When a person dies, his or her estate may have to pass through a process called probate before distributing to heirs and beneficiaries. Probate is the court-supervised system for assessing the deceased’s debts and assets, fulfilling the estate’s existing financial obligations and passing on the remainder to designated parties.
When a person makes a will, he or she also designates a personal representative, or executor, who will help wrap up the estate’s affairs.
One of the personal representative’s first duties is to identify, collect, safeguard and value estate assets that will have to pass through probate. This may include bank and investment accounts, real estate and life insurance policies as well as personal property.
Informing interested parties
The executor must notify those with an interest in the estate that the probate process has begun.
Notifying creditors and fulfilling debts
In addition to publishing a general “Notice to Creditors” who may have a claim on estate assets, the personal representative must perform a reasonably thorough search for creditors with a potential claim. The executor then pays valid claims from the estate and defends assets against invalid claims.
Completing final tax returns
The personal representative is also responsible for completing final state and federal tax returns for the deceased as well as paying any outstanding taxes due.
Paying for estate administrative costs
Finally, personal representatives often benefit from professional services when handling an estate. From certified public accountants and appraisers to investment and legal advisers, the executor may be able to use estate assets to pay for these administrative services.
It is essential that personal representatives understand that they may be personally liable for mistakes made during probate. Those taking on the role of executor should make sure they understand their responsibilities and meet all important deadlines.