It’s a role no one really relishes: being named the executor of a deceased person’s estate.
But the burden of this responsibility can be lessened considerably if you’re methodical and organized.
An executor is also known as the “personal representative” of the estate and is legally responsible for protecting the home, savings and other assets of the deceased person — perhaps a parent or grandparent — until the probate process is complete and the assets are disbursed.
You can always say no if you’re unable or unwilling to serve as executor. The backup executor can step in, or a probate judge can name a replacement.
However, if you set up a checklist and seek appropriate tax and legal advice, settling an estate can be orderly. Here are seven tips to keep you on track.
1. Obtain the death certificate
The executor of an estate is responsible for funeral and burial arrangements and pays those costs out of the estate.
Additionally, the funeral home will ask you how many copies of the death certificate are needed.
Those copies will be required when notifying banks, investment firms, life insurers, the U.S. Department of Veterans Affairs, the Social Security Administration and others about the death, and for filing the deceased person’s final tax returns. So experts recommend ordering twice as many as you think you’ll need.
If the deceased was receiving Social Security benefits, it’s critical to immediately notify the Social Security Administration to turn off those payments, says Renno Peterson, an estate planning attorney and co-author of “Protect and Enhance Your Estate.”
“Otherwise, it’s a mess to try to pay it back,” Peterson says, “and a real hassle.”
2. Find the will or trust
Whoever informed you that you are executor will likely know the location of the will or trust documents. You’ll need a copy of the will for the probate court; it usually must be filed within a few days to a month after the death.
If the deceased person had a living trust, you might be able to avoid probate court if the trust was set up properly.
Trust assets can be disbursed immediately without court approval, while a probate judge must decide on the distribution of assets covered by a will. The time required for the probate process varies by state and ranges, on average, from six months to two years.
The living trust can be kept out of probate court because the trust owns all the property, not the deceased person. So, in effect, the trust never dies even though the person does.
3. Seek professional advice
Once you have the will or the trust documents, you’ll have a clearer idea of how complicated the process of administering the estate might be. At that point, you’ll want to consult with an estate attorney, tax accountant, appraiser or any other professionals whose expertise can help you avoid mistakes.
An attorney can advise you on legal steps and help answer questions from beneficiaries who might be pushing for a quick distribution of assets. If the estate must go through probate, the attorney also will know the right forms to fill out to make the process smoother.
“Generally speaking, if you try to do it yourself, it will take longer,” Peterson says.
The tax professional can assist with the final tax returns and any issues involving inherited assets, such as a home, investments, retirement accounts or a family business.
An appraiser can put a fair market value on antiques and other valuables.
4. File ‘letters testamentary’
If the estate must go through probate, the probate court will legally confirm your appointment as executor with what are called letters testamentary (sometimes called surrogate certificates).
These are certified documents that prove you have the legal authority to act on behalf of the estate to start paying bills, filing tax returns, managing and distributing assets, dealing with beneficiaries, and opening or closing bank accounts.
5. Locate and protect the assets
The best gift an executor can get from the deceased person is a detailed list of assets and where to find them. This includes wills and trusts, and paperwork related to insurance, investment accounts, prearranged funeral plans, bank accounts, real property like vacation homes or artwork, business interests and partnerships. Documents that verify the value of antiques or collectibles also can come in handy.
Ideally, all of this paperwork would be in a safe deposit box, ready for the executor. But even if the deceased person didn’t stash the paperwork in a safe place, the attorney who prepared the will typically has a list of assets, says Marshall Jones, principal at financial services firm Jones Lowry and an accredited estate planner and life insurance consultant.
Once you’ve taken stock of the assets, it’s important not to let Aunt Edna grab her favorite painting, a beloved chair or even a single teaspoon from the estate until the probate process is complete and creditors have been paid.
6. Pay bills and taxes
The estate is in charge of paying the debts of the deceased person, including any income tax and estate taxes that are owed. If the debts exceed the assets, potential inheritors are not liable for covering them.
Before paying any debts, the executor is responsible for ensuring the estate’s assets can cover all of them. If not, a probate judge will prioritize the creditors.
If the deceased person didn’t keep a detailed accounting of monthly bills, income and debts, you, as the executor, will need to figure all of that out.
A great place to start is the checkbook, which provides a record of the payments and deposits that the deceased person made. For more clues, comb through regular mail and email, if possible, and sift through tax returns, too.
A bank can open an account in the name of the estate or trust, so you can pay bills and accept deposits.
7. Don’t rush the process
The executor’s natural inclination is to try to “make everyone happy and distribute the assets,” Jones says. But if the executor rushes and misses some crucial legal steps, he or she could be found personally liable.
This is where having an attorney can be a big help.
An attorney also can step in and mediate beneficiary disputes, which can get nasty.
“There’s a saying that you never know anybody until you’ve shared an inheritance with them,” says estate planning attorney Peterson. “If someone feels slighted, it can get very bitter.”
Set up a separate filing system for the estate, and keep copies of everything you’ve sent and received from creditors, beneficiaries, financial institutions and others.
With a little organization and careful record-keeping, the obligations of an executor don’t have to be overwhelming.