Business Executor: Everything You Need to Know
A business executor is the person legally responsible for distributing the finances of a person who has passed away.3 min read
Updated November 24, 2020:
A business executor is a person legally responsible for distributing the finances of a person who has passed away. This means settling any debts, paying the appropriate taxes, and distributing the remaining assets to the heirs as specified in the will. A business executor is also known as a personal representative in some states.
Overall, being a business executor is a large commitment and should not be taken lightly.
Who Can Be a Business Executor?
Who is eligible to be a business executor varies depending on state law. However, most executors are family members, such as siblings, spouses, parents, or children. If you're selected as an executor, all that's required of you is to act in good faith. As long as you do this, you won't be held liable if the value of the estate drops. Just keep in mind that if you try to tamper with the assets before distributing them, you could be found liable.
If you don't feel comfortable acting as an executor, that's ok. You just have to inform the contingent executor or the court, and they can name a new one. One benefit of acting as an executor is compensation, as most states permit the executor of a will to be paid. However, because executors are family members, they don't seek out this benefit.
For those who choose to accept the position of executor, it's a good idea to seek professional advice. Consulting with a tax accountant, estate attorney, appraiser, and other professionals can provide you with the expertise you need to make the best decisions.
More on the Duties of a Business Executor
There are many duties of a business executor. The most important ones include:
- Getting a copy of the will and submitting the will to the local probate court. It's the executor's responsibility to find, read through, and comprehend the information in the will. Even if a probate isn't necessary, the executor still has to file it with the probate court. The last step of this stage is to figure out which people inherit any property.
- Getting a copy of the death certificate. This allows the executor to handle funeral and burial arrangements. The executor can pay for these expenses using money from the estate.
- Informing government agencies, credit card companies, and banks about the death of the person in question. This might include many different agencies, such as the Social Security Administration.
- Creating a bank account for paying out any bills or debts related to the estate. This account is a good place to collect any owed paychecks or other funds. With the money in this account, the executor can pay utilities, mortgages, or other bills throughout the probate process.
- Listing out an inventory of goods and submitting it to the court. Most states require this list to be quite detailed in listing all available assets.
- Understanding the type of probate that's necessary. In some cases, probate isn't necessary at all, such as when a property is held jointly by a married couple. Other times, probate can also be expedited depending on how much value the estate has.
- Keeping any property in good shape until it's ready to be sold or distributed. This might include maintaining a house until the heirs can assume responsibility. Another part of this job is to collect all relevant property inside the house until it can be distributed under the terms of the will. Finally, the executor must also collect any safety deposit boxes owned by the person in question and keep them safe.
- Paying off any taxes and debts related to the estate. The executor will have to follow relevant state laws when it comes time to notify creditors. It's also important for the executor to file an income tax return for the current year until the time of the decedent's death. For larger estates, the executor might also need to pay federal or state estate taxes.
- Distributing all assets as outlined in the will. If the decedent did not leave a will, then the executor should use state intestacy laws.
- Getting rid of any remaining property after everything has been distributed to the heirs.
- Appearing on behalf of the estate in court whenever necessary.
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