Picking an Executor: Part 2
In the last blog post, I answered two very important questions to consider when picking an executor: ‘what is an executor?’ and ‘what are the duties of the executor?” This blog will explore two more issues regarding picking an executor.
CAN AN EXECUTOR BE (PERSONALLY) LIABLE TO AN ESTATE?
Executors are NOT personally liable to an Estate that they are administering UNLESS their action (or inaction):
- Constitutes neglect or unreasonable delay in collecting the credits or other assets of the estate or in selling, mortgaging or leasing the property of the estate;
- Constitutes neglect in paying over money or delivering property of the estate the fiduciary shall have in the fiduciary’s hands;
- Constitutes failure to account for or to close the estate within the time provided by this probate code;
- Results in economic loss to the estate arising from the fiduciary’s embezzlement or commingling of the assets of the estate with other property;
- Results in economic loss to the estate through self-dealing;
- Results in economic loss to the estate arising from wrongful acts or omissions of any co-fiduciaries which the fiduciary could have prevented by the exercise of ordinary care;
- Constitutes a negligent or willful act or nonfeasance in the fiduciary’s administration of the estate by which loss to the estate arises.
WHO IS ALLOWED TO BE AN EXECUTOR?
“Natural persons,” including BOTH residents and non-residents may serve as executor.
Banks (provided they have a trust department) and Trust Companies who are properly authorized to do so, may act as executor. Id.
In determining WHICH natural person (or bank) should serve as executor, the Court shall give preference to the following (in order):
- The person (or qualified bank) designated in the will;
- Any beneficiary named in the will, or a person nominated by the beneficiaries;
- Any creditor of the deceased, or a person nominated by such creditor;
- Such other person (or qualified bank) as the court may find to be qualified.
If you have any questions about establishing your estate plan and picking an executor, or if you are an executor and need legal assistance, please feel free to contact us at email@example.com or by calling us at 515-727-0900.
Picking An Executor: Part 1
Estate planning is not about dying. It is about attaining the peace of mind that what you want done will get done when you are no longer there to make your wishes known.
In this and the next few blogs, I’ll go through some common estate planning questions and considerations.
WHAT IS AN EXECUTOR?
An executor is a person (or a financial institution) appointed in a valid Will who steps in to make sure that:
- the deceased’s creditors get paid;
- the estate’s tax obligations are fulfilled; and
- the assets of the estate get distributed in accordance with the Will.
An executor is court appointed, and, as such, is an officer of the Court. In fact, the executor is required to sign and file an oath that they will faithfully discharge the duties imposed by law according to the best of their ability.
WHAT ARE THE DUTIES OF THE EXECUTOR?
Simply stated executor’s duty is to administer the estate in accordance with the law, and the Will of the deceased. This Includes:
- Publishing Notice of the opening of the Estate, the time for Creditors to file Claims; and providing notice to a surviving spouse and of the time in which any action must be taken to set aside a Will, or exercise their statutory rights.
- Preparing and filing an Inventory of all of the assets of the deceased within 9 months of the opening of the Estate.
- Selling, mortgaging, or leasing property of the estate, if it is in the best interest of the beneficiaries and/or the creditors of the estate to do so.
- Paying the debts of the estate, which include any taxes (final income taxes of the deceased, Federal Estate taxes, Inheritance Taxes, and Income taxes of the Estate). HOWEVER, these liabilities are limited to the amount of the estate itself- the executor is not personally liable for the debts of the estate unless the estate is insolvent and they have paid the debts without court approval.
- Making a Final Report to the Court which includes: an accounting of all property included in the estate, and their disbursement; a statement that all taxes have been filed and paid; as well as a statement that all debts and charges have been paid.
- Distributing the assets remaining after payment of all debts and taxes to the beneficiaries, in accordance with the Will (Note: often bequests to children are to a trust for the benefit of the child until the child reaches certain ages).
- Upon satisfactory proof that the estate has paid taxes, creditors, costs of administration (including fees of the executor, the Attorney for the Estate, and charges by the Court itself), AND properly distributed the remaining assets to the beneficiaries, the executor is “discharged” and relieved of any further obligation.
WHO IS COMMONLY CHOSEN TO ACT AS EXECUTOR?
Most of our clients chose a surviving spouse, a relative, or a close friend as Executor (in that order). HOWEVER, if you don’t have a Will the COURT will pick one for you.
If we can help you attain the peace of mind that comes from expressing your post mortem wishes contact us via www.kreamerlaw.com, or at 515-727-0900.