Swimming with the Sharks
Chances are fairly good that you will, at some time or another, serve as an independent executor of an estate. Your chances increase exponentially if you are married (spouses are customarily named in a will as executor) or are an only child.
Being an independent executor is a fairly easy gig if you also happen to be the sole beneficiary and there is no conflict with other family members. However, if there are multiple beneficiaries or a contest over the validity of the will, then being an executor is like swimming in a pool full of hungry sharks.
That is why you need to be scrupulous about administering the estate. You are a fiduciary and owe the highest of duties to the beneficiaries. You should keep the beneficiaries of the estate reasonably informed as you carry out your duties.
What Does An Estate Executor Have To Do?
Speaking of duties, it is your job to collect all of the assets owned by the decedent and all claims owing to him, pay all of the debts, liabilities, claims and expenses owed by the decedent or his estate, and then distribute the remaining assets to the beneficiaries. You have the duty to pay all state and federal taxes owed by the decedent.
That may sound simple in concept, but it is most assuredly not simple in practice. Each asset must be collected and valued. Many estates turn in to big scavenger hunts as you try to hunt down investments, cars, safety deposit boxes, and heirlooms that mysteriously disappeared when the family members were wandering through the house.
You are obligated to create a written inventory of the assets. This is time sensitive, so your work will have to begin promptly after you are appointed executor.
You will have to store and insure each asset until it is sold or distributed. If you are unlucky enough to be stuck with an estate that is short on cash, then you may have to advance the monies for insurance or upkeep until you can liquidate assets.
You will need to be organized. You must continuously be ready to account for all money received and spent, all assets sold or purchased, and any other matters that affect the estate. You have to keep up with invoices, checks, cash and credit card payments.
You cannot ever commingle your money with the estate’s money. The estate should have its own tax ID number and its own bank account that is styled ” [your name], Independent Executor of the Estate of [name of decedent], Deceased.” All of the estate revenue that you receive should be deposited into the account, and all estate disbursements should be made from the account.
You should not ever self-deal with the estate unless the will specifically authorized you to do so. Self-dealing would include purchasing an asset or loaning yourself money from the estate.
You have to give certain notices to creditors and the government, and file tax returns.
Fail at any of these duties and you could be personally liable for damages.