What Does The Executor of An Estate Do

by Maria Angel

Executor

If you’re researching estate planning or creating a will, you’ll find the term “executor of an estate” pop up a lot. That’s no fluke. The executor of an estate plays a key role in making sure your final wishes are looked after, dealing with everything from funeral planning and shutting off credit cards to contacting financial institutions and selling off real estate. The executor of an estate has a lot on their plate. Let’s talk about the short-term and long term tasks an executor has to cover.

The First Priorities of the Executor of An Estate

We know. The first thing that usually comes to mind when thinking about what an executor of an estate does is read the will and give beneficiaries what they’re owed. Well definitely get to that part. But the very first priorities of an executor rarely have anything to do with money. Instead they deal with pressing issues like:

  • Guardianship of children: One of the most challenging tasks as an executor of an estate is finding a guardian for children if their parents are both dead. You can certainly turn to the will to see if it’s named a guardian, or you’ll have to look into childcare or contact child protective services.Executor2
  • Securing the death certificate: Working with a funeral director or whoever else is handling the deceased’s remains, the executor of an estate will make sure that certified copies of the death certificate are available. This is an important task since it will allow the executor of an estate to handle future responsibilities like closing out bank accounts or transferring ownership of assets.
  • Carrying through on funeral arrangementsGenerally within a week of a death you’ll want to hold a funeral, and it’s up to the executor of an estate to go through all of the details with a funeral director like opting for a burial or a cremation, choosing what type of ceremony to have, and coordinating the event with family and loved ones.
  • Informing credit card companies of the passing: It can be incredibly easy to take advantage of a deceased’s credit cards right after they pass. As a result, one of the first things an executor  will do is contact the credit card companies and let them know that the cardholder has died. This lets the companies safely shut off the account to prevent any future transactions.
  • Store valuables in a safe place: Just as credit cards are susceptible to thieves, so are valuables like jewelry or cars. The executor of an estate will want to make sure that these items are in a secure place before they can be sold or given to family and loved ones.

This is just the tip of the iceberg for the executor. As you can see, a lot of these early responsibilities are extremely time sensitive and make sure that no one is being taken advantage of.

The Second Priorities of the Executor of An Estate

Once these primary responsibilities are tackled the executor of an estate must then move on to additional tasks that will help fully disperse the deceased’s assets. In truth, these are usually the sorts of things people think about when talking about estate execution. These responsibilities include:

  • Look for the will: As obvious as this sounds, an estate executor will need to first find the deceased’s will, assuming Screen Shot 2015-12-15 at 7.43.19 PMthere is one. Ideally the deceased will have written up a will and shared it with their executor, if not more people.
  • Beginning the probate process: Whenever there is an estate disbursement, it must go through probate. This is the legal process that names the estate executor, ensures that creditors are paid off and beneficiaries get the proceeds from the estate. The executor of the estate enters the estate into probate to get the process going. If there’s a will, it gives the executor of an estate a solid roadmap to use while the estate goes through probate.
  • Tackle real estate holdings: All mortgages will have to be paid off first, since part of the probate process requires creditors getting what they’re owed. Once any home-related debt is paid off, the executor of an estate will either make sure real estate deeds are transferred over to beneficiaries or sell the real estate and pass the proceeds on.
  • Liquidate the home: To properly get the home ready for sale, it will need to be cleared out. When liquidating a home or other real estate holdings, the executor of an estate can hold an estate sale, work with consignment stores, or donate the items to charity.
  • Close financial accounts: The deceased no doubt had checking and savings accounts, if not CDs or investment accounts. Armed with those death certificates we mentioned earlier, the executor of an estate will close the accounts and collect the cash as part of the larger estate to help pay off creditors and share the proceeds with beneficiaries.
  • Transfer retirement and life insurance accounts: When retirement and life insurance accounts are setup, they generally ask for beneficiaries. This is great because it generally means they are exempt from probate and possibly estate taxes. The proceeds, however, do need to make it to the beneficiaries. The executor of an estate can help with this by contacting these companies and ensuring that the funds are paid out.

If you haven’t figure it out yet, being the executor of an estate is not for the faint of heart. It requires juggling a lot of tasks in a timely manner.

