Can I Leave My Estate to My Sister Who Is Also My Executrix?

If your estate is relatively simple and straightforward, naming your sister as executrix shouldn't be a problem. If your estate is extensive and complicated, unless your sister possesses financial expertise, you might want to name a financial institution as co-executor. As executrix, your sister is responsible for hiring legal, financial and any other necessary professionals to handle estate matters. If you live in a different state than your sister, your state's law might require that a state resident act as co-executor or that your sister purchase a bond to protect the estate against any possible wrongdoing.

After your death, your sister must take your original will, along with a certified copy of your death certificate, and file in the probate court of the county in which you lived. The court formally names her as executrix and issues letters testamentary, documents that allow her to begin settling your estate. One of the first things she must do is publish a notice to creditors in your local newspaper that states that anyone having a claim against your estate must present it within a certain time period, according to state law.

Even if your sister is your only heir, that doesn't mean she can simply transfer all of your assets to her name. As executrix, she must collect all of the assets titled only in your name and establish their fair market value as of the date of your death, filing this information with the probate court. These assets must then be retitled in the name of your estate, which has its own tax identification number from the Internal Revenue Service. She must pay any bills you or the estate owe, as well as file your final income tax forms, paying any taxes due. Your sister is responsible for paying for the maintenance of any of your property, as well as any real estate or other taxes. The estate must also pay the fees of professionals hired by the executrix. Once all the bills and taxes are paid, your sister can submit an accounting to the court and transfer any remaining assets to her own name, closing the estate.

As executrix, your sister must pay any estate tax due. The amount exempted from federal estate tax varies according to federal law in a particular year, so depending on the size of your estate and the year in which you die, your estate might owe no tax or a substantial amount. If you live or own property in a state that assesses an estate or inheritance tax of its own, your sister might also have to pay those taxes. Estate taxes are paid by the estate, while the inheritance tax is paid by your sister after she formally inherits the assets.