Just what is an estate executor? Choosing an executor requires technical skills, experience, and an ability to deal with family members.
While a challenging position, it is of utmost importance to the family involved.
The executor's responsibilities include collecting all the assets, paying all obligations and finalizing the estate affairs for ultimate distribution to your heirs.
The use of a financial adviser in your lifetime can be beneficial when it comes time for your executor to step in. Part of the responsibility includes decisions regarding whether certain federal and state death tax returns must be filed or to determine if any lawsuits may be pending.
Immediate needs of the family are also a focal point of the executor. Having a strong financial and legal team in place already makes the choosing of an executor easier.
Now is the time to ask about executor duties. This position is not effective until your death. Preparation is the key both psychologically and emotionally. When an executor steps in, it can be a stressful time, so having all the pieces in place helps make these types of decisions more effective for the family.
The executor orchestrates with the right people the many processes that must be carried out; for example, probate of the will, completion of an inventory of the safe deposit box, claiming any insurance benefits due along with obtaining a Form F12 from each insurance company, considering and choosing the method of payment, and making claims for pension, profit-sharing, IRA and 401(k) plans, along with considering the method of payment that would be most appropriate.
Additionally, the executor must write to the banks for date of death value, obtain a valuation for securities and real property, including personal assets.
One of the most difficult areas for an executor is dealing with the more technical aspects of estate administration and postmortem planning.
Your executor is important in the filing of tax returns. The executor works with your adviser to determine if prepayment of state inheritance tax should be done, administration expenses and losses should be claimed as an income or estate tax deduction, and should an alternative valuation date be selected for the final federal tax return. If your estate is comprised of assets that are likely to decline in value between the date of death and nine months later, then the alternative date may be wise to select.
Final personal income tax returns must be filed, along with personal property tax returns. If the estate will file a U.S. income tax return, then an identification number must be issued to the estate. Inventories must be filed, tax waivers applied for, and informal family agreements or accounts with a statement of proposed distribution completed and, if applicable, filed.
There are other areas the executor will learn about as he/she walks through the trenches of following procedures to settle and distribute an estate. Could your executor confidently work through his/her duties without running into a brick wall even on step one — which includes collecting all the assets? Take time now to plan. At the very least, you won't increase the suffering your heirs will feel when you have gone.
Kim Ciccarelli Kantor is president and founder of Ciccarelli Advisory Services Inc., a family owned and operated firm in Florida and New York. It provides financial investment and estate planning services for individuals, families and businesses. Ciccarelli Advisory Services, Inc. is at 3066 U.S. 41 N., No. 202, Naples. 239-262-6577