What Does a Good Executor of An Estate Look Like

With all of the tasks an executor of an estate has to juggle, there are certain personality traits you’ll want to look for before naming your executor:

  • Strong communicator: This skill is especially handy right after someone has died. It can take a lot of work and finesse to coordinate all of the family and loved ones through the funeral and memorial services.
  • Good multi-tasker: From managing real estate and financial accounts to finding guardians for children, the executor of an estate will have a lot on their plate. You’ll want to pick someone that isn’t phased by juggling all the big and little things that will come their way.
  • Solid conflict resolver: As the person tasked with carrying out a will’s final wishes, the executor of an estate can come across a lot of family strife. It’s best to pick an executor that can take this in stride and keep moving forward.

Nope, this isn’t the easiest bunch of characteristics to find in one person. But, with all the tasks this person needs to tackle, you can see why it would be ideal to bundle these traits together.

Complete Article HERE!

This Is What Happens to Your Debts After You Die

By Aubrey Cohen

Your debts become the responsibility of your estate.

Coffin on stage

When you die, any debts you leave behind could eat up assets that you had hoped to leave to heirs. In some cases, family members could even be on the hook for your debt. Many people buy life insurance not only to leave something behind for their loved ones but also to help deal with any debt and final expenses.

Will your debts die with you?

After you die, your debts become the responsibility of your estate — which is everything you owned at the time of your death. The process of paying your bills and distributing what’s left is called probate.

Your executor (the person responsible for dealing with your will and estate after your death) will use your assets to pay off your debts. This could mean writing checks from a bank account or selling off property to get the money. If there isn’t enough to cover your debts, creditors generally are out of luck.

But specific kinds of debts have their own wrinkles.

Mortgages and home-equity loans

If a property has a mortgage, the lender has some protection, at least up to the value of the property.

But federal law bars lenders from forcing a joint owner to pay off the mortgage immediately after the death of another co-owner. This also applies to any relative who inherits the home and lives in it. Practically, this means the family member or co-owner can simply take over the mortgage payments.

An outstanding home-equity loan against the property is different. A lender can force someone who inherits a home to repay the loan immediately, which could require selling the house. That said, lenders might work with new owners to allow them to simply take over the payments on the home-equity loan as well.

Auto loans

In the case of an auto that is not fully paid off, the lender has the right to repossess the car. But typically whoever inherits the vehicle can simply continue making payments, and the lender is unlikely to take action.

Credit cards

Once the estate runs out of assets, credit card companies are out of luck, because this debt is not secured by assets the way mortgages and car loans are. Any joint account holder would be responsible for the bill, but people who are simply authorized users of a card would not.

In community property states, listed below, spouses are responsible for any debts incurred during the marriage, including credit card debt.

Student loans

Lenders have no recourse if the estate does not have assets to repay other unsecured obligations, such as student loans.

If your relatives are not responsible for your debts, collection agencies may still legally call to discuss debts and to try to find someone authorized to pay them, according to the Federal Trade Commission. But collectors cannot mislead family members into thinking they’re responsible for the debts.

Caveats

There are circumstances in which spouses or other people would be personally responsible for your debts. These include if they:

  • Co-signed for a loan.
  • Are joint account holders.
  • Are spouses in community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Spouses are not responsible for debts that predate the marriage, although half of any community property from a marriage could be put toward such obligations.

About 30 states have “filial responsibility” laws that could make adult children responsible for debts related to caring for parents or parents responsible for debts related to care of their children. These laws once were rarely enforced, but there have been recent cases in which creditors have used the statutes to pursue family members.

What’s protected?

Creditors typically cannot go after your retirement accounts or life insurance proceeds. Those will go to the named beneficiaries and are not part of the probate process. But if the life insurance beneficiaries you named are no longer living, your death benefit may go into your estate and can be subject to creditors. That’s one reason why it’s important to make sure your policy names the proper beneficiaries.

Life insurance can help with debt payments

To decide whether you need life insurance to cover debts after your death, consider these questions:

  • Do you have family members who would be responsible for your debts?
  • Do you have debts that would eat up assets you want to pass on to family members?
  • Do you want to pass on money that couldn’t be diverted to pay your debts, even if you owe those debts?

Life insurance can help in any of these scenarios. Term life insurance policies, which provide a death benefit for a set number of years, are suitable for most people’s life insurance needs. NerdWallet’s life insurance tool is a good place to compare prices. If you want to consider a permanent policy, such as whole life insurance, consult a financial advisor.

Complete Article HERE!