Being chosen to serve as the executor of a will for someone you know is an important fiduciary obligation. Before the time comes to actually administer that loved one’s estate, there are a few basic things you need to know about estate administration and asset distribution. If you have been chosen to be an executor of a will and need some advice, consult with one of our Kansas City estate planning lawyers.
What is actually required in probate administration?
In order to start the probate process, you need to first commence the court proceedings by filing a petition with the probate court in the county where your loved one was residing when they died. After the initial petition has been filed, a hearing will be scheduled (typically within thirty days).
Notice of the hearing should be published through the court’s procedures so that potential heirs and creditors know about the hearing date. Once you have been formally appointed as the executor, you need to take possession of the estate property, particularly that property that is subject to probate. Some of that property may require the transfer of ownership title to someone else. In that case, as the executor of a will, you need to take care of that as part of your duties.
Order of distribution of estate property
Distributing estate assets requires paying creditors before the heirs receive their inheritances. Any legitimate debts that exist, as well as funeral expenses, need to be paid. The probate court will require creditors to submit claims for payment of their debts. According to the laws in the state where the probate proceedings have been opened, creditors will have a deadline for submitting their claims. After debts have been paid, estate taxes must be paid next. Then, if there are any assets remaining, they can be distributed to the heirs or beneficiaries based on the terms of the will. If you have questions about priorities and distribution, contact our Kansas City estate planning lawyers.
The executor of a will must distribute the assets
When it is time to make distributions, they will be made based on the terms of the will. Wills specify specific gifts of cash or property to be distributed to named individuals. After those distributions have been made, the remaining property will go to the person who is entitled to receive the remainder. In most cases, the property can be distributed directly to the named individuals. But in some situations, the property needs to be first transferred to a trust for the benefit of a particular person.
The executor of a will cannot make distributions to heirs until all expenses are paid
One of the biggest mistakes an executor of a will can make is distributing assets to the heirs and beneficiaries before all legitimate debts and applicable taxes have been paid. While the executor of a will is generally not held personally responsible for unpaid debts or taxes, if the remaining funds are insufficient to satisfy the expenses, the executor could be personally responsible. In some states, the executor of a will is required to obtain court approval before making distributions, which provides protection for executors.
The executor of a will should never make assumptions about their duties. Each estate is different and the terms of each will are unique. Therefore, you should never assume that there will be a so-called “standard distribution.” There really is no such thing. If you do not have financial experience, it is important to consult with a professional regarding issues like investments. This is important especially for understanding which assets should be sold in order to have sufficient cash for expenses, taxes and other cash distributions, as well as, how to reduce income and capital gains taxes.
Be sure to pay the estate taxes if any are imposed
If the value of the estate exceeds $5.49 million, then the estate will be required to pay estate taxes. Form 706 along with the required tax payment needs to be paid within nine months of the decedent’s death, in most cases. You can file a request for an automatic six-month extension of time for filing the return by filing IRS Form 4768. However, it is important to remember that the form does not extend the time to pay the taxes that are actually due. Furthermore, the surviving spouse can choose to add their deceased spouse’s unused estate tax exemption to their own, which is known as “portability.” If you have more questions about estate taxes, consult our Kansas City estate planning lawyers.
If you have questions regarding the duties of the executor of a will or any other estate planning matters, please contact the experienced attorneys at Gaughan & Connealy for a consultation. You can contact us either online or by calling us at (816) 974-3030. We are here to help!