A will is a legal document that outlines how an individual wants certain assets to be distributed at death. Another important function of a will is to nominate the executor (sometimes called “personal representative”) who will administer the decedent's estate through probate, the legal process by which a court oversees the settlement of an estate after someone dies.
Assets that typically pass through probate are those that don’t pass through title, beneficiary designations, or trust. That often includes real estate, tangible personal property (car, boat, jewelry, artwork, etc.), business interests, and intangible assets such as bank accounts, investment accounts, and retirement accounts that do not list a beneficiary.
Being an executor is one of the most important fiduciary roles in estate plans, and can be a way to help ensure that a loved one’s legacy is implemented according to their wishes. It’s also a role that carries a great deal of responsibility and can be very time-intensive. While a simple estate plan might be completed in as little as 3 months, settling one that is more complex can take a year or even several years. Executors are personally responsible for performing their duties and can be financially or even legally liable if their work is performed incorrectly or irresponsibly. As an executor, it’s important to work with trusted and qualified advisors such as attorneys, accountants, and financial professionals.
If you’re considering taking on the role of an executor—or asking a friend or family member to take on the role for your estate—here’s what you need to know.
The responsibilities of an executor
Below is a typical list of steps you may be expected to perform as an executor. Keep in mind that this can vary depending on the state in which the decedent lived.
- Collect the death certificate and organize estate planning and other legal documents.
- File the last will and testament with the court as required by the local laws. In some states, this must be done in person, within a certain time period. In addition, if the decedent owned assets in multiple states, then this process may be required in multiple states.
- Take an oath. After the court validates the will, it will appoint an executor, who is typically the person or entity nominated in the will. To be approved, the executor must agree to faithfully fulfill the decedent’s wishes, as outlined in the will, and abide by all applicable fiduciary laws and probate court rules. Once an executor is approved, the court will typically issue a formal document, sometimes referred to as a "Letter of Testamentary” that documents the executor’s authority. These letters give the executor the legal authority to act on behalf of the estate and are used to interact with third parties, such as financial institutions and state agencies.
- Notify interested parties. In most forms of probate, the court will direct the executor to formally notify all those individuals that may have an interest, whether financial, legal, or otherwise, in the decedent’s estate. This typically includes the decedent’s heirs, financial institutions, insurance companies, creditors, government entities such as the Social Security Office and DMV, etc.
- Establish bank accounts for the estate. Because an “estate” is a separate legal entity, the decedent’s individually owned accounts must be transferred into estate accounts. The executor is responsible for establishing a tax ID for the estate, properly opening these accounts, funding them, and prudently managing them throughout the course of the estate administration. With these accounts, the executor can receive any outstanding funds owed to the decedent and pay bills.
- Post bonds if required. State law (or the will itself) may require an executor to obtain a probate or fiduciary bond, which serves as a form of insurance primarily to protect estate beneficiaries in the event an executor does not properly fulfill their duties and obligations and causes financial harm to the estate. A probate bond is purchased by the executor and typically reimbursed by the estate.
- Maintain real estate and other estate assets. The executor is responsible for maintaining and protecting all estate assets until the estate is fully distributed. In the case of real estate, this includes properly maintaining the property and insuring the property.
- Create and file an inventory of the estate’s assets with the court. In many states, an executor is responsible for submitting an estate inventory that details all assets that comprise a decedent’s probate (and potentially non-probate) assets. This may include accessing safe deposit boxes and digital assets. The usual practice is to engage a professional appraiser to value the decedent's tangible personal property.
- File tax returns for the decedent and the estate. A final personal income tax return for the decedent for the year of death, federal and state estate or inheritance tax return, and an estate income tax return for all income received by the estate while it's open may be required to be filed.
- Pay the estate’s debts and taxes. While laws differ by state, the costs to settle the estate are the first to be paid. These typically include professional fees such as legal fees, executor fees, and the cost of public filing fees. Next are funeral expenses and taxes, with all other claims (credit cards, utilities, etc.) following those. Careful records should be kept, and receipts should always be obtained.
- Resolve creditor claims. It is not uncommon for someone to die with outstanding bills, debts, or contractual obligations. An executor is responsible for evaluating these claims and, if valid, pay them. However, if the executor believes the claim is not valid, they may have to resolve or settle the claim, or even litigate it, if necessary.
- Distribute assets to beneficiaries. Executors must be certain that all estate debts, including outstanding bills, income, and estate taxes, have been satisfied before making a final distribution of estate assets to beneficiaries. In some cases, partial distributions can be made, provided the executor is confident sufficient estate assets remain to satisfy any outstanding liabilities.
- Wrap up the estate to close out the probate process. Prior to the complete distribution of the assets, it’s common for the executor to prepare an accounting and a “receipt and release” for each beneficiary to sign.
- Exhale. Take one final deep breath … the work is done!
In some cases, beneficiaries may have to wait months, if not years, to receive a distribution from an estate, depending on the complexity of the estate’s assets, potential liabilities, and the timeliness of state and federal agencies like taxing authorities. As an executor, you may bear the brunt of any ire from frustrated family members who are waiting for an inheritance—even though the settlement time may not be within your power to control.
The above is simply a high-level view of probate and estate administration: When it comes to estate laws, each jurisdiction can have its own probate requirements. If you agree to take on an executor role, consider working with an attorney and financial professionals who understand local rules.
David is responsible for Fidelity's estate and wealth planning activities, including creation of new thought leadership in these areas. He heads a team of professionals that develops and delivers the depth and breadth of Fidelity's wealth planning offering.
Prior to joining Fidelity, David was managing director and head of Insured Solutions for UBS Wealth Management Americas. He served as chief operating officer of UBS Wealth Planning. David first joined UBS as a senior member of UBS Private Wealth Management, and was involved in the creation of that business for the firm. During his tenure with UBS, he also served as the chairman and president of UBS Life Insurance Company USA, Inc.; the chairman and president of UBS Financial Services Insurance Agency, Inc.; and a board member of UBS Trust Company, N.A.
Prior to joining UBS, David was a director in Merrill Lynch's Private Banking & Investment Group. He joined the firm's International Private Banking business in London and was a key member of the firm's Corporate Strategy unit.