An executor is a person who is charged with closing out any estate issues left open by the deceased, and fulfilling the financial wishes as laid out in the official will. A large part of the executor's role is the process of distributing funds as instructed in the will. Every person who leaves a will is entitled to select and name his executor. While some situations provide the executor with the power to decide where money goes and when, he is always bound by the law and by his responsibility to the beneficiaries.
The executor of a will must perform a search of the deceased person's creditors and locate any outstanding debts or unsettled accounts. If any such accounts exist, the executor must make full payment out of the estate of the will writer. The deceased person's creditors hold priority over all other parties mentioned in the will. Each creditor should be notified about the death by the executor, who must then request proof of any current balances held. The executor does not have the power to bypass any creditors, and must settle all accounts before any inheritance is distributed.
Using funds from the estate, the executor must pay taxes due on the property of the deceased, including estate tax. Tax payments are viewed as a debt of the deceased and, as such, funds cannot be distributed to heirs unless and until all debts have been paid in full. The executor must notify the IRS and any local or state tax authorities who may have a claim, and allow them to produce evidence of the debt. Only once all taxes are up to date can the distribution of inheritance property take place.
The executor has the authority to make payments related to the death of the will writer. If some other form of payment is arranged to cover the costs of the funeral and burial process, such as the assistance of a family member or a dedicated account, the executor need not get involved. If the cost of burial is not paid by any other means, the executor has the power to access the estate funds to pay the burial expenses. The executor must also deduct his own fees from the estate prior to any further distribution of funds. (An executor typically is entitled to receive a fee equal to a certain percentage of the estate.)
With all the responsibilities of the deceased met, the executor must arrange for a court probate. The executor must prove to the court probate that every debt has been paid in full and that the estate is now free from creditors. If the court agrees, a release of the estate is issued, and the distribution of property, as per the instructions in the will, can begin.
The distribution of inheritance property as laid out by the contents of a will is the last step in the role of an executor. With all debts paid and the will in probate, the executor is free to carry out the wishes of the deceased and has no say in the distribution of property. Once the estate has been distributed, the executor must provide each inheritor with a list of what was granted from the estate to prevent any fraudulent activity or forgotten assets. If the executor himself is a beneficiary of the will, he is, of course, able to spend his inheritance as he sees fit.
Property that is not mentioned in the will cannot be distributed as seen fit by the executor. The law controlling the order of distribution of this property differs from state to state. For example, in Colorado it goes to the next of kin starting with the spouse, children, grandchildren, parents, siblings, nieces, nephews, their children, grandparents, aunts, uncles, cousins and finally their children. If the deceased has no living relatives at all, the executor must turn over the estate to the state government. Smaller personal items not mentioned in the will are typically distributed amongst family members and friends as seen fit by the parties involved and outside the purview of the executor.
While the executor is not able to spend the estate's money any way he wants, he may be tasked with managing that money until the estate is closed, or beyond (if one of the inheritors is under age at the time of distribution). In the case of the former, the executor is charged with ensuring that existing investments remain safe and that the value of the estate does not fall. In the case of the latter, the executor may be named as a trustee, which then grants him the power to make investments and manage the money without checks or balances from of the inheriting party or parties. In either case, it is very important to have an executor who can be trusted and who understands finances to some degree. If losses occur in either case due to the mismanagement of the estate by the executor, the beneficiaries may pursue legal action against him.
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