Executors

A will executor should:

• Be trustworthy
• Have common sense and good judgment
• Live close to the probate court and your property
• Have the ability to referee fairly between beneficiaries of your will, if necessary

Duties of An Executor

One of an executor's first and most important duties is to take an inventory of estate assets. The detail required in inventorying tangible, household personal property varies, depending on the value of the property involved and how it's to be distributed.

Family members and prior tax returns can be a big help in identifying assets and account numbers, but the executor must look through the deceased person's papers very carefully so as not to miss anything.

The executor must also act immediately to preserve and protect the assets, according to what's called the "prudent person rule." Following this rule is part of the executor's "fiduciary duty" to act cautiously, as though dealing with his or her own affairs.

The executor will handle all the details of paying any debts owed, and distribute the assets to the beneficiaries of the will. This may involve:

• Setting up bank accounts
• Closing business accounts
• Paying any taxes owing

It may be necessary for the executor to sell real estate and personal property owned by the deceased person to pay estate debts. There is usually a waiting period after the will is filed before the executor can begin distributing the assets to those listed in the will. This allows time for any creditors to come forward to declare debts that may not be known to the executor simply by going through the deceased person's paperwork.

The probate court won't allow any claims not made to the executor in writing during this waiting period, as long as the executor has published a local newspaper legal notice that the estate is in probate.

An executor may hire an attorney with estate funds for advice or to assist in defending any creditors' claims. It's often a good idea for the executor to consult with an attorney, even if the executor doesn't wish to hire an attorney to process the will through the probate process.

The executor usually has the discretion to distribute the beneficiaries' shares in cash or property, but the will can specify otherwise.

After all debts and taxes have been paid and assets distributed to beneficiaries, the executor submits a report or final accounting for approval by the court.

The executor is entitled to reasonable compensation for his or her services, often limited to a certain percentage of the property in the probate estate. The executor's fee is usually listed on the final report and must be approved by the probate court. Interested parties can object if the fee appears to be excessive, considering the time and effort actually expended by the executor.

An executor is never personally liable on claims or lawsuits against the deceased person or the estate itself, unless he or she was negligent or engaged in some sort of wrongdoing. For example, if estate funds were available, but the Executor neglected to pay a theft insurance bill covering property owned by the estate, and a theft loss resulted, he might well be held liable to the beneficiaries. But if a general economic downturn decreases the value of a "blue chip" estate portfolio of stocks and bonds, the law wouldn't hold an executor responsible.

Michael Palermo is a Lexington, Kentucky estate planning lawyer and Certified Financial Planner. More information about estate planning can be found on his Web site.

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