So You’ve Been Named Executor: Now What?

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Hi everyone, and thanks so much for joining us today. My name is Paul Lightfoot and I’ll be your host. Today we’re going to walk through what it really means to be named an executor or successor trustee after someone passes away. After that, we’ll share some helpful estate planning tips that can make things easier for your family down the road.

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We know everyone is busy, so we’ll keep the discussion focused on the most relevant items. With that in mind, we expect the webinar to run about 30 minutes before we dive in. Just a quick disclaimer so we’re all on the same page. This webinar is for educational purposes only.

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We’ll be covering general concepts and strategies, but we’re not providing personalized tax, legal or investment advice. Our goal is simply to provide clarity and help people become better informed. If something we discuss raises questions about your own situation, we encourage you to connect with your tax professional or state planning attorney to determine what makes the most sense for you.

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Also, feel free to send in your questions at any time during the presentation, and we’ll address as many as we can. At the end, just click the Zoom Q and A icon at the bottom of the screen to submit a question. With that, I’ll turn it over to Archie Ponce. All right.

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Good afternoon and thank you for taking the time to join us today for a webinar so you’ve been named Executor. Now what? My name is Archie Ponce and I serve as Executive Vice President and a managing Partner at Optima Asset Management. I began my career 29 years ago working across several firms in a variety of roles before joining Optima more than 18 years ago.

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Today, I’m going to walk through what it really means to be named an executor or successor trustee after someone passes away. After that, we’ll look at some helpful estate planning tips everyone should know. This is our topic of discussion today, and we’ll dive right in.

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So what it Means to be Named an Executor or Trustee first an executor, also known as a personal representative, is the individual legally designated in a last will and testament to administer a deceased person’s estate through probate. The executor is responsible for ensuring the will is properly executed in court.

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Beneficiaries adhere to its terms, and all actions comply with applicable state law. Although probate laws vary by state, this discussion addresses the general process in Texas. How the executors chosen to depends on whether the person died, test date or intestate.

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Test date means the person died with a valid will and appointed the executor. When someone dies intestate, it simply means they did not leave behind a valid will. In that situation, state probate law decides who steps in to handle the estate.

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In Texas, the surviving spouse usually has first priority, followed by the children and then other close residents. If no family members can be found, the court will appoint someone to serve. An executor handles a person’s estate through probate.

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A Trustee, in contrast, manages assets that are placed in a trust. Trustees have a legal duty to follow the trust’s instructions and always act in the best interest of the beneficiaries. They must treat everyone fairly and follow state and federal laws.

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Trustees can be individuals or corporate entities, but today we’ll focus on individuals as successor trustees. How are trustees chosen? The grantor, as the creator of the trust, determines who will serve as trustee. In some cases, the grantors name themselves as the initial trustee.

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In others, they appoint a different individual or entity. The trust document also identifies successor trustees who will step in if the original trustee is unable or unwilling to serve. What are some of your key duties and timelines?

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Key Duties before death for executors, an executor’s official duties do not begin until after the individual’s death. However, they are often involved in funeral and burial arrangements beforehand, even before they are legally appointed as executor.

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Trustees can begin their duties before the grantor passes away. As current trustees age, it is not uncommon for diminished mental or physical capacity to make trust administration more challenging. Many serve alongside a spouse as co trustee, but over time they may begin relying on children or other trusted individuals for assistance.

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One option available is resignation, allowing the named successor trustee to step in as acting trustee. This typically requires a formal trustee resignation letter and and in some cases a successor trustee acceptance form. Financial institutions holding trust accounts will also require copies of relevant trust provisions, the resignation documentation, and any additional paperwork necessary to update their records.

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In cases of serious medical conditions or cognitive impairments, such as dementia, a trustee may become unable to fulfill their duties. Most trust documents include an incapacitation clause outlining how incapacity is determined. Commonly, this requires written certification from one or more physicians stating that the trustee is incapacitated, which then permits the successor trustee to step in now the Key Duties After Death Executors have numerous responsibilities to fulfill during their probate process.

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The following outlines the primary duties an executor is expected to perform May Many of these steps occur simultaneously and the overall timeline for completing probate can range from several months to several years. Trustees While executor’s official duties do not begin until the passing of individual and not legally recognized until a court hearing, a successor trustee immediately will take over management of the trust after the passing of the current trustee.

