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Valley Southern Title
To be or not to be (an Executor)
By Charles R. Chenault, Paralegal

In non-legal jargon, an executor is the person designated in a will to manage and carry out the will instructions, the payments of debts, the distribution of property and to settle their accounts in accordance with the will.  It has been said that the executor takes up where the decedent left off.

The choice of who should serve as executor is usually lost in the shuffle of the will making process.  The selection is often an afterthought. While such matters as tax planning and dispositions property are important and complicated matters, it is the executor who manages the estate and insures that the matters considered in the estate planning and will preparation process are properly carried out. An incompetent and ill chosen executor can sometimes defeat the purpose of estate planning.  The question of who should serve as executor; therefore, merits serious consideration. A corollary question is whether the person selected desires to serve.  The considerations concerning the identity of the executor of one's estate will often answer the question as to whether the person so designated wishes to accept the appointment.

Qualifications
The most important question concerning the fitness of a proposed executor is one of integrity: will the person carry out the decedent's instructions contained in the will faithfully, honestly and in a trustworthy manner?  This preeminent consideration means that the appointment usually falls upon a close family member, a friend or a long-trusted attorney or business associate.  Attorneys and business people often possess useful expertise.  Friends and family may or may not have any special expertise.  Still, unless the estate is large or is to be administered over a long period of time, an executor who possess the qualities of promptness, attention to detail and has the time needed to administer the estate should be capable of performing the duties of executor assuming that the executor knows when to seek advice and legal counsel when encountering something unfamiliar.

Procedure
Once the named executor has accepted the appointment, the following scenario is fairly typical.  Upon the testator's death, the executor must qualify in the Circuit Court Clerk's Office. I have often wondered how many times a decedent left a will and the estate is administered as if the decedent died intestate due to someone in possession of the will failing to notify anyone of its existence or location.  Any person in possession of a decedent's will has a legal duty to propound the will, usually lodging it in the Circuit Court Clerk's Office.  With this in mind, it follows that any person considering an individual as a potential executor should consult with that individual prior to the designation in order to ensure that the estate will be administered properly and that the testator knows that upon death, the will be probated and the executor will qualify.  Before qualifying in the Clerk's Office, the executor will need to have some idea of the approximate value of the decedent's estate.  This evaluation includes the value of all tangible personal property, bank accounts, stocks, debts due to the estate and real estate owned by the decedent at the time of death.  Certain items of property such as real estate owned as tenants by the entireties and insurance policies payable to a beneficiary are not considered part of the probate estate; however, the personnel who work in the probate department of the Circuit Court Clerk's Office in which the executor qualifies should be competent to assist in the determination of what property is and is not estate property for purposes of qualification. After qualification, the executor must marshal the assets of the decedent's estate.  This does not necessarily mean that all assets should be immediately converted into cash and deposited into an estate checking account.  Whether or not to liquidate depends on the necessity for obtaining immediate cash for payment of debts and on how quickly the executor wishes to satisfy certain bequests that may be contained in the will.  If the estate is insolvent, the executor should make no disbursements before seeking legal advice.  The second hurdle that the executor must overcome is to determine if federal and state estate tax returns are necessary and whether any planning is necessary to protect beneficiaries from unanticipated tax consequences.  This usually happens only with larger estates and usually necessitates professional guidance.  The next hurdle is determining as precisely as possible the debts of the decedent's estate.  The ultimate goal in this dynamic is to convert only as many assets as are required to pay all debts and initial costs of administration and to allow the remaining assets to continue to earn the highest rates of return possible in the safest manner possible.  One note of interest to the potential executor is that if assets are placed in investment status of any type, the accounts must be as safe as possible.  In the case of bank accounts, most lawyers try to place assets at various institutions so that no one institution has more funds than are insured by the Federal Deposit Insurance Corporation.  If an investment made by the decedent is safe and earning an unusually large rate of return, there is usually little reason to change the investment until liquidation is necessary.  A tax identification number should be obtained for the estate, and this number should be used on all new accounts and substituted for social security numbers or current tax ID numbers on existing accounts.

Once the assets are marshaled and the debts are paid, the executor is in a position to satisfy the various devises and bequests contained in the decedent's will.  Before doing this, the executor must decide whether certain devises and bequests should be satisfied without first obtaining protection against personal liability.  Certain court procedures such as a debts and demands hearing, a show cause hearing and obtaining a distribution order provide the executor with protection against personal liability against unknown creditors, after-discovered wills and other contingencies.  If the executor has any doubt as to personal liability for the satisfaction of any devises or bequests, these efficient and inexpensive court procedures are available to afford the executor the desired protection against liability for distribution of the estate; however, professional assistance is advisable in these matters.   Once all of the assets have been marshaled, the debts have been paid and the instructions, devises and bequests contained in the will are satisfied, the executor can proceed to file a final settlement with the Commissioner of Accounts and close the estate.

Recommendations
The executor who has a fairly good idea of the decedent's personal affairs during life will be well served in the estate administration process.  Often a named executor has served as a decedent's attorney-in-fact before death and has an intimate knowledge of the decedent's financial situation.  It is essential that the executor keep precise records of all assets received, debts paid, and devises and bequests satisfied. In light of the decedent's personal income tax situation as well as the estate's fiduciary income tax situation, it is essential that the executor keep precise records of all financial matters that transpire during the estate administration process and be able to reconstruct the financial transactions of the decedent for the taxable year of the decedent's death and beyond.  Note that this time period for tax consideration and records reconstruction can be considerably longer with larger and more complex estates.