What Is Estate Planning?

Buckle your seat belts, history buffs! Estate planning can be traced all the way back to the Stamp Act of 1797, which was enacted as an estate or property tax to pool funds for the navy during the time of tensions with France. Subsequent reenactions were made to fund the Civil War, Spanish-American War, and World War I.

Initially, when the war is over these taxes are repealed. However, after World War 1, estate taxes became permanent, but with exemptions. The present federal estate tax exemption amount is $11.7 million.

It didn’t take very long for people to realize that to avoid estate taxes, they can gift parts of their estate to their spouse or family members to use up the estate tax exemption amount. That was where estate planning came to play. This is when the modern definition of estate planning came into existence.

Estate Planning Definition

Estate planning can be simply defined as the way an estate owner makes plans or arrangements to protect and manage their assets. This plan goes into effect when the estate owner passes away or becomes incapacitated and unable to manage their estate.

Estate plans or arrangements include heir and beneficiary designation. The heirs and beneficiaries are relatives to whom the estate owners want their assets transferred or entrusted. Some people hire a qualified estate planning attorney to help them create a will or trust, while others opt for a document preparation service like A People’s Choice to minimize their financial obligations.

Summarily, estate planning lets the estate owner determine what happens to their assets when they are too ill to decide or when they have transitioned to the great beyond. Careful planning is important because the testator (estate owner) obviously won’t be there to manage their assets after death. This is why they make sure to appoint a trusted person to manage their affairs when they pass away. This person is called an executor.

Who Is an Executor?

When an individual dies with an estate plan, which is usually a will or a testamentary trust, the estate plan often designates an executor. This is the person the testator has trusted to administer the will.

Anyone appointed to administer the will and carry out the wishes of a deceased person is referred to as an executor. The executor or estate administrator has a primary duty: ensure the wishes of the decedent as documented in the will or trust document are fulfilled. These wishes mostly involve:

1. The management of the probate estate
2. The distribution of personal assets or trust assets to heirs and beneficiaries

The executor’s appointment may not necessarily come from the testator (the one who prepared the will). The probate judge also has the right to appoint an estate executor to administer the will of the testator who did not make an appointment in the will. This may also happen if the testator’s original choice is not available for whatever reason.

What Is the Role of an Executor in Estate Planning?

The executor plays a critical role after someone dies. They are appointed because the deceased or the court found them responsible enough to fit the critical role of executor. Therefore, many executors revere the role as a sign of their last respect to the deceased person. Note that if you are planning your estate, you may want to ask your executor’s position before naming them, as this can be a lot of work.

As an executor, among other duties, you have a legal obligation to complete many tasks. You must manage the deceased person’s probate estate matters, settle debts and unpaid bills, locate the heirs and beneficiaries, and distribute their inheritances to them according to state laws.

Here’s a general idea of the key roles of the executor:

1. Filing the will with the local probate court
2. Representing the estate in court
3. Informing government agencies and financial institutions of the death
4. Acting as caretaker for the estate until it is sold or passed on to beneficiaries
5. Filing the estate’s inventory with the court
6. Settling and paying estate debts and bills
7. Paying estate taxes
8. Setting up a bank account for estate funds if necessary
9. Distributing the deceased’s assets to beneficiaries
10. Disposing of other assets

It is important to note that an executor in estate planning must always act transparently and in good faith. Sometimes, the executor has to work hand in hand with and seek the advice of professionals to assist with some tasks. This can include valuation, property sale, and legal paperwork, among other responsibilities.

What Is the Role of an Executor in Estate Planning and Probate?

As executor, your only possible role during estate planning is agreeing to become executor. You won’t have an active role in estate planning unless the estate holder asks for your input.

After death, it’s a different story. Let’s say you have been appointed as the executor of a deceased person’s estate plans. When the person passes away, you must kickstart the formal process of probate. There are several steps to this process as outlined below.

Immediate Steps for the Executor

Everything stated here should be done within the first week of death. It is important to secure the deceased person’s properties, obtain their death certificate, arrange care for their minor children, and notify appropriate quarters of the death. This will enable notify who needs to know.

• Secure the testator’s residence and other properties
• Notify the appropriate authorities of their death. This includes the department of health and the testator’s employer/s if any
• Provide care for the testator’s dependents, such as minor children and pets
• Obtain copies of the testator’s death certificate

Executor Steps During the First Three Months

Within the first three months, you must execute the tasks below. These constitute the main jobs you have as executor. It is important to note that doing all this may take more than three months. What is important is getting the process started and moving smoothly along.

To execute some of these tasks as an executor, at some point you will need to work hand in hand with professionals. This may include a probate attorney, accountants, tax professionals, and realtors.

• If there is a will, file it with the probate court alongside a petition for probate
• Obtain the letters testamentary that permit you to administer the deceased individual’s estate
• Notify various groups of the death. This includes:
  • All agencies with the deceased person’s records of the death, including all agencies from which the deceased person received income or services.
  • Beneficiaries and adult children of the will of the probate hearing.
  • Creditors, so they have the opportunity to make claims.
• Take an inventory of the estate. You’ll need to evaluate financial documents and bank statements, personal property, real estate, and digital assets including financial accounts. In some cases, you may need professional assistance.
• Claim and receive all benefits and debts owed to the deceased individual to the estate. Don’t forget any death benefits from life insurance policies.
• Oversee the sale of estate assets that need to be sold to settle creditors or pay estate debts. This can be done carefully with an attorney to ensure that the estate has enough assets to settle these debts.
• Manage and pay off the estate’s liabilities, debts, bills, and levies. This may include a mortgage, estate and income taxes, and fees. You’ll need to manage these until you transfer ownership to the estate property to beneficiaries.

Final Tasks for the Executor

After everything pointed out above has been done, you should then proceed to the following. Make sure to issue the payment for any professional services and payment for your own services as the executor from the estate before closing it.

• File the final federal estate tax return of the estate alongside state and federal income tax returns. You may seek the help of a tax advisor or tax professional for tax advice to guide you through this.
• Analyze and evaluate all transactions you have conducted on behalf of the estate and submit a report of these to the probate court.
• Distribute the assets to heirs and beneficiaries according to the deceased person’s wishes and state laws.
• Finally, file for a final probate hearing to conclude the probate process and close the estate.

Spend Less, Do More as Executor

What is the role of an executor in estate planning? While the role of an executor is a delicate and taxing one, it doesn’t bleed into estate planning. When you begin managing an estate, however, you can save time and money by having the necessary legal documents needed in administering the estate.

Not every task in estate administration requires the services of an attorney. Sometimes, all you need are adequate legal documents prepared by the best hands. At A People’s Choice, this is what we do! We help our clients to obtain the most comprehensive legal documents required in their legal activities at very affordable costs. Contact us today to make your legal journey as easy as possible for you and your loved ones.