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For executors, the next step is to initiate the probate process to legally be recognized as the executor. The probate process begins with the filing of an application for probate of will along with the original will, if one exists, and the death certificate.

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This filing must occur within four years of the date of death and in the county where the decedent resided. Once the application is filed, the county clerk posts a notice at the courthouse which for at least 10 days. This lets the public and beneficiaries know that probate has been open and gives them a chance to raise any concerns about the will or the process.

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The next step after the mandatory 10 day waiting period is the probate hearing held before a judge to establish the validity of the will. The executor provides testimony confirming the decedent’s death, the authenticity of the will, and the identity of the heirs.

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If approved, the court issues letters of testamentary granting the executor authority to administer the estate, pay debts, and distribute assets. If no valid will exist, an application may be made for letters of administration. After the probate hearing, the executor must gather important documents and information to put together an inventory of the estate’s assets.

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Staying organized and keeping good records, whether on paper or digitally, makes this process much smoother. The executor will then identify and provide notice to heirs, beneficiaries, and any other interested parties as required by the probate process. Executors are responsible for gathering, maintaining, and securing estate assets, including homes, the vehicles, and other tangible properties.

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Because probate is a public process, for example, a vacant home can attract the wrong kind of attention and be a target for potential theft. Increased vigilance and proactive security measures are essential. Part of the information gathering process is to identify and properly value assets in the estate.

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To get an accurate valuation of assets, it may be necessary to obtain professional appraisals to determine the fair market value of certain assets, especially if the trust or estate requires equal distribution to beneficiaries. After compiling the inventory of assets, the executor must file the inventory, appraisement and list of claims with the probate court within 90 days of the probate hearing or qualification.

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This filing must include all real and personal property, its location and value, as well as any debts owed to the estate. A common question is what assets are included in the estate for the probate process. Generally, the estate consists of assets owned solely by the deceased without beneficiary designations or automatic transfer provisions, including real estate held in the decedent’s name only, with no transfer on death deed personal properties such as vehicles, jewelry, and other tangible items without co ownership or financial accounts held individually with no transfer on death beneficiaries Business interest in sole proprietorships which lack a succession plan after the inventory is filed, a notice must be provided to creditors.

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The executor is responsible for publishing and mailing a notice to creditors, not the court. This typically includes publishing a notice in a local newspaper and sending direct notice to known creditors, giving them the opportunity to file claims against the estate. For executors.

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What does this look like and how is this done? First, contact the local newspaper. An executor has to file a notice with only one local newspaper with general circulation in the county. The probate is pending within a month of probate hearing. The notice has to run for one to two consecutive weeks or as directed by the probate court.

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After notification, the newspaper will provide an affidavit of publication as proof to provide to the court. Second, the Executor has to notify secured creditors within two months of the probate hearing, which are debts backed by collateral, such as mortgage or car loans.

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Lastly, for unsecured creditors, such as credit card companies, it’s not mandatory to send each creditor an individual notice of the death of the account holder, but in doing so, it does trigger the four month statute of limitations for their claim. During this period, the executor and successor trustees additional responsibilities also include obtaining a tax ID for the estate as it becomes a separate legal entity, paying outstanding debt and ongoing expenses such as utilities and property taxes, and coordinating any necessary estate and property sales.

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After creditors are notified, they have four months from the date of notice to submit their claims in the Texas probate process, the executor then reviews each claim and determines whether to prove or reject it in order to properly settle the estate’s debts. So what are valid debts?

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A, valid debt is legitimate liability of the estate or trust that was owed by the deceased at the time of death. In Texas, once claims are determined to be valid, they must be paid in the priority order established by state law. Higher priority claims must be fully satisfied before lower priority claims receive payment.

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In general, the order of priority is funeral and hospital expenses up to $15,000 each. Administrative expenses, such as court costs, attorney fees and other costs necessary to maintain and preserve the estate. Secured claims, including mortgage and liens, child support, taxes owed and unsecured claims.

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If unsecured claims are not presented within the four month claims period, they are generally barred. Once debt and expenses have been addressed, the executor proceeds with distributing the remaining assets to beneficiaries designated in the will or heirs under Texas intestate succession statutes.

