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Understanding Your Duties, Responsibilities, And Rights As The Executor Of An Estate

If you have been appointed the executor of an estate, you were likely informed of it at the time. However, once the time has come for you to step into that role, you may need clarification as to what it entails and what is expected of you. In this guide, we will discuss your duties, responsibilities, and rights before, during, and after the probate process. 

Enlisting Professional Assistance 

As an executor, it's crucial to recognize the essence of your role. You were not appointed to be a legal expert, accountant, or financial planner. Instead, you were chosen to act in the best interests of the estate and the beneficiaries. You should be assured at the outset that you are lawfully entitled to retain professionals such as attorneys, accountants, and estate managers with the expertise to assist you throughout the probate process.

Note that you will not have to pay for these services out of pocket, as their compensation should be paid out of the estate. Furthermore, while the specifics vary based on your jurisdictions and certain other factors, such as the terms and conditions outlined in the appointing documents, you will also be entitled to compensation for your time and efforts.

Understanding Your Fiduciary Duties

As an executor, you have been entrusted with significant responsibilities that require you to act in the best interests of the estate and its beneficiaries. While the specifics will vary by jurisdiction and the terms of the will, an executor’s core fiduciary duties generally include:

  • The Duty of Loyalty: You must act solely in the best interests of the estate and its beneficiaries, avoiding any conflicts of interest or self-dealing.
  • Duty of Care: You must exercise reasonable care and diligence when managing the estate's assets. This includes making informed decisions and seeking professional advice when necessary.
  • The Duty of Impartiality: You must treat all beneficiaries fairly and equally, unless the will specifies otherwise, and avoid favoritism or discrimination among beneficiaries.
  • The Duty of Full Disclosure: You must keep the beneficiaries informed about the estate's affairs, including financial transactions and asset distributions.
  • The Duty to Preserve Assets: This requires that you take reasonable steps to protect and preserve the estate's assets for the beneficiaries. This includes obtaining appropriate insurance coverages and ensuring that valuable items and assets of the estate are kept secure.
  • The Duty to Account: Maintain accurate records of all transactions related to the estate and be prepared to provide a detailed accounting to the court and beneficiaries.

Note that the failure to fulfill your fiduciary duties can result in personal liability, including financial penalties and legal action from beneficiaries. It is recommended that you consider procuring executor’s insurance to protect you from such liability. 

Pre-Probate duties

Before you formally initiate the proceedings, you should collect all pertinent documents related to the deceased's assets, debts, and personal affairs, such as bank statements, property deeds, insurance policies, tax returns, credit card statements, and outstanding bills, as well as personal documents such as birth certificates, marriage licenses, or divorce decrees. After this is done, you should formally notify all beneficiaries mentioned in the will about their potential inheritance. 

Navigating the Probate Proceedings 

Your first responsibility regarding the probate process will be to submit the original will to the probate court in the jurisdiction where the deceased resided. Based on the jurisdiction, the probate court may need to approve your appointment as the executor. You also may be required to post a probate bond with the court, which is meant to protect the beneficiaries in case there are any financial losses or mismanagement of assets during the administration of the estate. Once this happens, your duties will involve the following: 

  • Inventorying the Estate: This involves creating a detailed list of the deceased's assets and estimated values, a process sometimes called "asset marshaling." This encompasses everything from real estate and bank accounts to stocks, bonds, and personal property. For items with challenging valuations, such as art or jewelry, it is recommended that you retain the assistance of a professional appraiser.
  • Paying Debts and Taxes: It's essential to notify creditors of the deceased's passing, both through direct communication and by publishing a notice in local newspapers. As claims are made by creditors, review each one and settle valid debts using the estate's assets. Additionally, you'll be responsible for filing the deceased's final income tax return and addressing any taxes owed. Depending on the estate's size and jurisdiction, you may also have to manage inheritance or estate taxes.
  • Managing the Estate’s Assets: Depending on the estate's complexity and the duration of the probate process, you might find yourself managing assets for an extended period. This could involve decisions like selling real estate, overseeing investments, or even handling business interests. As you make these decisions, always act in the best interest of the beneficiaries and the estate, keeping detailed records of all transactions to ensure transparency.

Post-Probate: Finalizing and Closing the Estate

The post-probate process is the final stage of estate administration. It involves finalizing the estate's financial affairs, distributing the assets to the beneficiaries, and closing the estate. The first step is to prepare a final accounting, which is a comprehensive overview of the estate's financial activities during the probate process. After this is complete, the assets should be distributed to the beneficiaries in accordance with the will. 

After its assets have been distributed, the estate can be closed. This typically involves submitting the final accounting to the probate court and any other required documentation. Some jurisdictions might require a formal petition to close an estate (and in some cases, a court hearing as well), while others might have a more streamlined process. Once the court approves the closing of the estate, you will be discharged from your duties, and your responsibilities as the executor will officially conclude. 

Record-Keeping Requirements

You should retain comprehensive records and documentation well after the estate has been closed. This can help protect you from legal problems down the line and resolve future disputes between the beneficiaries or defend against certain creditor claims. Records you should retain include:

  • Financial Statements: Keep bank statements, investment account records, and records of financial transactions related to the estate's assets and liabilities.
  • Legal Documents: Retain a copy of the will, trust documents, and any legal agreements related to the estate, as well as any amendments or codicils.
  • Tax Records: Maintain records of tax returns, both for the estate and the deceased, including any correspondence with tax authorities.
  • Communications: Keep copies of all correspondence, emails, and communications with beneficiaries, creditors, and any other parties involved in the estate administration.
  • Receipts and Invoices: Keep receipts for expenses related to the estate, such as funeral costs, legal fees, property maintenance, and any other financial transactions.

Note that in many jurisdictions, you will likely be required to retain at least some of these records for a number of years after the estate has been closed.

In conclusion, there are many considerations and potential pitfalls to be wary of in carrying out your duties as an executor. Through AAL’s directory, you can find many skilled attorneys with years of experience assisting executors in fulfilling their responsibilities in fulfilling the wishes of the deceased while protecting the interests of both you and the beneficiaries.

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