The Executor's Guide: How to Administer an Estate Under a Will

340 Pages·2004·15.33 MB·English

by  Linda Kirby

The
Executor's
Guide
How to Administer an
Estate Under a Will
w
I
i
a
A
Linda D. Kirby
The
Executor's
Guide
How to Administer an
Estate Under a Will
Linda D. Kirby
You have been named the executor of a will by
a friend or family member. Are you prepared to
meet the challenge, and do you know how to
avoid personal liability? Each year, thousands of
individuals face the daunting and often painful
task of settling the estate of a loved one, and
even with professional guidance from attorneys,
accountants, and financial advisors, they are often
ill-equipped to deal with many of the tasks neces
sary to manage and settle an estate—and may
even put themselves at serious financial risk.
This is the definitive instruction manual for anyone
administering an estate under a will. Featuring
step-by-step instructions, worksheets, checklists,
and timetables. The Executor's Guide takes the
reader through the entire process from the time
of death to the final closing of the estate. Linda D.
Kirby explains the full range of roles and respon
sibilities of the executor, including:
• Reading the will
• Hiring and supervising the attorney
' Dealing with court proceedings
• Notifying those who ore entitled to property
• Finding and valuing assets
• Settling with creditors
• Filing taxes
• And distributing the assets
Unique and highly practical elements include
a comprehensive Summary of Assets (from
"Annuities" to "Videos"), a glossary of essential
terms, and a series of key questions to ask your
attorney. Accessibly written by an expert in the
field, this book is at once authoritative and
user-friendly, making it an essential resource
for any family.
The Executor's
Guide

