What Is The Role Of An Executor In Estate Planning?

In an estate plan, the executor of the estate is an individual responsible for administering the last will of a deceased person, ultimately carrying out the instructions to manage the affairs.

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What Is An Executor?

The executor is appointed by either the testator or the court. Their role is to ensure all assets in the will are accounted for and transferred to the correct beneficiary.

Estate planning assets often include things like financial holdings like stocks and bonds, direct investments, real estate, or collectibles.

Duties Of An Executor In Estate Planning

An executor must be an individual over the age of 18 with no prior felony convictions. This individual is oftentimes a family member, close friend, accountant, or lawyer.

Here’s a quick look at some of the executor’s duties:

Estimate the value of the estate by using either the date of death value or the alternative valuation date, which is provided in the Internal Revenue Code.
Publish an official notice to creditors.
Meet legal obligations and wishes/interests of the deceased.
Make sure all of the deceased’s taxes and debts are paid.

Executor’s Role In Estate Planning

The executor plays a crucial role in estate planning for individuals and beneficiaries. Estate planning is how an individual wishes his or her assets to be preserved, managed, and transferred after death.

Individuals have several reasons for planning an estate, such as preserving family wealth, providing for others, and more.

Some major estate planning tasks include the following:

Completing or establishing a trust or will.
Appointing a guardian for living dependents.
Establishing trust accounts in the name of beneficiaries to limit estate taxes.
Appointing an executor.
Updating life insurance, 401(k), and IRA beneficiaries.
Planning future funeral arrangements.
Appointing a durable power of attorney (POA).

Personal Liability

The role of executor undoubtedly requires a lot of time and care. The executor is responsible for contacting agencies like the IRS or Social Security Administration.

An executor can allow an estate attorney to handle several of the matters mentioned above. A CPA or other tax preparers can work on the decedent’s final income tax return when it comes to the estate. Many states do currently impose death taxes on estates.

Executors need to explain to heirs eager to receive inheritances that they are not allowed to make disbursements until all claims against the estate are settled.

Disputes

When the deceased have designated multiple executors, this adds a lot more paperwork, which can result in disputes. If co-executors agree to allow only one individual to serve in this role, the other waives their appointment.

In some cases, heirs may try to claim valuables that are contrary to the deceased’s wishes. It is the executor’s job to secure the home and other assets, while letting the heirs know that this is the law.

Executor Vs Trustee In Estate Planning

While these two roles are similar, it’s the executor who must carry out one’s will. The trustee is responsible for the individual’s trust. There are some cases where both roles will belong to the same person.

Source:

“What Is An Executor? Duties And Roles In Estate Planning” Investopedia https://www.investopedia.com/terms/e/executor.asp#:~:text=An%20executor%20of%20an%20estate,assets%20to%20the%20correct%20beneficiary

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