The executor of an estate has an important responsibility to ensure that the deceased person’s assets are distributed fully and correctly. Before the assets are distributed, he or she may be tasked with opening a bank account for the estate, creating an inventory of the estate’s assets, seeking financial and legal advice and paying creditors.
The beneficiaries of the estate may be anxious to receive their share of the assets, however the executor must take certain steps first before that can happen.
If the executor distributes assets without following court procedures and the directions in the will, he or she could be breaching their fiduciary duty which requires them to act in the estate’s best interest. The executor can also face legal and financial penalties in some situations.
Process
The estate’s assets cannot be distributed until the executor determines what they are worth, based on their fair market value. Some items may have to be sold first, like a home or car, and then the proceeds must be divided equally among the beneficiaries.
Taxes are also a very important consideration for the executor. The estate may be subject to state, federal and local taxes and if the assets are distributed too soon, the estate may not have the funds to pay them.
The executor is not allowed to make decisions about which beneficiaries to distribute assets to or favor one beneficiary over another, outside of the estate’s directions. To avoid the appearance of preferential treatment to one or more of the beneficiaries, the executor should not advance funds, even if they are asked to do so.
It’s important that the estate administration is completed correctly and there is help available for executors who have questions.