Checklist for Executors for Settling an Estate
You Have Been Appointed Executor of An Estate in NYC. What do you do now? Here is a basic checklist for executors for settling an estate, including a list of tasks to perform.
Review Decedent’s Will Carefully.
The first step on this checklist for executors is for the nominated executor to review the Will. Take note of the general bequests and specific bequests. A general bequest is a note from the Decedent to distribute a portion of assets to a person (e.g. I give 20% of my estate to Joe). A specific bequest is a note from the Decedent to distribute a particular item to a person (e.g. I give my diamond watch to my daughter, Jane). If there are specific bequests in the Decedent’s Will, you should immediately go and locate those specific items, take inventory of them, and hold them for safekeeping until you can distribute them.
Also, take note whether the house is specifically devised or whether there is a directive that the house be sold and the proceeds distributed to certain people. There are special rules when real estate is the sole estate asset so please be mindful of those rules.
Obtain a Bond, if Directed by the Court.
The next step on this checklist for executors is for the executor to obtain a bond if necessary. A bond serves as insurance for the beneficiaries of the estate. Many times the Will is going to direct that the bond be dispensed with, but you should double check. If the Will directs that the bond be dispensed with, then there is no need for a bond. If the Will directs the imposition of a bond, then the steps for obtaining a bond vary according to the County where you are probating the Will. Some counties first want you to file your probate petition and then they will direct that you file a bond. Check with the county before you file.
Checklist For Executors – Collect all of the Decedent’s Assets.
A common question I receive is how to locate the Decedent’s assets. This is where you may need to put on your investigator hat and figure out where the money is and how you can collect it into the estate account. You should review the Decedent’s mail and bank statements. You should contact the Decedent’s accountant and financial advisor, if they have one. You should review the Decedent’s tax returns. The tax returns will have information on any account that generated over $10 in interest for the year. Once you locate the assets, you will want to go to the bank or financial institution and collect those assets. That means that you close the Decedent’s account in their personal name and physically collect the funds. Don’t forget to check Unclaimed Funds and those pesky Computershare stocks.
Checklist For Executors – Open an Estate Account.
Once you collect the Decedent’s liquid assets, you are going to need a place to put them. You cannot put them into your own bank account as some may consider this stealing or commingling. You have to create a new bank account. You cannot use the Decedent’s social security number. You have to obtain a new tax identification number. You can obtain a new number by filling out a form with the IRS online. You will then go to the bank with a copy of the new tax identification number, the death certificate, the money you want to deposit, and a copy of your Letters Testamentary that you obtained from the Court giving you authority to act. You can then put the money into an estate account and safeguard it.
Sell Property that Must or Can be Sold
The next step on your Executor’s checklist is to figure out whether the Decedent has real property and whether that property needs to be sold. If the Will directs that the property be sold, then it’s time to sell. if the Will is silent, you may want to speak with your beneficiaries – do they want cash or kind? If the beneficiaries can agree and they want kind, then you should consider transferring the property. Please note that you will not receive commissions on unsold realty. That being said, you should act in the best interest of the estate and the beneficiaries.
Obtain Appraisals and Valuations
If the beneficiaries cannot agree on whether to sell or distribute, or if you have an estate for which you must pay estate taxes, or if you are an Executor of an estate that owns a business that must now be sold, then you will want to obtain an estate appraisal of the asset. An appraisal or valuation is an estimate of what the property is worth. Note that if you have a taxable estate, you may want to consider whether you can take some discounts on the values of assets that cannot easily be sold or are partly owned by others.
Pay Bill, Debts, and Taxes.
After you have collected all the assets and determined their value, and figured out what has to be sold, you should shift focus to determining what bills and debts of the Decedent must be paid. Not all debts must immediately be paid. You may want to review SCPA Article 18 and speak with an estate attorney regarding debts and priority of payment.
That being said, an executor must pay funeral and administration expenses. You must also pay taxes. If you receive claims, make sure that the claims are in proper order, pursuant to SCPA Article 18.
If the estate you are handling is greater than $5.8 million dollars you may have to deal with a New York State Estate Tax. If your estate consists of stocks, bonds, equities, or other income producing assets, and those assets generate more than $600 of income, you may have to file Fiduciary Income Taxes. You may want to discuss this with your accountant.
Prepare an Accounting
The next steps in this checklist for executors is to prepare an accounting to the beneficiaries of the estate to show them what money came in and how it was spent and what is left. There are a number of ways to prepare an accounting. You should speak with your beneficiaries and see what they would prefer. Obviously the easiest would be an informal accounting that does not require Court approval. If the beneficiaries question some of your decisions, then you may want to do a formal accounting so that you have Court approval of your actions as the Executor. Note that not all accountings must be approved by the Court and those that do require Court approval take a long time, which will delay the distribution of assets.
Checklist for Executors – Make Distributions
The last step is to give the money out to the beneficiaries. There are two types of distributions that can be made. There can be a partial distribution. A partial distribution is where you distribute some of the money. If you know that the estate administration process will take a long time, then you may want to consider making a partial distribution. If the administration process will be relatively simple you may just want to make one distribution at the end after everybody has approved of your accounting. Regardless of when you distribute money, always make sure that the beneficiaries sign a RECEIPT, RELEASE, and REFUNDING AGREEMENT so that if anything goes wrong, you can get the money back.
We routinely assist Executors and Administrators with settling estates. Please feel free to contact us for help administering an Estate.
Additional resources provided by the author
For more information, please contact probate and estate planning attorney Regina Kiperman:
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New York, NY 10038
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