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If there is no will, closing the estate is the final step in the probate process. It involves obtaining a court order that formally discharges the executor, confirms that all debts and taxes have been satisfied, and officially concludes the administration.

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This closure follows a final accounting to the court, verifying that all assets have been properly distributed to the beneficiaries. Upon the death of the grantor who was serving as trustee, the successor trustee immediately assumes management of the trust.

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The first step is to formally accept the role or decline to serve, in which case the contingent successor trustee has the option to step in. The second step is to notify the beneficiaries of the grantor’s death. In Texas, a formal notice must be provided to beneficiaries within 60 days.

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A, key responsibility of the successor trustee is conducting a thorough review of of the trust agreement. This ensures a clear understanding of distribution provisions, beneficiary specific directives, and any conditions or timing requirements outlined by the grantor.

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While an executor administers the estate in accordance with the terms of the will and under the supervision of the probate court to eventually close an estate, a Trust is a private non court arrangement allowing assets to bypass probate where the trust may continue to manage, invest, or hold assets for beneficiaries over many years.

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An additional consideration during the trust transition year arises when the grantor has used their Social Security number as the trust tax id. Upon the grantor’s death, a new tax ID must be obtained as the Social Security number is no longer valid. Many financial institutions require new trust accounts to be established under the new tax id.

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Consulting an estate attorney, CPA, or financial advisor during this period can help prevent tax reporting and filing issues. Beneficiaries A beneficiary is the person or entity set to receive the benefits or assets from the trust. Beneficiaries generally are entitled to some of the distribution from the trust outlined in the agreement.

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These may include periodic income payments, distribution of specific assets or lump sum distributions, or other tailored plans. Beneficiaries have the right to stay informed after being notified of the grantor’s death. They can request information about the trust’s terms, its assets, and how the trustee is managing the trust.

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Lastly, Enforcing the Trust if a trustee fails to properly administer the trust or does not make distribution in accordance with the trust documents, beneficiaries have the right to pursue legal action to enforce the terms of the trust.

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When and how to Involve professionals such as attorneys, CPAs, and financial advisors the successful closing of an estate, trust, or business isn’t something you have to do alone. It often requires a coordinated team of professionals to manage the legal, financial, and administrative responsibilities.

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Key professionals may include an estate attorney, cpa, and financial advisor. In cases involving business interest or complex assets, business brokers, real estate agents, and specialized appraisers may be necessary. Proactively retaining professional support early in the process can greatly improve the efficiency and accuracy of State and trust administration.

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Estate Attorneys Ideally, before someone passes the executor or trustee would have already been introduced to the estate attorney who prepared the will or trust of the deceased. That way you already have a trusted point of contact who understands their wishes and overall plan and can provide additional guidance through the probate process.

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Immediately engaging a cpa, ideally one you already know and trust or one familiar with the deceased, can greatly assist with the preparation and filing of tax returns. A CPA can also help obtain a tax id, locate and interpret necessary tax documents, identify key filing deadlines, calculate and determine final tax obligation.

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Engaging the deceased financial advisor or one you know and trust early in the process can provide valuable guidance in managing investments and coordinating the transfer of assets to the beneficiaries. Financial advisers often work closely with state attorneys and CPAs to support executors and successor trustees throughout the process.

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Real Estate Agents if a real property is solely owned and does not pass by co ownership or beneficiary designation, engaging a Real estate agent can assist in navigating the often complex and emotional process of selling a loved one’s home. An agent familiar with the local market can provide an accurate valuation and can help coordinate repairs or improvements to help maximize value.

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Business Broker if the deceased owned a business, selling it can be one of the most complicated parts of administration. A business broker can help you properly value the business, set a fair market price, find serious buyers, and guide the negotiation and closing process.

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Tips to Find a Business Broker if you do not have one, seek a referral from a trusted source you know. Oftentimes the estate attorney, CPA, or financial advisor may have a recommendation. Contact the insurance professional to handle life insurance claim. They typically are listed on the insurance forms and can help file death benefit claims.

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Real world examples and Common mistakes Executors and successor trustees should avoid secure homes and property as previously discussed, executors have a duty to gather, maintain, and safeguard estate assets. Because probate is a public process, vacant properties can become targets for theft.

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Periodic property checks, changing locks, and installing security cameras may be necessary. In addition to securing physical property, executors should inventory and protect digital assets, including social media, email, and cloud storage accounts.

