estate planning
Money Matters
Wills & Estates

What You Need to Know If You’re Named the Executor of an Estate

It is time to meet your team. They are (in no particular order): lawyer, accountant, appraiser, realtor, auctioneer, insurance agent, banker, broker, assorted bureaucrats, and the people who haul away a lifetime’s worth of junk. You may not need all of them, but chances are very good that you will need most of them—especially if the decedent owned real estate. Exercise good judgment in picking your team. Remember who is ultimately responsible for absolutely everything. That’s right. It’s you.

The Lawyer

The law is everywhere and effects almost every aspect of our lives. This is especially true in the case of settling estates. While lawyers may not be realtors, they know property law. While lawyers may not be accountants, they know tax law. And while lawyers may not be bankers, they know banking law—in particular, the Uniform Commercial Code. And so it goes with each member of the team. As such, one of the lawyer’s principal responsibilities is to coordinate the efforts of the team as a whole and prevent one member from doing the job of another. For example, if the lawyer is going to prepare the Federal Estate Tax return (as many do), it is important that the accountant be aware of this so that it is not prepared twice.

In addition to coordinating the team, it is the lawyer who guides you through a court proceeding known as probate: gaining access to assets that were held in the decedent’s name alone. And finally, the lawyer acts as negotiator, helping you deflect complaints from and among your decedent’s beneficiaries as well as settle the claims of your decedent’s creditors (usually at a substantial discount).

The Accountant

The accountant’s principal job is as tax preparer. The accountant will be responsible for preparing the decedent’s final tax return as well as preparing the annual tax returns of both the Probate and Trust estates. The accountant will also act as counsel. Questions such as whether it is a good idea to distribute income to beneficiaries or what is the tax effect of selling property are directed to your accountant.

The accountant also serves as liaison with the Internal Revenue Service. Should you forget to file a tax return or should you fail to pay the tax, the IRS will impose substantial penalties on the Probate and Trust estates. It is the accountant who will negotiate a reduction in these penalties. Many times, an experienced accountant can eliminate the penalties altogether.

The Appraiser