By Cheryl Ellefson, CPA, MBT, CFP®
Being the Executor of an Estate Is Not an Easy Job
Your friend or loved one passes away. If you’re the executor of their estate, you’re left with more than your grief. You’re also left to pick up the pieces, which could include carrying out the decedent’s desires, following their will, and dealing with their heirs.
If you wish to take on this noble responsibility, you should know: It begins long before your friend or loved one dies. Here’s what you should know about being an executor.
What to do while your friend or loved one is still alive
First, make sure you understand their will. Talk through all aspects of it, so you can get a better understanding of their wishes as well as the logic behind them. Yes, it could be an uncomfortable conversation, but it’s highly important.
As an executor, you’re the person who family members and heirs will approach with questions about the decedent’s will. There may be surprises within the will, and (ideally) you should be able to explain them.
To help you carry out this task, it’s wise to ask your friend or loved one for a separate letter of instruction to be read after their death. This is an informal document explaining the decisions they made when drafting their will.
What to do upon the person’s death
Your first task is to locate the original will. You’ll also need to order several certified copies of the decedent’s death certificate, as these are required to close out bank and other accounts.
Be sure to safeguard the decedent’s property—lock up and secure valuable items or move them to a safe place. If you haven’t already, make a list of the decedent’s assets and liabilities.
Some of the administrative duties you’ll need to take care of include:
- Maintain and sell an unoccupied house
- Stop Social Security
- Settle debts
- Close financial accounts
- Open estate accounts
- Take care of tax filings (final 1040 filing, fiduciary 1041 filing, and possibly a federal and/or state estate 706 filing)
Consider hiring an estate attorney—if only for consultation—to help you through the process. An attorney can be especially helpful for interpreting the legal aspects of the decedent’s will.
How to distribute assets
It will take time to distribute the decedent’s assets. Keep in mind you’ll need to hold back enough assets to cover the expenses of the estate such as taxes and debts.
Carefully think through your decisions regarding asset distribution, and don’t feel obligated to quickly give beneficiaries answers. That said, do try to keep them informed.
Up to the task?
Being an executor of an estate can be a time-consuming, stressful endeavor. Not only will you have to take care of administrative details, but you’ll also have to deal with family members and heirs during an emotional time. At the same time, helping to carry out your friend’s or loved one’s wishes can bring you a sense of comfort.
If you’re considering taking on the job of an executor, be sure you understand your responsibilities. And if you’re not feeling up to the task, don’t be afraid to respectfully decline. Either way, we’re here to help. The CPAs at JAK can advise you on tax filings, distribution of assets, and more.