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Understanding the Roles of an Executor in Estate Planning
Choosing the Executor of your estate plan is hugely important. This person or institution will need to be involved in both legal and financial matters. Let’s dive into this.
Probate is a legal procedure that can be lengthy and costly and your executor needs to be on top of this. Your executor must file the necessary documents with the probate court to get started. These documents can include a death certificate, executor petition and the will. If the process is followed properly, the probate court will grant your executor the authority to act on your behalf.
The asset management requirement is especially critical. Your executor may need to maintain investment properties, manage insurance contracts and pay bills such as mortgages, utilities and other expenses.
For a probate, your executor will need to identify and manage all the assets of the decedent. Assets could be properties, bank accounts, investment accounts, digital assets and jewelry. The government will appraise the value of the estate and will want accurate records of everything.
Debts must also be settled by your executor and this can get involved. Creditors must be notified, all debts confirmed and making sure debts get paid from the funds within the estate. There is also a final tax return that is due and your executor may want to enlist the support of a tax professional.
Or course the distribution of assets to the heirs must be done and this is the role of your executor. This can get complicated depending on what type of assets are part of the estate and the language about distribution within any trust documents. Real property can present challenges, for example. Some heirs may want to hold onto property while others may want to sell. Your executor must handle all distribution issues with care. I have seen many families fall apart due to poor planning, no planning or mismanagement by the executor.
The estate has to be “closed off”. A final accounting is involved here with details on all financial dealings. Receipts must be kept and all beneficiaries must acknowledge they have received their inheritance.
Knowing all of this, it becomes obvious that your executor must be organized, trustworthy and will follow your wishes as spelled out in your will and trust documents. It’s a good idea to discuss the role with them and that they understand 100% what they are being asked to do.
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