One of the first things we tell estate planning clients when they are thinking about who to name as Executor in their Will is that: “the role of Executor is a JOB and not an HONOR.” The reason we tell them this is because we represent Executors when settling an estate and, like most jobs, it includes deadlines and responsibilities. Choosing the right person to do this job is a particularly important decision.
What is an Executor?
An executor is a person or entity appointed to administer the financial affairs and wishes of a deceased person according to their will.
How does an Executor get authority to act?
An Executor can start doing this job after being sworn in by the Register of Wills of the appropriate county following a properly submitted Petition for Probate containing a self-authenticating original will and original death certificate.
Step One: Know Your Role
The first rule of thumb that an Executor must consider is that they have a fiduciary duty to the beneficiaries in the Will. This means that they must act in the best interests of the beneficiaries. It does not mean that they must be perfect, but it does mean that they must be financially responsible when dealing with the assets in the estate. They must consider the tax implications of decisions they make, and they must make prudent investment decisions with probate assets.
Step Two: Know What You’re Dealing With
One of the first roles of an Executor is to determine what assets are in the estate. An Executor should “take inventory” of the what and the how. An Executor should determine what assets are in the estate – this includes real estate, bank accounts, and personal property. The Executor should find out how the assets are owned. For example, assets can be owned individually, jointly, or in a trust.
There’s much more, the value of assets depends on the date of the decedent’s death. Some assets may already be designated for someone. After the what and the how comes how much and to whom. It is critical to know the value of the assets (the how much) on the date of death and to whom (if anyone) the assets are designated.
Also, what about debts of the decedent, including funeral expenses and last medical bills? These are paid before any distributions can be made to any beneficiaries. Additionally, the estate must be advertised so that any future creditors are aware that the estate is being settled.
Step Three: Pay Taxes
Of course, then there are taxes. An important role of the Executor is to be sure Pennsylvania Inheritance Tax is paid in full in a timely manner. Pennsylvania Inheritance Tax is determined by the relationship of the beneficiary, so one inheritance tax return may contain several different tax rates. Fortunately, there are deductions and discounts which can reduce the amount of tax owed.
Conclusion
You can now see why we describe the role of Executor as a job. This is a job that we, at HighPoint Law Offices, have been assisting clients with for decades and take great pride in doing well. If you are named Executor and wondering what you should do next? The answer is: give us a call so that we can help you get the job done and get it done well!
