What is an Executor?
In many cases, people choose either a loved one or a family member to serve as the executor of their estate. An executor is a person who oversees wrapping up the decedent’s affairs, arrange for the payment of any income or estate taxes, and to distribute the assets of the estate. The executor has both legal and fiduciary responsibilities to the beneficiaries of the estate. An executor should consult with a professional during estate administration to avoid making mistakes that might expose the estate to litigation, increased tax liability and other potentially serious consequences.
Estate administration can be a complex process requiring familiarity with the process, applicable statutes, and tax forms necessary to distribute the estate. One example of how complex the estate administration process is complex is the portability election. This allows a surviving spouse to use both individual federal estate tax exemption and the exemption to a first-to-die spouse. To use the portability election, the executor of the estate must timely file an estate tax return. If not, the deceased spouse’s exemption is lost.
How a Professional Can Help
Executors are responsible for making distributions to beneficiaries. The executor is personally liable for any improper distributions prior to making payments to taxes and other creditors. A professional can assist the executor to avoid “at risk distributions” by ensuring that all the required debts are paid prior to the beneficiaries receiving their share of an estate.
An executor also has a fiduciary duty to manage the estate’s assets and it protects the estate’s financial health. Estates sometimes have a stock portfolio or homes as parts of the assets. The executor could be in breach of the fiduciary duty if he does not properly protect the estate’s assets. Working with a professional allows the executor to act properly and react to market conditions.
Professionals will counsel you and your family throughout the entire process. They will ensure that the estate administration, from beginning to end, is a smooth and stress-free process.