Estate Appraisal - Executor's Responsibilities
What is involved in being the executor of someone's estate or trust? This memo should give you some general concepts and some idea of the responsibilities.
If you are dealing with a probate asset, you will be issued "letters" from the court which reflect your appointment as personal representative.
These letters are evidence to third parties of your authority to act on behalf of the estate. You may need to order certified copies of these letters to present to bank s, insurance companies, etc.
Assets owned by a revocable living trust do not require court authorization. You m ay, how ever, be required to provide a copy of the trust or at least an "Affidavit (F or Property of Trust)" which evidences your authority to act.
Your general duties to the beneficiaries include:
- The duty to be impartial; that is, not to favor the interest of one party over another
- The duty of undivided loyalty (not to put your own interest in conflict with those of the estate)
- The duty to administer the estate with care and prudence.
- Collecting and taking an inventory of the assets of the estate
- Managing these assets during the period of administration and paying the estate bills, including claims of creditors, expenses of administration and any taxes
- Making distribution to the heirs or the beneficiaries under the will or trust.
Set up an estate accounting system at the beginning of the administration of the estate. You must keep records of all cash and other financial transactions of the estate and provide written accounting to the beneficiaries. You can use this checking account to pay for estate's expenses.
Tax Responsibilities:
You must file the final income tax returns for the decedent as well as any gift tax returns. You are required to file a federal estate tax return (Form 706) if the estate is of sufficient size to require such a filing. There is also a separate income tax return that must be filed for the estate.
If you have questions, consult promptly with your attorney. Seeking your attorney's advice before you act may avoid more costly legal services later.
Exerts from: Steward W Fleisher were used in writing this article.
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