Estate Administration: A Summary
Administering a deceased person’s estate can be a big job, even if the estate to be administered is relatively small. It’s a task that requires patience, organization, persistence… and occasionally some help from a lawyer familiar with the estate administration process. While it may sound intimidating, I find that most people can do a great job with minimal frustration, especially if they have a good understanding at the outset of what they’re about to experience. So, to that end, this month’s article will give a quick summary of the duties of a person administering an estate. If you find yourself in this position and would like assistance from an experienced estate administration attorney, I invite you to call or email to see how we might work together to achieve a complete and efficient administration of the estate.
Why Do We Do This?
When a person passes away, they leave behind assets which will be inherited by one or more heirs/beneficiaries. Some assets have ways of getting themselves into the hands of the beneficiaries. For example, some assets may transfer via right of survivorship or via beneficiary designation. Assets without features such as these will instead need to go through the court supervised estate administration process to reach the proper recipient. The court will make sure that these assets are properly accounted for and only used to pay legitimate expenses and debts before final distribution of the remaining assets is made to the rightful heirs/beneficiaries of the deceased person.
Who Administers an Estate?
A deceased person’s estate is administered by either an executor or an administrator. An estate has an executor if the deceased person left a valid will; it has an administrator if the deceased person did not have a will. The difference between an executor and an administrator is more than just terminology, but the differences are not significant enough to warrant going into detail about here. If a deceased person left a valid will, it most likely includes a provision that appoints the person who will serve as executor. If a deceased person did not leave a valid will, the law provides a process for selecting an administrator, offering the job first to the surviving spouse (if there is one), and then to others. Before they can begin acting on behalf of the estate, the executor/administrator will need to be “qualified” by the Clerk of Court. Qualification will require the submission of the deceased person’s will (if one exists), a death certificate, and a few other court documents that are fairly easy to complete.
What Does the Executor/Administrator Do?
It can be helpful to think of the duties of the executor/administrator as falling into two broad categories: tax-related duties and non-tax duties. Tax-related duties will need to be completed within timelines set out by the IRS and the North Carolina Department of Revenue. Non-tax duties have their own deadlines set by North Carolina law and enforced by the local Clerk of Court.
On the tax side of things, the executor/administrator will need to prepare various tax returns for the deceased person and/or for the deceased person’s estate. A state and federal income tax return will likely need to be filed by the executor/administrator on behalf of the deceased person for the year of death. The estate itself will also be a taxpayer and may owe taxes on any income it receives while the estate is being administered. If other types of returns need to be filed, such as gift tax returns or an estate tax return, it will be the executor/administrator’s job to have these prepared and filed as well.
On the non-tax side, the executor/administrator’s responsibilities will typically include, among other things:
Preparing an inventory of the deceased person’s assets and their value as of the decedent’s date of death;
Running a notice in the newspaper to notify the deceased person’s creditors that they have a limited time within which to submit their claims to the executor/administrator of the estate for payment;
Using estate assets to pay the deceased person’s debts and the estate’s expenses of administration;
Distributing remaining property to the heirs/beneficiaries as provided by law or by the terms of the deceased person’s will; and
Submitting an accounting to the court that shows all amounts paid into and out of the estate, with some sort of documentation in support of each receipt or disbursement (bank statements, receipts, canceled checks, or similar).
While handling these tax and non-tax duties, the executor/administrator will be responsible for maintaining the assets of the estate until they are finally distributed to the beneficiaries. This may mean investing the estate’s assets, acquiring or maintaining insurance policies on tangible assets, changing the locks on real estate owned by the estate to safeguard what’s inside, and quickly disposing of assets that create liabilities for the estate or that are depreciating in value.
The Executor/Administrator Doesn’t Have to Go It Alone
An executor/administrator has very broad powers to help them complete the tasks listed above. These powers include the power to enter into contracts on behalf of the estate and to enlist the services of professionals. This means the executor/administrator can hire accountants, attorneys, financial advisors, appraisers, realtors, and others who may reasonably be needed to assist with the administration of the estate. The executor/administrator will be able to pay for these professional services out of the estate’s assets.
Conclusion
Administering an estate is a big job, but not an impossible one. If you’ve recently been appointed as an executor or administrator, understanding the road in front of you will help you stay calm and continue making progress. If you need help along the way, The Law Office of Ryan A. Layton, PLLC will be glad to assist you as you carry out your duties. Call or email to arrange a free consultation.
The information contained in this blog post is intended only as general legal information and should not be construed as formal legal advice on any matter, nor should its presentation be construed as intent on the part of The Law Office of Ryan A. Layton, PLLC to form an attorney-client relationship with any user of this website. For more information, please see this disclaimer.