So You’ve Been Appointed Executor or Administrator of an Estate. Now What?

Being appointed administrator or executor of an estate is a serious job that requires patience, organizational skills and persistence. 

Many people quickly become overwhelmed, or simply don’t know where to begin. 

It’s important to work with a knowledgeable attorney who specializes in probate and estate administration so you don’t make mistakes that are more costly and difficult to straighten out later. Serving as executor or administrator can expose you to personal liability for any losses suffered if you fail to properly administer the estate.

There are six distinct phases of estate administration. Here is a high-level overview of each phase, along with some tips about how to navigate each stage and pitfalls to avoid:

1. Petition the court to be appointed executor or administrator and issue letters.

When someone dies, whether there is a will or no will, the courts must legally assign the role of executor or administrator. You must determine the heirs of the decedent, and hopefully all parties can agree on who should be identified as the executor or administrator. A petition is filed with the probate court, and the executor or administrator will swear under oath to perform their duties as the law specifies. 

When the court grants your petition, it will issue either letters testamentary for an executor or letters of administration for an administrator, which you will provide to various banks, creditors and other parties that conduct business with the estate. If there isn’t a will, you may need to post a bond that functions as an insurance policy to cover expenses while the estate is being handled. 

As the executor or administrator, you will be entitled to compensation from the estate for the time you spend on this work. You can also get reimbursement for certain expenses such as funeral, burial or cremation costs; attorney fees; CPA fees; and court fees.

2. Identify and gather assets.

Now it’s time to marshall all of the assets of the estate, including bank accounts, real property such as a house or vacation homes, cars, boats, jewelry, artwork, etc. You must also take control and responsibility for all of the decedent’s accounts, such as property tax bills, utilities, cell phone, etc.

You may need to create an inventory that values each item, and it’s important that you create the inventory the way that the courts require. You may also need to get a special tax identification number for the estate, and open a special estate banking account. 

Be aware that the beneficiary designations on certain accounts such as a 401(k) or life insurance policy will pass most likely outside of probate. However, any accounts of this nature without named beneficiaries can become part of the decedent’s estate.

3. Identify and pay debts.

There is a prescribed method and order for which debts get paid by the estate. You’ll publish a notice to debtors and creditors in the newspaper, and it must run for a specific amount of time and contain specific language that an experienced probate attorney can write for you.

At this stage, there is often confusion about how and when to pay debts and in what order. Avoid making payments personally; that’s the job of the estate. Consult an attorney about the order of payment.  Also be aware that many debts are negotiable, and an experienced attorney can help you negotiate a lower payoff amount with creditors. You are also entitled to reimburse yourself for estate expenses paid out of pocket. 

4. File taxes.

You will need to file estate tax returns, and an experienced CPA can help you with these forms. You will probably also need to file income tax returns for the decedent if any income such as a last paycheck was issued after their death or if a certain amount of interest was earned. 

5. Distribute remaining estate assets.

Once all debts have been paid, you are entitled to pay yourself for your work as personal representative.  You will need to follow the statutory guidelines for appropriate compensation.

If there is still money in the estate, you will distribute it as stipulated by the will or the law. You may also need to sell or liquidate assets. Avoid making any handshake agreements or verbal promises to anyone about how the estate assets will be divided up. Oftentimes, extended family members or other close friends think they have leverage or a claim on the estate assets when, in fact, they do not. The law is very clear about inheritance, and how much goes to surviving spouses, children, parents and other potential heirs. 

6. Petition for discharge.

When all matters of the estate have been concluded, you will close the estate file through a Petition of Discharge. This will be your final duty as executor or administrator.

There are many other considerations when serving as executor or administrator of an estate, such as having a plan for the digital assets of the decedent. What happens to their email, digital photos, social media accounts, files stored in the cloud, and other electronic records? Estate planning attorneys often work with end of life concierge services such as Black Dress Consultants to help people plan for and handle the logistics and administration of their legacy.

Another pitfall to avoid is letting your will and estate plan become outdated, especially when major life events occur such as marriage, divorce and the birth of children. Update your will and estate plan periodically so your loved ones know your exact wishes and how you would like your assets distributed when you die.

Clear estate plans make it easier for your heirs and loved ones to handle your affairs, and it can reduce the stress of administering your estate.

Disclaimer: This content is for informational purposes only, and does not constitute legal advice nor create an attorney-client relationship with Bequest Law.

