Executor Services

Executor services are the duties and responsibilities of a person or entity appointed by the testator for estate management and distribution. They include estate administration, managing legal and financial affairs, and properly distributing the trust assets among the beneficiaries as per the deceased's wish.

Although such services can be provided by a beneficiary serving as an executor, a professional executor is more significant in estate planning due to their knowledge and expertise in protecting a deceased testator's estate from unrealistic claims and unwilling distributions. Also, a third-party executor can effectively resolve any disputes or conflicts among the beneficiaries or testator's family members.

The executor services are the duties and responsibilities of an estate trustee or executor that begin as soon as the testator appoints them, beginning from estate planning, valuation, management, creditors settlement, insurance claim, and tax filing to distribution of the trust assets. An executor can be a family member or a professional; however, they have to ensure that the trust assets are transferred to the right heirs or beneficiaries as per the testator's wish. Such an individual or organization holds significant legal, financial, and administrative responsibilities.

An executor's duties and responsibilities upon the testator's death include but are not limited to the following:

1.  Administering the trust assets or estate;
2.  Funding the testator's funeral from their estate;
3.  Getting the death certificate of the testator from the authorities;
4.  Going through the testator's will thoroughly;
5.  Determining the correct valuation of the estate;
6.  Creating an assets inventory that needs to be disposed of;
7.  Settling or paying off all the creditors of the testator from their estate;
8.  Collecting any due amounts from the debtors on behalf of the deceased person;
9.  Initiating the probate process for the estate and the will of the testator;
10.  Filling the taxes regarding the trust assets;
11.  Completing the process of an insurance claim;
12.  Paying off all the expenses for estate management from the estate amount until settlement;
13.  Will settlement and distribution of the assets to the designated beneficiaries as stated in the will;
14.  Attending the legal proceedings on behalf of the testator as their representative in the court and
15.  Maintaining proper records of all the beneficiaries and estate transactions.

While most people prefer their family members to be their estate executors, the significance of professional executor services cannot be overlooked due to the following reasons:

1. Impartial Third-Party: Professional executor services ensure impartial and fair estate management and distribution since the authorized person serving as an executor or co-executor is not a family member or close one who has a vested interest in the testator's estate.

2. Experience and Expertise: The professional executors are trained, experienced, and discreet in managing and distributing the estate assets. They have immense knowledge of estate planning, probate laws, financial affairs, tax regulations, and estate administration.

3. Stress Reduction and Conflict Management: The family can be carefree of the legal and financial procedures while entrusting that the trust assets will be fairly distributed as per the will. Also, any family conflict or co-executor conflict arising due to the estate will be addressed by such professionals.

4. Time and Location: The family members, be they spouses, children, or any other loved ones, are overwhelmed by the demise of the testator and are not in a position to contribute the desired time for estate management and distribution. Also, they may reside in different states and cannot travel frequently to the testator's state for probate. 

5. Personal Liability and Risk: Executor services entail legal and financial responsibilities and duties. If an executor, who is a testator's loved one, fails to fulfill these responsibilities, there is a potential risk of individual liability and financial loss.

The executor services facilitate the testators and the beneficiaries in case of family disputes, legal procedures, and taxation. Let us now understand what an executor needs to do for estate management and settlement with the help of the given examples:

Example #1

Suppose Mr. Wilson has an estate worth $1.7 million, including his fixed deposits at the bank, insurance policy, and some stocks and bonds. He forms a trust and authorizes Mrs. Wilson to be the primary executor. Now, they have four children who don't have cordial relations with each other and may engage in family conflict during the estate settlement and distribution. Therefore, Mr. Wilson assumes the need for professional co-executor services, so he selects an agent, Mr. Davis, from XYZ Bank. Now, Mr. Davis has performed all his responsibilities, from asset valuation and management, during the lifetime of Mr. Wilson.

Upon the testator's death, the co-executor assisted Mrs. Wilson in paying off Mr. Wilson's creditors, including his credit card bills, personal loans, and car loans. Next, he helped Mrs. Wilson make the insurance claim, fill out the tax return, and distribute the estate among all five, i.e., their four children and herself, according to Mr. Wilson's wish. Furthermore, Mr. Davis maintained proper records of the beneficiaries.

Example #2

In this case, Philip Galanes states that after their mother passed away in 2021, her estate was divided equally among her three children, with the sister taking on the role of co-executor. She managed the bulk of the estate work, distributing most of the funds shortly after their mother's death. However, $150,000 remains, and the sister now claims this amount as compensation for her executor services, even though the will does not specify payment for executors. This has upset the other siblings, who believed the work completed 18 months ago should have been done out of love. Hence, they would consult a local lawyer to determine the appropriate compensation under state law, noting that it likely won't amount to $150,000. This incident emphasizes the need to address executor payments in wills to prevent such disputes.

The executor services are crucial for ensuring a seamless probate process after the death of a testator. It holds the following significance:

• Rightful Execution of Trust Settlement: The executor services are essential for ascertaining that the trust assets go to the correct beneficiaries and heirs as specified by the testator in their will.
• Avoid Any Legal Disputes: These responsibilities ensure that estate management and settlement are done within the legal and regulatory framework to avoid any future consequences.
• Estate Tax Planning and Filling: These services help the beneficiaries reduce their tax obligations through proper planning and filing of the estate tax.
• Proper Financial Management: It ensures that the trust assets will be managed with prudence, ensuring value creation and sensible investment of the estate funds until their distribution.
• Transparency and Accountability: The executor services enable the executor to take responsibility for proper record keeping, reporting, and accounting of the trust assets for superior transparency.
• Confidentiality: Such services are provided with an assurance that the legal and financial matters are not disclosed to outsiders.