What it means to be an Executor

By: Elizabeth A. Hartnett

This blog answers questions we frequently are asked by persons named as Executor in a decedent’s Last Will and Testament.

The decedent’s Will appoints me as executor.  What’s next?  Is my appointment automatic?

No.  You will be appointed executor by the Surrogate Court after the Will has been accepted for probate.  The Court will issue you “Letters Testamentary” which give you the authority to act on behalf of the estate.  The Court may deny you Letters notwithstanding that you are nominated in the decedent’s Will for reasons such as being a non-US citizen or a felon.

The Court may also require you to obtain a fidelity bond from an insurance company before issuing Letters unless the requirement for a bond is waived in the Will.

Letters Testamentary are important as they are typically presented to third parties holding assets of the decedent, such as a bank, so the third party knows you have authority to act on behalf of the estate.

I have been appointed executor and issued Letters, now what?

As executor, it is your duty to collect and preserve the decedent’s assets, pay debts, taxes and administration expenses and to distribute assets in the estate in accordance with the term of the Will.  To help facilitate this, you will need to open an estate checking account.  In turn, you must keep complete and accurate records of the estate’s assets, income and expenses.

Decedent had a number of securities at his or her death and none are specifically bequeathed to any beneficiaries.  What as executor should I do with these securities?

Securities will need to be re-registered in the name of the estate.  This will typically involve sending a death certificate and Letters Testamentary to the mutual fund, bond company, stock issuer, etc. for processing.  Each entity may also have its own internal forms and affidavits it requires to be completed before it will process the re‑registration.

Although every estate should be reviewed on a case-by-case basis, generally speaking estates are short-term endeavors.  It is thus recommended that any stocks be liquidated into cash as soon as possible and deposited into the estate’s checking account to be used to pay any estate debts and to be distributed to any beneficiaries with specific cash bequests or residuary beneficiaries who are entitled to a percentage of the estate.

How do I sign my name?

As executor, you should sign as follows: “John/Jane Doe, Executor of the Estate of ABC, Deceased.”

Decedent had a summer home in Florida that was bequeathed to a specific beneficiary in decedent’s Will.  Can I sign an executor’s deed conveying this property to the beneficiary?

No.  As executor you only have authority over assets located in New York.  Any real property located outside New York is under the jurisdiction of that particular state.  You will have to file what is called an ancillary probate proceeding to obtain authority over that out-of-state asset.

The Will says that I am entitled to executor’s commissions.  Can I simply take this money out of the estate checking account and pay myself?

No.  A court order is required in order to take advance payment of commissions.  Without that advance approval you must wait for the court to award commissions or the beneficiaries to approve commissions on the final settlement of the estate.

You as executor may also renounce your commissions within 4 months of receiving Letters Testamentary.  This is advisable if you are the beneficiary of the estate since the commissions are subject to income tax while the receipt of the bequest or legacy is generally not subject to income tax.

How are executor’s commissions calculated?

The commission rate in New York for each executor is 5% on the first $100,000 of the value of the estate’s assets, 4% on the next $200,000, 3% on the next $700,000, 2-1/2 % on the next $4,000,000 and 2% on any amount above $5,000,000.  Executor commissions are in addition to the reasonable and necessary expenses actually paid by the executor.

As executor, how do I know if decedent is liable for any estate taxes and what do I need to do?

As executor you are responsible to prepare and timely file estate tax returns, Form 706 (federal) and ET-706 (New York), within 9 months after the date of death.  The ET-706 will disclose all of decedent’s estate assets and enclose the applicable tax owed (if any).

Estate tax returns need not be filed if the deceased’s estate value is less than the applicable federal and New York exemption amounts at the time of death.  These exemptions are subject to change so you will need to contact an estate attorney to obtain advice about these filing requirements.

Note that although estate tax returns may be required, it does not necessarily mean any estate tax will be owed.  If the decedent left all of his or her assets to his or her spouse, for example, the estate tax marital deduction would apply thus leaving no estate tax liability for decedent.

What is the attorney’s role in handling the estate?

The attorney assists the executor throughout the entire administration process, from preparing and filing the initial petition to probate the Will in Surrogate’s Court to preparing the final accounting.  The attorney also typically prepares and files the inventory.  The attorney can also assist the executor with marshalling the assets, transferring decedent’s assets into the name of the estate and obtaining date-of-death values.  Estate tax and fiduciary income tax returns can be prepared by the attorney or an accountant.

When does the estate get distributed to the beneficiaries?

After all of the assets have been collected and the debts and taxes have been paid, you as executor are responsible for distributing the remaining estate assets in accordance with the terms of the Will.  Each beneficiary should acknowledge receipt of assets due to them.  This protects you from later claims by a beneficiary.

Before the estate is distributed, the executor is also responsible for preparing an accounting which lists all of the estate assets and indicates every dollar that has been earned and how estate monies have been spent or distributed to beneficiaries during the course of the estate administration.  The accounting can be informal if all of the interested parties are competent adults who agree that an accounting before the Surrogate’s Court is unnecessary.  The accounting is the final duty of the executor and it or the informal agreement to settle the estate and receipts are prepared by the estate’s attorney.

When can I step down as executor and close the estate?

After all debts, administrative expenses and funeral costs have been paid and all beneficiaries under decedent’s Will have had the applicable estate assets distributed to them.  You must wait at least 7 months to allow creditors to file any claims.  If the estate has estate tax liability, you must wait until a closing letter is issued by the IRS and NYS Department of Taxation.

You will then submit an affidavit (along with any tax closing letters, if applicable) to the Court attesting that all debts and expenses are paid, settled or otherwise expired and all beneficiaries have been distributed to and then request to be discharged from your duties.

 

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