When a person passes away, the liquidation of their estate is administered by an executor. Being selected as an executor is an honor. However, it can also be an obligation. It is not a task you should take lightly. As an executor, you will manage the administration of a deceased person's belongings and assets. The time and effort will vary based on the size of the estate. Still, regardless of the estate's size, you will have essential duties to properly perform. And if things are not done correctly, you might be liable to the beneficiaries of the estate.
Duties of the Executor
Some executor duties include:
- Obtain and file a copy of the will with your local probate court. You are responsible for finding, reading, and understanding the will, even if it is not required to go through probate, you will still need to file the will with the probate court.
- Hire an attorney. You do not necessarily have to hire an attorney, but if you make any mistakes, it could cost you money. You might be personally liable if mistakes do happen with the payment of taxes or with the estate. An attorney can help ensure you take all the proper steps and you meet all deadlines.
- Notify government agencies, credit card companies, and banks of the decedent's death. Some examples of who you should notify of the decedent's death are the decedent's credit card companies, banks, and the Social Security Administration.
- Manage the property of the deceased. You will have to make a list of the deceased's liabilities and assets, and you might need to gather up any property and belongings in the hands of other individuals. One of your jobs, as an executor, is to protect the deceased's property and ensure it remains safe. You will also have to hire an appraiser to obtain the worth of the property.
- Contact heirs. If the deceased did not leave behind a spouse, you would have to find and contact the individuals named in the will who will be inheriting property or money. You are typically in charge of ensuring the property named in the will goes to the proper individuals.
The following steps can assist you in determining how to tackle asset liquidation.
- Exercise your fiduciary duty as an executor of managing the estate assets efficiently. To start, you can not show any appearance of impropriety. For instance, you should not liquidate any estate property by selling it to yourself, nor should you transfer any funds into your own bank account. You should set up an account for estate use and only use this account to deal with money that is transferred in and out of the estate.
- Get independent value verification. It is not appropriate for you to rely on your personal judgment when you are an executor to determine an assets' value. Instead, you need to get an independent appraisal. You can use a licensed appraiser, but do not use one who is also a friend or relative. You need to be impartial at all times when acting as an executor.
- Find a buyer. You can not liquidate assets without buyers. You might use a stockbroker to sell stocks. You might use a real estate agent to sell real estate. If there is estate jewelry, you can go through a jeweler who specializes in estate jewelry to help with selling the inventory. In any of these scenarios, you will want to use professionals who are experienced in selling the type of item you are liquidating.
- Document the final sale. You need to properly record the sale of all sold assets. Obviously, the transfer of title will reflect the sale of a house. But if you sell art, for instance, you will want to obtain written documentation of the transfer to protect the estate and yourself. Make sure you are signing the documents as the estate executor. Any funds you receive from the sale of estate items will need to be deposited into the estate bank account.
What Are the Next Steps?
If there is a surviving spouse left behind, they might wish to:
- Move closer to relatives
- Move to a low-tax state.
If they are elderly, they might want to live in an assisted living atmosphere. You might be in charge of arranging the surviving spouse's move along with being responsible for the sale of the former marital abode.
This can all be a great deal of work, but keep in mind, as an executor, you are entitled to compensation, subject to court approval. Remember, if you do receive compensation, it is counted as income and, you will need to file it on your income taxes.