23 Feb 2022

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the role of an executor

As executor for an estate, the job of fulfilling a loved one’s wishes, may seem opaque at best. But if you understand the purpose behind the work, it will go a long way toward helping you get it done.

An executor’s job really has two distinct parts. The first involves distributing the assets in the estate. Sometimes that work can be accomplished in a single step (for example, the proceeds of a life insurance policy or the holdings in an IRA typically get distributed directly to their named beneficiaries). Sometimes though, it is a two-step process – an individual’s account may first have to be converted into an estate account with a new account number before it can get divvied up among the beneficiaries or liquidated to them.

The second part of an executor’s job is satisfying the probate court and the tax authorities when it comes to identifying, valuing and paying taxes on the person’s assets. Here, there are typically three types of tax returns (all with different deadlines) for which you will need to gather the paperwork to be turned over to the attorney and/or accountant you’ve retained:

1) Final income tax return. For this, you will need to gather evidence of the person’s income up until the date of death.

2) Estate tax return. This goes hand in hand with the inventory of assets you will need to provide the court, and requires a valuation of every asset owned at death. There is a lot of document collection and certain assets, such as homes and jewelry, may require appraisals.

3) Fiduciary income tax returns. Assets that are part of the estate can still generate income after death, so you will need to continue keeping track of the paperwork showing that income until the estate is fully distributed and the final fiduciary income tax return can be filed.

Staying organized is the key to accomplishing both parts of this job. Keep track of your work, take detailed notes of your conversations, and mark reminders in your calendar of upcoming deadlines to give the professionals you retain and yourself enough lead time to get the work done.

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