Executor 102 - By Tim Barkley
"When my husband died, my
kids wanted me to put them on the house. I haven't done it
yet – should I? My daughter lives locally, and she's on my
accounts so that if something happens to me, she can take
Uncle Herman has just died,
and you have been duly selected as the Executor of his Last
Will and Testament. Hopefully, you were forewarned.
Your obligation is to
marshal, preserve, and distribute the assets of the Estate in
accordance with the terms of the Will and the Law; and to
treat creditors, beneficiaries, and the taxing authority
impartially. This can be no small feat.
If you are a beneficiary of
the Will, you have an inherent conflict of interest, since you
must (a) make sure all legitimate creditors are paid, while
(b) making sure your own inheritance is not diminished. While
this sounds simple enough for a reasonably moral individual,
there are times when the issues are not clear, and it becomes
difficult to reconcile your interests and your obligations
To open the estate, you will
file paperwork with the Register of Wills of the County in
which Uncle Herman died domiciled. The Petition for Probate
and supporting documentation, including bond and notice for
publication in the newspaper, suffice to open the Estate and,
hopefully, provide for you to be appointed as Executor.
Marshaling the assets of the
Estate is simple if Uncle Herman kept a detailed, up-to-date
list of his assets and liabilities. All cash assets must be
transferred to an Estate account. Securities must be retitled
in the name of the Estate. Real estate need not be retitled,
but should be administered with the obligations of the
Executor paramount. Beneficiaries can reside in Estate real
property, but only if consonant with the terms of the Will.
Tangible personal property ("stuff") must be inventoried
before the beneficiaries remove it from the premises, and
valued for tax purposes, if not directed by the Will.
Preserving the assets of the
Estate requires keeping them insured, exercising reasonable
care with personal property, and carefully tracking the
receipt and expenditure of Estate assets for Estate purposes.
Every dollar or item must be accounted for, and any
discrepancies are resolved against the Executor. This writer
advises his Executor clients not to make any expenditure or
distribution without consultation, and to keep every slip of
You must then begin the
process of valuing assets. Real estate can be inventoried for
Estate purposes at assessed value, but if the Estate is
taxable, you should obtain a full fair market value appraisal.
This can be more challenging than it appears; valuation for
one purpose is not sufficient as valuation for other purposes,
and an appraisal must take into account all factors. In one
recent estate, the Executor unaccountably ignored subdivision
potential in valuing the family farm, reducing value (and thus
distribution) by approximately one-third. Beneficiaries were
less than completely gruntled.
Securities are valued at
their average price in the markets on the date of death. Cash
assets are valued using either the last statement value,
adjusted for transactions prior to death, or a written
statement from the bank or other custodian of the account.
Tangible personal property is valued at fair market value,
usually by an appraiser or auctioneer.
All of these values must be
totaled on an Inventory of the Estate, and you must file it
with the Register of Wills within three months of the date the
Estate was opened. You must also file a statement of any
assets of which Uncle Herman was joint owner and any
retirement assets, since these might be subject to tax.
All creditors’ claims must be
filed within six months from the date of Uncle Herman’s death.
Any claim not filed by that date is time barred. An important
exception is for claims of the Department of Health and Mental
Hygiene, which can be filed at any time up to one year from
the date of death. Claims must be filed in a legally
determined format and property executed.
Thereafter, you need to
decide which claims are to be paid, and which are to be
contested or denied. In the latter cases, you should plan on a
Court hearing to determine the rights of the parties. If you
pay any creditor without receiving a claim, you are personally
liable to the Estate for that amount if contested by another
creditor or beneficiary.
Within nine months of the
opening of the Estate, you must file an Accounting, showing
the gains and losses in value of assets, receipts and
disbursements, and distributions to beneficiaries during the
Estate process. Again, every asset and every dollar must be
accounted for, sometimes a significant burden in an active
Estate or an Estate with many creditors and beneficiaries.
State and federal death taxes are due by this date, and
probate fees are paid with the Accounting. You will also
petition the Orphan’s Court for your commission and the
Assuming that all creditors,
beneficiaries and the taxing authorities are satisfied, and
all Estate business is completed, the Estate is then closed.
Nearly a year of your life has passed, and, if you are like
many, you are now considering how to avoid placing this burden
on your family upon your death.