The Important Job of an Executor

By Ronald A. Fatoullah, Esq. and Yan Lian Kuang-Maoga, Esq.

{3:54 minutes to read} What does it mean to be named as an executor under someone's Will? Generally, it can be seen as an honor to be named as an executor, but it is important to know exactly what responsibilities the title carries. The following is a general job description of an executor:

(1) Probating the Last Will and Testament of the Deceased: There is a common misconception that having a Will and a named executor means that the court process is avoided. The process of "probate" is specifically for the purpose of proving that the decedent's Last Will and Testament is valid. Along with this process, the court appoints the executor. An executor named under a Will is only a nominated executor until the court legally appoints the executor and grants him/her power over the estate. Therefore, the first task of the named executor is to obtain the original Will and prove to the court that it is a valid Will. This is the probate process which generally will require the help of a lawyer.

(2) Marshalling Assets: Once the court legally appoints the executor, the executor will be provided with a certificate from the court called "Letters Testamentary." With this certificate, the executor is to collect all the assets of the estate. This means setting up an estate account and contacting all the institutions in which the decedent had assets in order to get those assets into an estate account. It is important to note that the executor is NOT responsible to collect assets in which a beneficiary or joint owner is named. Those assets pass directly to the named beneficiary or joint owner. It is also important to note that the executor is not required to "cash in" assets such as stocks or real estate unless the Will provides otherwise. Assets such as stocks and real estate may be desirable to keep, therefore the executor can execute proper paperwork to transfer these assets "in kind" to the beneficiaries.

(3) Reporting and Paying Taxes: Unless the executor is an accountant, it is strongly recommended that the executor review the following three types of taxes with an accountant to make sure reporting requirements are met and taxes are paid if any:

a. Final Personal Income taxes: This is the personal income tax of the decedent which covers income tax liability to the date of death. This is also important to file because it notifies the tax authorities that this person is deceased; therefore the return will be the final return.

b. Estate taxes (also known as death taxes): This is a tax on the entire estate. For most estates, estate tax returns are not necessary because the estate tax exemptions for Federal and New York State are high. Currently, the federal estate tax exemption is nearly $11,200,000 and the New York State exemption is $5,250,000.

c. Estate income taxes: This is a tax on income earned from the decedent's date of death to the date when the estate is finalized.

(4) Paying Expenses and Debts: The executor is responsible for paying administration expenses and debts of the estate. The executor should verify that the debts are valid.

(5) Distributing the Estate: An executor can settle an estate formally by court intervention or, more often, informally between the parties. In the informal process, the executor provides an accounting to the beneficiaries and obtains a release from each of them before distributing the estate assets. It is imperative that the executor carefully read the instructions of the Will as to how the estate is intended to be distributed. It is also important for the executor to keep detailed records and to have open communication with the beneficiaries.

The above is a very general job description of the executor. Each estate is different, therefore it is important for a named executor to review the estate with an attorney to ensure that he/she is carrying out his/her responsibilities appropriately.

Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Yan Lian Kuang-Maoga is an elder law attorney with the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll-free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also a partner with Advice Period, a wealth management firm, and he can be reached at 424-256-7273.