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Inactive accounts should be closed and devices such as cell phones, tablets, and computers should be secured as they may contain sensitive financial information. Death certificates it’s generally recommended to obtain approximately 10 to 15 certified copies of the death certificate.

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While some institutions may accept a photocopy, many require an original certified copy for processing. Create a dedicated file, either digitally or physically. Subscriptions Many individuals maintain multiple subscription services on automatic payment.

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It is advisable to review and cancel any unnecessary subscriptions to prevent ongoing charges. Online tools such as experion or Rocket money can assist in identifying and canceling unwanted subscriptions. Credit card companies are not automatically or immediately notified when a cardholder dies.

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They typically learn of death later through the credit bureau. Updates from the Social Security Administration since these are unsecured debts and are effectively active accounts. Notifying the credit card companies can stop the card from being used and prevent unauthorized use.

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Even if you are the authorized user, do not use the deceased credit cards. Do an unclaimed asset search. Many deceased may not even be aware of missing assets such as old bank accounts, old security deposits, or overdraft or overpayments of bills.

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Using a website such as claimittexas.gov is a way to search for unclaimed property such as old bank accounts. Many executors and successor trustees who are the children of elderly parents are also listed as power of attorney on various financial accounts from banks to investment accounts.

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Once the account owner has passed away, the power of attorney becomes invalid. Lastly, never commingle estate assets with your own personal funds. Detailed accounting of estate and trust assets and liabilities will be easier when kept separate up.

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To this point, the discussion has centered on the responsibility of executors and successor trustees. We’ll now explore key considerations to better prepare and assist those individuals to you intend to serve in these roles. Strategies for Managing Family Dynamics and Maintaining Clear Communication the first step to address complex family dynamics is to better understand existing relationships and any potential areas of conflict.

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Take time to thoughtfully assess the blended families. In situations involving remarriage or stepchildren, it is important to thoughtfully consider and address the needs, expectations, and potential sensitivities of all family members. Estranged Relationships Addressing estranged family members in an estate plan requires a careful balance between your wishes and meeting legal standards to reduce the risk of future family disputes. U.S.

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law typically permits you the right to disinherit family members. However, thoughtful planning and clear documentation are essential. Identifying estranged relatives and evaluate how their inclusion or or exclusion may affect your plan. Financial Disparities Estate planning often involves navigating complex family dynamics and financial disparities.

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Strategies may include establishing trust for beneficiaries with special needs, structuring distributions to provide additional support for financially vulnerable children, and maintaining flexibility in the plan. Some best practices Be proactive by holding regular family meetings to clearly define roles and expectations for both trustees and beneficiary.

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Explain the reasoning behind your decision, listen to family concerns and adjust if and when appropriate. Identify any special items or assets that could potentially cause dispute between a family, such as a family heirloom. Consider neutral parties when appropriate to avoid potential conflict within the family and provide possible objectivity.

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Update and review your estate plan every three to five years and make any necessary adjustments and amendments. Or after a major life event, it is highly recommended to introduce your intended executor or successor trustee to the estate attorney, CPA and financial advisors you utilize so they have a point of contact in the event of incapacity or death.

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Another consideration is inheritance advances such as loans or other gifts given during your lifetime. It’s not uncommon for parents to gift or loan children money, and if there are multiple beneficiaries, maintaining accurate records of loans, notes or gifts can help with future disputes between beneficiaries.

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What you can do now to make things easier for your own future executor and successor trustee, Seek professional help. Estate attorneys, Financial Advisors and CPAs play a Critical role in helping you define and achieve your estate planning goals. They assist in drafting legally binding documents that comply with state and federal law.

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Provide guidance in evaluating and refining your plan that is aligned with your long term objectives for transferring wealth to beneficiary. Create a legacy binder Gathering information can be one of the most time consuming and difficult tasks, especially when assets are spread across multiple sources, making this information easily accessible by organizing estate documents.

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Clearly identifying account locations and securely providing instructions for accessing online accounts can significantly ease their burden. One practical way to support your executor or trustee is to create a centralized legacy binder. Products such as the nokbox, which is short for Next of kin, offer a structured, user friendly system for organizing essential estate documents in one portable location.