Five Things You Can do NOW to Make Probate Easier Later:

Probate is the process of having your Will proved to the court after you die and involves gathering together all of your assets and distributing them to your beneficiaries. Probate can be time consuming and inevitably involves the court system but can be made easier by following these simple steps:

1. Add “transfer on death” forms for your bank and brokerage accounts.

If you know who you would like to inherit your bank or brokerage accounts, contact your financial institution about setting up a “pay on death” or a “transfer on death” form for that account.  That way, your beneficiary can access the money right after you die without having to wait on probate.

If you live in Georgia and hold an account jointly with someone - like your spouse - that person will automatically inherit what is in your bank account.

2. Do NOT keep your original Will in your safe deposit box!

Unless your Executor is jointly listed with you on your safe deposit box, do not keep your original Will inside. Most, if not all, banks will not let someone into your safe deposit box after you die unless he or she has been appointed by the court as your Executor. That person cannot (or will have a harder time) getting appointed unless he or she has your Will, which creates a catch-22 scenario of needing the Will to get into the box when the Will itself is inside the box.

Consider a fireproof safe instead - and let your Executor know how to get into it!

3. Make sure your deed with your spouse says “joint tenants with right of survivorship.”

In Georgia, if you want your spouse to inherit your half of your house after you die, make it easier by confirming that your deed includes the words “joint tenants with right of survivorship.” Without these words, even your spouse will have to probate your half of the house (and he or she may not ultimately inherit it).

4. Tell your Executor what your assets are (and consolidate your accounts).

Executors and family members spend the most time after a loved one’s death trying to sort out bank, brokerage, retirement, and life insurance information. Why not make things easier on them by letting your family know where your money is now (or how to find out once you die)?

While you are at it, consider closing a few bank accounts and rolling over old retirement accounts. Every financial institution has its own rules on how to close accounts after death, and banking with many different banks now will make your Executor’s job much harder later. 

5. Make sure your Will was signed properly.

Most importantly: make sure you have a properly executed Will because if it is not signed correctly, it is not a valid Will. In Georgia, your Will was properly executed, i.e. signed, if:

1. You had the proper “capacity” to sign it.

   1. You were over the age of 14 when you signed it, 

   2. You understood (generally) what property you own, 

   3. You understood who you were leaving that property to, and

   4. You understood who your family members were at the time.

2. You were not pressured or coerced into signing it.

3. It is in writing.

4. It was signed by you.

5. It was “properly witnessed” by two non-beneficiaries over the age of 14, who watched you sign it and then signed themselves as witnesses.

6. It includes a “Self-Proving Affidavit.”

   1. This is not technically required, but without it, probate will be far more time consuming and expensive.

   2. The Self-Proving Affidavit needs to be signed by two witnesses and stamped by a notary. 

The “Secure Act” - What You Need to Know

Finance industry analysts and estate planners alike were surprised by the late December passage of the Setting Every Community Up for Retirement Enhancement, i.e. the SECURE Act. The Act goes into effect January 1, 2020, and is the most impactful retirement legislation of the past decade. The Act includes a number of changes, but here are the standouts:

• Increased age for required minimum distributions, “RMDs,” from retirement accounts from 70 ½ to 72 years of age.

• Non-spouse beneficiaries (other than an account holder’s minor child) of traditional IRAs and 401ks will now be required to withdraw the balance of the account within 10 years. This eliminates the “stretch” option for non-spouse designated beneficiaries who inherit a retirement account.

• Beneficiaries of traditional IRAs and 401ks who are both minors and children of the account holder must withdraw the balance of the account within 10 years of the date they reach the “age of majority.”

These changes may have significant implications for your estate planning, including the following:

• If your Trust or your Estate is a beneficiary of your traditional IRA or 401k, it may make sense to change this to an individual beneficiary instead. 

• It may make sense to add additional beneficiaries to your traditional IRAs and 401ks rather than make gifts to those individuals through your Will or Trust.

This is by no means an attempt to cover every provision of the Act, which can be read in its entirety here. If you have questions about how the Secure Act impacts your estate plan, email Amanda at hello@bequest.law and set up a time to talk to Kristen!

1. If a beneficiary is not considered a designated beneficiary, distributions must be taken by the fifth year following the account owner’s death. Common examples of beneficiaries that are not designated beneficiaries are charities and estates. See Treas. Reg. § 1.401(a)(9)-3, Q&A (4)(a)(2) and 1.401(a)(9)-5, Q&A (5)(b).

2.  This is not true for Roth IRAs, and in many cases, it may make sense to convert your traditional IRA to a Roth IRA in light of the new rules. Please plan to speak to a financial advisor about pros and cons of conversion.