After the recent deaths of Michael Jackson, Farrah Fawcett, Ed McMahon and Billy Mays, I think the entire country has death on its mind. It's a morbid topic, to be sure, but it also forces us to think about our own mortality. And one of the most important things to think about: How do I want my estate to be handled when I die?
As I'm reading articles in the aftermath of Michael Jackson's death, I keep thinking the same thing, "I hope he had an up-to-date will and has named a competent executor, because his estate sounds as if it could be a mess." He has three children (two with an ex-wife, who reportedly relinquished custody years ago, plus a third with a surrogate). He reportedly has hundreds of millions of dollars of debt. He apparently has multiple homes, a lot of valuable art, some priceless possessions and a body of musical work that will continue to generate income long after his death.
Your estate probably isn't anywhere near as complex as Michael Jackson's, but that doesn't diminish the importance of picking the appropriate person to act as executor of your estate.
Who Is Your Executor?An executor, sometimes known as a personal representative, is the person named to administer your estate upon your death. This person is responsible for using the estate's assets to pay any debts, file tax returns on behalf of the estate, and distribute the estate's property according to the deceased person's guidelines as specified in their will.
Selecting an executor can be a tough; the person you choose must appreciate the issues involved with their duties and carry out your wishes. They must be responsible, trustworthy and mature. Many people appoint lawyers, bank trust officers, and accountants as their executors. Don't look at the selection of executor as a popularity contest. You want an individual who is capable of carrying out the executor's responsibilities.
A relatively simple estate may settle in a matter of months, but it's not unheard of for estates to take years to settle. My mother was the executor for another family member who died in early 2006. The estate was relatively straightforward, but as recently as a couple months ago my mom was still dealing with lingering details related to its settlement.
What Does the Executor Do?An executor, or personal representative, is responsible for managing the estate of someone who has died. These responsibilities include:
- File the will with the appropriate state probate court
- Petition the court for letters for proof that the executor has been legally appointed
- Request certified copies of the death certificate
- Assemble and inventory the estate's assets, including checking and savings accounts, real estate deeds, vehicle or boat titles, brokerage accounts, stock and bond certificates and other property
- Re-title property as necessary
- Manage and protect the estate property
- Pay any debts owed by the decedent at the time of death, using money from the estate
- Open and inventory the contents of all safe deposit boxes
- Close bank or brokerage accounts that the decedent solely owned and open a checking account for the estate to pay the estate's debts and other obligations if needed
- Locate insurance policies and file claims for benefits
- Collect any money or other property due to the decedent
- Retain the services of professionals when required, including accountants, attorneys and financial advisors
- Maintain estate records, including records regarding receipts and disbursements, and file any required accountings
- File tax returns when required, including income tax returns for the decedent and the estate and state and federal estate tax returns, if required, make various tax elections, and pay any tax due using money from the estate
- Keep beneficiaries informed of actions taken on behalf of the estate
- Contact the nearest Social Security office about survivor benefits
- Distribute the estate's assets according to the instructions left in the will
- Close the estate after ensuring that claims against the estate are paid and distribute the remaining assets to the beneficiaries
Am I Up to the Job?If a family member asks you to be an executor, make sure you're comfortable with the responsibility before accepting the job. Among the things to consider:
- Do I have the time to serve as executor?
- Am I organized and detail-oriented?
- Do I feel confident dealing with finances?
- Do I feel comfortable working with lawyers, accountants, government employees, bankers, real estate agents, financial advisors and others who may need to help me as I settle the estate?
- Am I able to handle the pressure that comes with managing the estate? Will I be able to answer questions from beneficiaries and handle the pressure of the job?
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