The executor (or if a woman, the "executrix") of an estate is the person who has accepted the responsibility of closing out the estate of someone who has passed away. Some estates are small, and the executor has only a few things to do. Large estates may need as long as a year or even longer to reach the point where inheritances can be distributed to the heirs. Something to keep in mind that confuses lots of people: If you were the Power of Attorney for someone who is now deceased, this does not automatically make you the Executor of their estate. The Power of Attorney is designed to allow you to help a living person with the chores of daily financial and medical life. At the moment the person who appointed you passed away, your authority under the power of attorney ceases to exist. The Executor of that person's Will is either named in the Will, or appointed by the Court if no one has been named.
Unlike what you see in movies or on TV, it is unusual in our practice to have a reading of the Will. The Will is filed with the Probate Court and recording with the County Clerk's Office. This makes the Will a public record for anyone to read.
The actual distribution of assets to beneficiaries does not happen right away. This is difficult for many beneficiaries to understand, but there is an initial 6 month period, generally referred to as the "creditor period" when the Executor is not allowed to distribute assets.
In general, an eEecutor is responsible for:
1. Identifying and securing the assets of the estate. This can be as simple as putting a new lock on the door(s) to keep the contents secure, to searching for property, investments, insurance policies and other financial information. This can take many months if you are looking for property you are not certain about or if you must wait for statements to arrive so you can identify accounts.
2. Establishing the value of all these assets. This means that except for very small estates or for things that have already been valued, such as bank accounts, the Executor will probably have to have the assets professionally appraised.
3. Paying legitimate debts of the person who has passed away from the assets of the estate. In the case of medical bills, it may be many months before all the bills have been accounted for. If there is not enough money in the estate to pay these bills, the executor is not personaly responsible to pay them. However, if there is not enough cash, but there are other assets with value, then the Executor will usually have to liquidate assets to pay the bills. In Kentucky, creditors have 6 months from the time the Will is filed in Probate Court (the 6 month creditor period discussed above) to come forward with their claims.
4. Completing all tax filings and pay required state, local and federal taxes from the estate. The Executor should also review or have reviewed the decedent's returns from the previous one or two years to be sure that taxes were paid properly. The IRS will certainly come back to the estate for any unpaid income taxes.
5. While all these details are unfolding the Executor continues to remain responsible for preserving the value of the estate. Property, boats and automobiles must be maintained. Investments must be managed. If assets must be sold, the executor manages the sale and decides how the proceeds are to be managed.
6. When all the legitimate debts and all the taxes have been paid, the Executor then distributes the remaining estate to the beneficiaries in exactly the way the decedent specified in his or her Will. The Executor does not have the authority to make changes to how the estate is distributed, even if the instructions of the Will do not seem to be fair.
If you are the Executor of someone's Will, the best first step is to contact an attorney who practices "estate" or "probate" law for a short consultation. In Kentucky, there is no requirement that an Executor hire an attorney to assist with the estate. There are many ways to retain an attorneys services, if desired, to accommodate the estate's budget, from a one-time consultation, to an ongoing consultation (you do the work, the attorney just tells you the steps), to full representation (where the attorney essentially handles everything). Be sure that the attorney you consult is licensed to practice in the state where your relative passed away. Attorneys should be paid from the assets of the estate, not your own personal money. Be sure to reach an understanding about the exact level of service you want and the attorney's fees and billing process (flat fee, percentage fee, hourly fee) before you proceed.