I’ve been named Executor in a Will. What do I do now?

What do I do if I’ve been named “executor” in a will?

What's next after being named executor in a willWhat should you do after being named executor in a will? The first answer to this question should be another question: “do I want to serve as executor?” No one is required to accept this responsibility. Should you wish to decline, you can sign a document called a “renunciation.” This would enable either an alternate executor named in the will to serve, or to allow another authorized party to petition to become the administrator of the estate.

What is an executor and what are his or her duties? First, the term “executor” typically refers to a male; “executrix” is the female form. The more modern term is “personal representative,” which generically refers to an executrix, executor, administrator or administratrix. The term executor simply refers to a person appointed in a will; for persons who die without a will, the term “administrator” is used.

The duties of a personal representative are essentially to gather the assets of the deceased, convert them to cash if appropriate, and pay the decedent’s debts and inheritance taxes. Finally, the personal representative will distribute the balance to the beneficiaries named in the will, or if no will, to the decedent’s heirs as set forth by law.

While it is not necessary to have a lawyer assist the personal representative in administering an estate, it is certainly advisable. There are many ways that an attorney’s advice can save the estate money, and protect the personal representative from the many pitfalls in administering an estate.

As a few examples of the type of issues facing a personal representative, the first is providing notice to the beneficiaries. The law requires certain persons to receive notice of the administration of an estate, and a lawyer can determine who needs to receive notice. Failure to provide notice could potentially expose the personal representative to liability in the future.

Next, a decision needs to be made as to whether or not to advertise the estate. While not strictly required by law, advertising is beneficial because the purpose of the advertising is to cut off claims of creditors. However, in some situations, typically where there is a sole beneficiary who perhaps had a power of attorney for a parent and is very familiar with their affairs, the cost of the advertising can be saved.

It is the personal representative’s responsibility to file and pay any inheritance taxes due. There are many issues dealing with inheritance tax that most people are not able to handle on their own. Just as an example, in Pennsylvania, there is a 5% discount to the extent that inheritance taxes are paid within three months of death. This may not be possible if there are not sufficient liquid assets, but an attorney can assist in estimating the tax, which can result in significant savings to the beneficiaries.

There are many other issues facing a personal representative. One of these issues is whether or not to take a fee. The personal representative is entitled to be paid from the estate for their services. However, this is not always advisable because the personal representative will need to pay income taxes on their fee, which could be greater than the savings in inheritance taxes to the estate.

Other issues confronting a personal representative are whether or not to make an “at risk” distribution. This is any distribution made before one year has passed from the advertisement of the estate. Such a distribution is “at risk” because if claims of creditors later arrive, the personal representative may have personal liability for these claims.

One of the more difficult issues to deal with is that of an insolvent estate. This is where the debts are greater than the assets. It is still necessary to file an inheritance tax return even though no tax will be due. It is also important that no debts be paid until all debts are known. This is because, by law, certain classes of debts have greater priority than others in being paid. It is the personal representative’s responsibility, with advice from their attorney, to only pay those creditors that are entitled to payment.

At Bernard Stuczynski & Barnett, we would be pleased to discuss your situation. In most cases, it will benefit a personal representative to have representation by a skilled attorney.

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