Upon the death of the testator (person who made the will), the designated executor must diligently adhere to the public process of probate. Meanwhile, beneficiaries tend to wonder: what’s the delay with asset distribution? To prevent misunderstandings, it’s best for everyone involved to understand the steps involved in executing a will.
First Things, First
Ordinarily, probate is nothing to be afraid of: it is simply the legal, public process that settles our affairs when we die. Most states offer expedited processes depending upon the level of assets involved. When families are communicating and have had a chance to get organized, probate generally proceeds smoothly. Nonetheless, executors are likely to find themselves busy with their duties, and it is typical for the probate process to take some time—a year or so is fairly common. As David Peterson of Fidelity observes, the administrative slog can take a toll on both beneficiaries and executors:
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.
To avoid confusion, and conflict, it’s useful for everyone to know the basics about the duties an executor must undertake during probate. Typically, the first thing an executor must do is obtain the death certificate and other documents that will be essential to settling the affairs of the deceased, such as the will. Peterson explains that with these in hand, the person designated as executor must:
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.
Generally, given the fiduciary nature of their responsibilities, courts require executors to secure bonds, which can be referred to via a variety of names, including probate, estate, fiduciary, personal representative or executor bonds. Fidelity points out:
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.
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Notify, Inventory, Maintain…
With the “Letter of Testamentary” in hand, an executor can begin carrying out the tasks associated with settling the affairs of the estate. Among the key duties an executor must perform under the supervision of the court are notifications to interested parties, inventorying assets and safeguarding them until they can be distributed to beneficiaries. Summarizing these steps of the probate process, Fidelity explains:
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.
….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.
….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.
Pay Taxes and Resolve Claims
Before any assets can be given to beneficiaries, debts must be paid, and that includes attending to taxes: “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” must be paid. Fidelity reports that usually, prior to providing a final accounting to the probate court, the last steps an executor does are:
Pay the estate’s debts and taxes….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… 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.
Good To Know
As time goes by, it’s critical for executors to keep communications flowing to beneficiaries, creditors, and the court. Silence can lead to misunderstandings, conflicts and even probate litigation. It is also helpful to know that when there is no will, assets are distributed in accordance with state laws of intestacy. The fiduciary appointed by the court to handle the probate process when there is no will is generally referred to as an administrator. Court appointed administrators can obtain administrator bonds with speed and ease right here:
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