Guidant Wealth Advisors: What to Expect as an Executor
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This document provides an overview of the roles and responsibilities of an executor. It defines key terms like executor, administrator, trustee and fiduciary. It outlines the probate process including opening an estate, administering assets, closing an estate and filing final tax forms. It addresses where to file a will, how an estate is handled if no executor, an executor's entitlement to compensation and disclaims this is not legal or tax advice.
Guidant Wealth Advisors: What to Expect as an Executor
- 1. WHAT TO EXPECT AS AN EXECUTOR GUIDANT WEALTH ADVISORS 35 WEST SLADE STREET PALATINE, IL 60067 847-330-9911 GUIDANTWEALTH.COM
- 2. THE OPINIONS EXPRESSED IN THIS MATERIAL ARE FOR GENERAL INFORMATION ONLY AND ARE NOT INTENDED TO PROVIDE SPECIFIC ADVICE OR RECOMMENDATIONS FOR ANY INDIVIDUAL. TO DETERMINE WHICH INVESTMENTS MAY BE APPROPRIATE FOR YOU, CONSULT YOUR FINANCIAL ADVISOR PRIOR TO INVESTING. ALL PERFORMANCE REFERENCED IS HISTORICAL AND IS NO GUARANTEE OF FUTURE RESULTS. ALL INDICES ARE UNMANAGED AND MAY NOT BE INVESTED INTO DIRECTLY. COPYRIGHT © 2013 GUIDANT WEALTH ADVISORS ALL RIGHTS RESERVED.
- 3. TERMS TO KNOW • Executor: is a person that performs or carries out some act • Administrator: is a person that has been appointed by the courts to manage the assets and liabilities of an intestate decedent • Trustee: is a person that has legal title to property, holds it in trust for the benefit of another and has a fiduciary duty to that beneficiary • Fiduciary: is a person that must exercise a high standard of care in managing another’s property • Intestate decedent: is a person that died without a will
- 4. PROBATE Probate generally takes place in the county in which the decedent resided. The court supervised process by which a representative is appointed to pay the • Debts • Taxes • Expenses of a deceased person and that any remaining assets are distributed to those that are legally entitled to such assets.
- 5. POSSIBLE NONPROBATE ASSETS Generally these assets should be payable to someone other than the decedent’s estate in order to avoid probate. • • • • • • • • • • Trusts Pay-on-death accounts Transfer on Death Instruments IRA 401(k)s Joint tenancy property Life insurance policies Land trust agreements Annuities Small Estate Affidavit (less than $100,000 of personal property)
- 6. POSSIBLE PROBATE ASSETS Generally, assets subject to probate court include: • • Assets titled in the decedent's sole name, payable to the decedent's estate and real property held as tenants in common. Determined by state property law
- 7. TAXES • • • The estate obtains its own taxpayer identification number from the IRS to report all items of income and gain (and deductions) accruing during the post-death administration process The Estate may report its taxable activities on either a calendar year basis or a fiscal year basis. (i.e. Decedent dies April 20, 2013; end of fiscal year March 31, 2014) The rules surrounding fiduciary taxation are substantially different from personal income tax rules
- 8. START PROBATE PROCESS • • • • • • THE FIRST STEPS • Funeral arrangements Copy of will Death Certificates from the funeral director Copy of funeral bill Immediately, the residence must be secured. This prevents confusion and theft. Arrange ancillary administration for out-of-state property Notify the local police department the house or condominium is vacant
- 9. OPEN THE ESTATE • • • PREPPING FOR PROBATE COURT • File the will with the Clerk of the Court (no fee to file in Cook County) “Petition for Probate of Will and for Letters Testamentary” A filing fee is paid, court date is set and several other required documents must be prepared and filed (including an affidavit of heir ship and the oath & bond of the representative) If everything is in order and there are no objections, the judge will enter an order opening the estate, appointing the representative and ordering "Letters of Office" to issue. continued….
- 10. OPEN THE ESTATE PREPPING FOR PROBATE COURT continued…. • • • Letters of Office is the (one page) court-sealed document that serves to notify third parties holding a decedent's assets that a person has died and a representative has been appointed to act on behalf of the estate for all matters After the estate is opened and letters of office have been issued, the representative should publish notice of probate in an appropriate newspaper. (claims of potential creditors against the estate are time-barred within six months after the first publication date) Notice to Heirs or Legatees that the estate has been opened and of their rights
- 11. ADMINISTER THE ESTATE • Inventory all of the decedent's assets including household and personal • Collect all life insurance proceeds payable to the estate • Obtain a taxpayer identification number • Establish an estate checking account • Examine safety deposit box (need access affidavit) • Transfer all securities to the estate account continue to collect dividends and interest on behalf of the heirs of the decease • Direct written notice to any and all "known or reasonably ascertainable" creditors continued….
- 12. CLOSE THE ESTATE • • • Before closing the estate the representative is required to provide a Final Accounting to the beneficiaries Prepare a Final Report for the court and obtain signed receipts from all beneficiaries entitled to distribution and from any outstanding creditors, to present to the court at closing Distribute the remaining assets as directed by the Will and as detailed in the Final Accounting and approved by the beneficiaries
- 13. CLOSE THE ESTATE TAX FORM 706 • • • If assets are more than $5,120,000 - file estate tax form 706 Using this form, calculate the estate tax due This form must be filed within 9 months of the date of death
- 14. CONSIDER: • Retaining an Attorney to assist you with the settlement of the decedent’s estate. • Retaining a C.P.A. to assist you with complex tax situations and tax returns. • Remember you are a fiduciary.
- 15. WHAT ARE THE QUALIFICATIONS TO SERVE AS AN EXECUTOR? 1) 2) 3) 4) Individual is 18 years or older A United States resident Not a convicted felon Not under a legal disability
- 16. DOES EVERY ESTATE HAVE TO BE PROBATED? No. Illinois probate is generally necessary when the aggregate value of the decedent's personal estate (all assets other than real property) is valued at $100,000 or more.
- 17. WHERE DO I FILE THE WILL AND WHERE DO I OPEN THE PROBATE ESTATE? The proper venue for filing a will and opening the decedent's probate estate is generally at the courthouse in the county where the decedent last resided and intended to remain.
- 18. WHAT HAPPENS WHEN NOBODY IS WILLING TO SERVE AND ADMINISTER THE ESTATE? Each county has its own Public Administrator, authorized by Illinois statute, to handle such situations.
- 19. IS AN EXECUTOR ENTITLED TO COMPENSATION? Yes. Every Executor and Administrator is entitled to receive a reasonable fee for his or her services.
- 20. THANK YOU. This is just an overview of what an Executor can expect. This is not legal or tax advice. Guidant Wealth Advisors 35 West Slade Street Palatine, IL 60067 847-330-9911 GuidantWealth.com Securities offered through LPL Financial, Member FINRA / SIPC. Investment advice offered through Guidant Wealth Advisors, a registered investment advisor and separate entity from LPL Financial. October 2013