An executor is the person named in a Last Will & Testament who is responsible for managing the administration and distribution of the estate of a deceased individual, the “decedent”. For persons who die without a will, the court appoints an administrator to perform that function. Although the time and effort involved will vary with the size and complexity of the estate, regardless of how small the estate is, you will have important duties that must be performed correctly or you could become financially liable to the estate’s creditors, taxing authorities or beneficiaries.

In a nutshell, the “personal representative” of an estate (executor or administrator) is responsible for identifying, safeguarding, valuing, and distributing the estate’s assets. But before that can legally be done, there are many duties that must be performed. These include:

  • Find documents. If there is a will but you can’t locate the original you will need to search for it among the decedent’s belongings or bank safe deposit box. A copy will not be accepted unless you can prove that it is a true and correct copy and was not revoked or superseded by a later will. You will also need to get multiple copies of the death certificate. Accomplishing the forgoing is usually the easy part. Often more challenging is tracking down all of the assets – and debts.
  • Hire an attorney. You are not required to hire an attorney, but, as mentioned earlier, mistakes can cost you money. You may be personally liable if something goes wrong. An attorney can help you make sure all the proper steps are taken and deadlines met.
  • Probate. Simply being named in the will as executor does not alone enable you to assume that role. You must first appear at the Register of Wills office at the County Court House, present a death certificate, submit the will for review and approval, sign a petition seeking your appointment, and take an oath to well and truly administer the estate according to law. Only then can you officially begin your work as the executor.
  • Notify interested parties In modern times there is no reading of the will at the lawyer’s office. Instead, beneficiaries named in the will, and spouse and children, regardless of whether or not named as beneficiaries, must receive from the executor a statutorily prescribed Notice of Estate Administration, with access provided to a copy of the will. In addition, you will have to legally advertise the existence of the estate in the form and manner prescribed by law. This puts creditors and potential creditors on notice regarding existence of the estate. It also protects the executor from future liability if creditors fail to timely present their claims.
  • Manage the deceased’s property. You will need to prepare a list of the decedent’s assets and liabilities and collect property in the hands of other people. One of the executor’s jobs is to protect the property from loss, so you will need to ensure the property is kept safe. Consequently, investment portfolios should ordinarily be liquidated and held as cash until administration is completed and distribution to beneficiaries is made. Holding on to investments that have gone south at the time distributed to beneficiaries exposes the executor to personal responsibility for the losses. For nonliquid assets you may need to hire an appraiser to find out how much the property is worth. In addition, if the estate includes a business, you will have to make sure the business continues to run or is properly wound up.
  • Pay valid claims by creditors. Once the creditors are determined, you will need to pay the deceased’s debts from the estate’s funds. An executor is not personally liable for deceased’s debts nor for other estate obligations such as administrative costs, taxes and other claims against the estate. But if the estate is insolvent, that is, if estate obligations exceed assets, there is a statutorily prescribed priority for who gets paid that, if you fail to properly follow, can make you personally liable for unpaid claims.
  • Pay taxes. A decedent estate is a separate tax-paying entity separate and apart from the deceased person. It must acquire its own tax number, an Employer Identification Number – EIN, and file its own income tax returns. It comes into existence on the date of death and ends when estate administration has been completed. As executor, you are responsible for preparing and filing these returns and have the option of choosing a fiscal year starting on the date of death rather than being restricted to a calendar year as are individuals. In addition, you must also file income tax returns for the decedent for the year of death. And beyond that, you are obliged to file one or multiple death tax returns. Persons who inherit from a Pennsylvania decedent must pay an inheritance tax. An executor typically files a consolidated return and pays the tax off the top on behalf of all the beneficiaries. For decedents with very large estates, an executor is also required to file a federal estate tax return.
  • Keep accurate records. It is very important to keep accurate records of everything you do. The attorney you hire will assist you and typically assumes control over the estate’s banking activity to ensure proper and accurate preparation of tax returns and of an account of your estate administration.
  • Prepare a final accounting. Once you have completed all prerequisites and are ready to distribute the estate it is prudent and customary to prepare and serve upon the beneficiaries a final accounting in the legally prescribed format that comprehensively reports all receipts and disbursements, including income, expenses, gains and losses on disposition of assets, and other relevant information.
  • Distribute the assets to the beneficiaries. As personal representative of the estate, you are responsible for making sure the beneficiaries get what they are entitled to under the will or under the intestate law if there is no will. That might include setting up trusts required by the will. Before you make the distribution to estate beneficiaries be sure to provide each with a copy of your account and schedule of proposed distribution together with a Receipt, Release and Refunding Bond that all beneficiaries must sign in advance. This will constitute a signed receipt of the amount distributed, legally bar any subsequent claims against you or the estate by the beneficiaries, and oblige each beneficiary to refund back to the estate his or her pro rata share of the inheritance needed in the event new creditor or tax claims arise against the estate after you completed distribution. If any beneficiary refuses to sign off, then you will need to file your accounting with the court and provide the disgruntled beneficiary with an opportunity to raise objections in court in front of a judge.

As you can see, serving as an executor can be a lot of work and is not without risk. You don’t have to take this on if you don’t want to. But once you do, you can’t just walk away. The court must release you and that will likely not happen until someone else is appointed in your place. On a brighter note, an executor is entitled to reasonable compensation. Keep in mind, however, that the compensation is counted as income, so you will need to declare it on your income taxes.

The lawyers at Vasiliadis Pappas Associates have extensive experience in representing executors in administering and distributing decedent estates. If you are called upon to assume this responsibility, contact us today, we can help!