The Executor's
Guide
How to Administer
an Estate under a Will
Linda D. Kirby
Westport, Connecticut
London
Library of Congress Cataloging-in-Publication Data
Kirby, Linda D., 1950-
The executor's guide : how to administer an estate under a will / Linda D.
Kirby.
p. cm.
Includes bibliographical references and index.
ISBN 0-275-98203-3 (alk. paper)
1. Executors and administrators—United States. 2. Wills—United
States. 3. Decedents7 estates—United States. I. Title.
KF778.K57 2004
346.7305'2—dc22 2003068723
British Library Cataloguing in Publication Data is available.
Copyright © 2004 by Linda D. Kirby
All rights reserved. No portion of this book may be
reproduced, by any process or technique, without the
express written consent of the publisher.
Library of Congress Catalog Card Number: 2003068723
ISBN: 0-275-98203-3
First published in 2004
Praeger Publishers, 88 Post Road West, Westport, CT 06881
An imprint of Greenwood Publishing Group, Inc.
www.praeger.com
Printed in the United States of America
@r
The paper used in this book complies with the
Permanent Paper Standard issued by the National
Information Standards Organization (Z39.48-1984).
10 9 8 7 6 5 4 3 21
Contents
Acknowledgments xi
Introduction xiii
1 Introduction to the Duties of the Executor 1
Legal Language 1
The Responsibilities of the Executor 2
Fiduciary Duty 2
Liability of Executor for Breach of Fiduciary Duty 4
Co-Executors 4
Out-of-State Executor or Out-of-Area Executor 5
Executor Can Decline to Serve 6
Executor's Fees and Expenses 7
Negotiation of Executor's Fees 8
Income Tax on Executor's Fees 9
Power of Attorney 10
Checklist: First Tasks 10
2 The Will 13
Types of Wills 13
Additions or Changes to the Will 16
Custody of the Original Will 17
Lost Will 18
Stale Will 18
Withholding the Will 18
Evaluation of the Will 19
VI Contents
Application of State Law and Interpretation of the Will 20
Powers Granted in the Will 21
Reading of the Will and the Family Interview 22
Checklist: Next to Do 23
3 Opening Court Proceedings 25
Why Probate Is Necessary 25
Choice of Probate Proceedings 28
Estate Attorney 32
Attorney's Fees 34
Is a Bond Necessary? 35
Decedent's Name 35
Probate Timetable 35
Checklist: Opening Court Proceedings 36
4 Identifying All Interested Persons 39
Interested Persons 39
Legal Proceedings to Determine Heirs and Beneficiaries 40
Minors, Disabled Persons, and Beneficiaries
in Military Service 40
Legal Notice Required 41
When Is Legal Notice Required? 41
Waivers of Notice 43
Publication of Notice 44
Checklist: Identify and Notify 44
5 Guardians, Conservators, Custodians, and Trustees 47
Who Needs a Guardian? 48
Appointment of a Guardian for a Minor Child 48
Appointment of a Guardian for a Disabled Adult 49
When Decedent Was Guardian of Another Person 50
Duties of the Guardian 50
Who Needs a Conservator? 51
Appointment of a Conservator for a Minor Child
or Disabled Adult 51
Duties of a Conservator 52
Distribution to an Adult Who Has Not Previously Been
Judged Disabled 52
Custodian under the Uniform Transfers to Minors Act 53
Trusts for Minors and Disabled Adults 53
Checklist: Guardians, Conservators, Custodians,
and Trustees 54
6 Inventory and Valuation of Assets 57
Introduction to Identifying Assets 57
Discovery of Assets 57
Contents vn
Where to Look for Assets 58
Confirmation of Asset Ownership, Asset Description,
and Value 62
Ownership Modes 62
Valuation and Appraisal 65
Organizing Information about Assets 67
Checklist: Inventory and Valuation 67
7 Management of Assets 69
Management Plan 69
Need for Immediate Action 70
Use and Occupancy of Estate Assets 70
Secure Personal Items 70
The Obituary 71
Insurance to Protect Estate Assets 71
Safe Deposit Box 72
Protection of Valuable Papers 73
Payment of Bills 78
Cash Requirements of the Estate 78
Estate Checking Account 78
Joint Tenancy Accounts Used to Pay Expenses 79
Accounting 80
Early Distribution of Assets 81
Death Certificates 81
Letters Testamentary 82
Decedent Was a Fiduciary 83
Retitling Assets 83
Investment of Estate Assets 83
Investments Purchased by Decedent 84
Checklist: Management of Assets 85
8 Sale of Assets 87
Duty to Not Self-Deal 88
Accounting for Sale 88
Minimum Sale Price 88
How to Set the Price 89
Sale of Personal Property 89
Distribution of Personal Property to Family Members 90
Sale of Real Estate 91
Checklist: Sale of Assets 93
9 Claims and Demands on Decedent's Estate 95
Notice to Creditors 95
All Claims Must Be Exhibited by Creditors 97
Approval and Payment of Claims 97
Contents
Types of Claims and Demands on Estate 98
Insolvent Estates 100
Schedule of Abatement 100
Accounting for Payments and Abatement 103
Warning about Specific Gifts in a Will 104
Checklist: Creditors 106
Taxes 109
Income Tax for the Beneficiaries, Devisees, and Legatees 109
Basis Step-Up 110
Filing Tax Returns for the Decedent and the Estate 111
IRS Forms SS-4 and 56 112
Decedent's Income Tax Returns 112
Estate's Income Tax Returns 114
Federal Estate Tax Return 115
Generation-Skipping Transfer Tax 116
State Inheritance, Succession, or Estate Tax Return 117
Consent to Transfer 117
Elections and Options 117
Elections Presented in the Federal Tax Code 118
Elections and Options Not Presented in the Federal
Tax Code 119
Who Pays the Taxes? 120
Liability of Executor for Tax Decisions 122
Checklist: Taxes 124
Special Considerations 127
Disclaimers 127
Pre-Marital and Post-Marital Agreements 128
Survival Clauses 129
Simultaneous Death Clauses 129
Settlement Agreements 130
In Terrorem Clauses 130
Testamentary Trusts 131
Living Trusts 132
Checklist: Special Considerations 133
Final Settlement, Distribution of Assets, and Discharge
of the Executor 135
Determination of the Estate to Be Distributed 135
Claims and Demands on the Estate 138
Types of Claims and Demands 138
Abatement of Gifts to Pay Debts, Taxes, and Expenses 141
Classes of Gifts 142
Limits to the Distribution of the Estate 143