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Similar products are available with options such as fireproof storage and secure compartments for digital thumb drives to provide additional protection. Some items to consider to add to your legacy a list of password, digital assets and important contact information Legal documents such as an original will and trust document Household information such as utilities A list of personal effects and location and if needed, final arrangements for funeral and burial.

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Consider consolidating accounts. Many individuals maintain assets across multiple financial institutions. Consolidating accounts into fewer institutions can simplify ongoing management, reduce potential fees, and make it significantly easier for beneficiaries to locate, organize and administer assets during the estate or trust settlement.

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Illiquid Assets Evaluate illiquid assets such as certain real estate private business interests. Investments with lock of provisions and collectibles could cause excess burden to your heirs to sell. Proactive selling now may help avoid fire sales of these items.

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Discussion with a financial professional can help guide what would be best for your goals. Some practical tips in choosing an executor or successor trustee Consider the following traits. First, one that is willing and able to serve Are they organized and trustworthy?

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How effective are their communication skills? Proximity to you and your resident? Another consideration you have is the option of having more than one executor. But having more than one executor often leads to significant delays, increased legal expenses and potential family disputes.

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Some estate planning pitfalls to avoid procrastination Estate planning can be overwhelming, uncomfortable and complex. While there are cost and time commitments to create an estate plan, the cost for not having a plan can end up being more expensive and can greatly impact the well being and care of your loved ones.

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Outdated documents after major life events such as marriage, divorce or birth of a child, it’s important to review documents such as beneficiary designations, which for example, may have an ex spouse listed or a new child not listed. Improper titling of accounts, particularly joint accounts.

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Lack of communication with your intended executors where they may not even know that you are their intended executor. An invalid Will it’s important to ensure that your will is valid. For the will to be valid, it generally has to meet the following requirements. Wills have to be written and signed by a person who is at least 18 years old.

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The person making the will must be of sound mind. The person making the will must have testamentary intent, meaning they have a desire to leave assets and must clearly outline the distribution of those assets. And it must be witnessed by at least two people. In Texas, witnesses must be at least 14 years old and who are not the beneficiaries of the will.

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In Texas, there’s also the option of self proving affidavits. These are signed statements saying the witness saw the testator sign the will. Having this makes the probate process smoother. Otherwise the court will require witness testimony that they have observed the testator sign the will.

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Consider will substitutes. There are different types of will substitutes. Some of the common ones are designated beneficiaries and are basically individuals named as beneficiaries of a particular account. Assets held in these accounts upon your death will bypass probate and transfer directly to your named beneficiary.

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The amount passed to the beneficiary is determined by you as a percentage of the account value. There are various types of joint accounts held. The most common are joints with rights to survivorship. Where one party passes away, all remaining assets go to the surviving owner.

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There are tenants in common. Where one party passes away, their sure goes to their state or a designated beneficiary while the survivor owner gets the rest of the assets. Lastly, there’s also community property which are available only in certain states. Texas one where it’s 5050 ownership.

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Deceased shares go to their estate while the remaining goes to the surviving owner. Transfer on Death deed is an option that allows real estate to pass directly to a beneficiary at, the owner’s death. If there is no co owner of the property, it allows the owner full control to revoke or sell the property during their lifetime.

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Pros, are it avoids probate and more quickly gets transferred to a beneficiary upon the death of the owner. And potentially less expensive, avoiding legal fees. Discussion with an estate attorney is helpful to determine if this is the best solution for you. If there are discrepancies between the will and a will substitute regarding the beneficiary, the will substitute will supersede the will.

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It’s important to regularly review your will and beneficiary designations to avoid any potential conflicts. A final miscellaneous consideration is pets. Many individuals overlook planning for the immediate care of their pets in the event of incapacity or death.

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If you are considering adding a child to your joint bank or financial account for convenience, one consideration is Depending on the size of the account, it may trigger gift taxes and disrupt inheritance plans. Who will assume long-care responsibilities. Adding a child effectively gives If your intended executor lives at a distance, it them ownership of the account.

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A power of attorney or check writing is prudent to communicate care to both the executor authority may be a better option. and a trusted neighbor, clearly documenting your wishes regarding

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All right, so that concludes the overview of essential guidance for executors and the considerations individuals should keep in mind to support them. I’ll now open up the floor for questions.