Sunday, November 29

I’VE BEEN NAMED AS THE EXECUTOR FOR MY PARENTS. WHAT DOES THAT MEAN?

Every few years, your parents update their wills and trusts, and one year they ask you: “Will you be the executor of our estate?” While it’s flattering to be trusted with the responsibility, do you know what an executor actually does?

financial advisors in Boston

What Does an Executor Do?

An executor is a person who manages the assets of a deceased person, and has a fiduciary duty to act in the best interest of the estate. This includes settling unpaid bills, tax debts, and other debts. After all outstanding debts are settled, the executor then ensures that the remaining assets are distributed appropriately.

An executor does not need to have any expertise, but does have a fiduciary duty to the estate. This means that you must act with honesty, fairness, and diligence on behalf of the deceased. An executor of an estate may perform one or all of the following duties:

  • Locate the will and trust documents of the deceased party, and obtain copies of the death certificate. Each financial institution will require a copy of the death certificate before allowing you access to funds or close accounts.
  • Determine if the will should be filed in probate. Typically, any assets with a designated beneficiary will pass to heirs directly and do not require probate.
  • Identifying what assets were owned by the deceased that are now in the estate. You are responsible for managing assets until they are distributed, and this includes deciding whether certain assets should be sold to pay outstanding debts.
  • Deciding who inherits what assets, whether in whole or in part, and contacting beneficiaries. If no beneficiaries have been named, or the deceased died without a will, state law dictates how the assets are distributed.
  • Notifying debtors and creditors, banks, and the SSA (Social Security Administration) of the death.
  • Creating a separate bank account for the estate to accrue income received after death and to pay expenses. The bank or financial institution may want to retitle checks to signify that the check is from the estate of the deceased.
  • Ensure that a final income tax return is filed for the year of death for both federal and state taxes. If the deceased has a large taxable estate, you may be required to file a tax return within nine months of the date of death.
  • Make sure that all assets and property are distributed properly according to the beneficiary designations in the will or trust documents.

Working down the list, it’s not uncommon for an executor to consult with legal and tax professionals to ensure that the estate is being managed properly.

The amount of time it takes to finalize an estate varies with the complexity of the estate. The average estate execution can take a year or more, so be sure you’re able to make that sort of commitment before accepting the responsibility of being the executor.

Information sourced from Modera financial advisors in Boston.

Modera Wealth Management., LLC (“Modera”) is an SEC-registered investment advisor with places of business in Massachusetts, New Jersey, North Carolina, Georgia and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. SEC registration does not imply any level of skill or training.  For information pertaining to our registration status, fees and services, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov) to obtain a copy of our disclosure statement set forth in Form ADV Part 2A. Please read the disclosure statement carefully before you invest or send money.

This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this article are subject to change without notice based on changes in the law and other conditions.