsibility for overseeing the entire process. Consequently, the Executor has the ability to help, or hinder, the process. Errors made during probate can cost beneficiaries a substantial amount of both time and money. This is why it is so important to appoint the right person to the position of Executor.
If you have additional questions or concerns regarding your choice of Executor, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia, by calling 800-295-1917 to schedule your appointment.