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Understanding the Role of an Estate Executor

Written by prositesfinancialJun 28 • 2 minute read

An executor of an estate has the legal responsibility of fulfilling the deceased’s wishes, identifying, gathering, and safeguarding assets, and distributing them to the beneficiaries. These responsibilities can be complex depending on the decedent’s financial situation and the intricate nature of their wishes.

Who Is an Executor?

An executor is a trust company, individual, or bank chosen by the decedent and appointed by law to settle the deceased estate. If the deceased failed to name an executor or did not have a will at the time of death, a judge will appoint a family member who qualifies.

Responsibilities of an Estate Executor

There are many legal and financial matters requiring attention after death. As an estate executor, you are responsible for the following matters:

1. Probate court

Depending on your state, probate will typically open thirty to ninety days after someone dies. If you are the executor, your top priority will be to present the decedent’s assets and debts. To do so means that you will need to:

  • Seek asset appraisal services to identify the value
  • File a proof of claim by contacting the IRS
  • Confirm all debts

The probate court will then authorize you to handle the deceased estate by providing Letters of Testamentary.

2. Tax returns

Typically, the estate executor files final tax returns for the deceased. This is a separate matter from filing tax returns for the estate. Generally, the information on the decedent’s records will be sufficient to file the person’s income returns. If it isn’t, you may contact the IRS for income documentation, tax transcripts, and previously filed returns. Your role is, therefore, to file form 1040 for a basic income tax return or 1040-SR if the person was a senior citizen.

Filing tax returns for the estate requires filling out form 1041 after receiving the deceased employer’s identification number (EIN). Remember that this requirement applies if the estate generates a yearly income of over $600. And if the estate undertakes a business in the person’s absence, you must secure a new EIN, which will apply to future tax returns. You must also complete form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. This tax applies to the handover of assets to the beneficiaries and typically pertains to large estates.

3. Funeral arrangements

Generally, the family members make the funeral arrangements. However, as the executor, you have the authority to oversee them by fulfilling the deceased final wishes. Remember that these wishes are not legally binding; loved ones generally honor them.

4. The residue of the estate

The residue of the estate, as the name implies, remains after paying debts and liabilities, funding testamentary trusts, and meeting cash legacies and other bequests. The documentation should detail the beneficiaries and their specific proportions. The will also states the testator’s wishes on the share of a beneficiary who dies before them.

5. Closing the estate

As an estate executor, your final role will be to submit an account to the probate court presenting all transactions and arrangements you made on behalf of the estate. After the judge’s approval, the beneficiaries can receive their share.

The Importance of Estate Planning and Execution

An executor has the authority to fulfill the deceased’s final wishes and ensure all legal and financial affairs are in order before handing over the estate to the beneficiaries. The delicate nature of the process makes it crucial to understand an estate executor’s role. If you have questions about fulfilling your responsibilities as an executor or drafting your own end of life plans, don’t hesitate to reach out to an attorney experienced in estate law.

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