Part of prudent estate planning is naming an executor in one’s will. The executor plays a major part in probate proceedings, so it is important to devote careful thought to your selection. If your will does not name an executor, the Surrogate’s Court will typically appoint one.
High-asset individuals and business owners, in particular, may need to consider whether their candidate for this role possesses the experience and knowledge needed to properly handle the estate’s assets. As the probate process often takes about a year, another major consideration is the prospective executor’s ability to continue devoting significant time and effort to administering the estate.
The executor must take a detailed inventory of all the estate’s assets, including obtaining a proper valuation. Until distribution takes place, the executor bears responsibility for keeping the assets in good order. This may mean operating or selling off a business, managing real estate, or collecting rent.
Another major duty of the executor is settling the estate’s debts. He or she may first need to verify the validity of a particular claim. This part of the process can even involve litigating a disputed debt. The executor must also handle any tax obligations of the estate.
After settling the debts, the executor can proceed to distribute the estate according to the testator’s will. In some cases, this is a straightforward process; in others, the executor may need to handle a variety of conflicts.
Throughout the process, the executor must keep detailed records of every action affecting the estate and its assets. He or she can expect to present an accounting to the probate court and/or the beneficiaries.
Beneficiaries of the will may serve as executors; however, they typically forgo the compensation to which New York State law entitles them. An executor who receives compensation must report it as taxable income.
Executors act as fiduciaries in matters of the estate. If they mishandle the estate’s assets or fail in their duties, they could become liable for resulting losses to the beneficiaries.