As an executor for a will, you have been honored with a position of trust. Another person believes that you can distribute their estate fairly and care for any investments and costs responsibly while distributing inheritance to their heirs. The position of executor is a large commitment which will take much time and effort to achieve an end to.
If you have been named as executor of a will, the time to begin preparation is now. Talk to the person who has named you and find out where they keep their will, how they hold their assets, who their attorney is, where their past tax documents are kept, and if they have a list of instructions to go along with their will.
Helping the person stay organized while still living will make your job as executor much easier to carry out after they are gone. Sometimes when the decedent is sick for years before passing away, they may not be able to care for their estate by paying taxes and bills on time. After their death, whatever has not been done will fall to you.
After the Decedent Passes
After the decedent passes on, you will be called upon to act as the decedent would have acted if they were alive. You will use their will and any other instructions as a guide.
- Obtain a death certificate from the medical examiner or hospital or from the Register of Deeds in the county where the death occurred
- Make sure to get at least 10-15 certified copies of the death certificate
- File the will with the Superior Court in the county where the decedent lived
- File a petition for Probate if needed
Secure the Home
You will also need to secure the home and ensure that family or friends don’t swoop in and begin taking items from the home thinking that they have a right to choose what they like. As executor, you will be handling the home and its items when the proper time comes. For now, the home and everything in it belongs to the estate.
Affidavit Exemption from Probate
In NC, if the estate is worth less than $20,000 for a single decedent or $30,000 for a couple, you may file an affidavit to allow a successor to handle the distribution of assets without having to go through a formal probate process. For this affidavit, you need a death certificate and the will, if there is one, as well as a description of the assets and their values.
After the probate court recognizes your authority as the executor of the estate, notice of your appointment as executor is given to all heirs and beneficiaries and the Probate Court gives you the legal authority to act on behalf of the estate.
Make an Inventory
At this point, you will need to go through what the decedent owned and be aware of any assets. Talk to any attorneys, accountants, financial planners or advisors that may be involved to get the full picture. You will need to make an inventory of all that is owned by the estate along with all of the debts. Don’t forget digital assets such as videos or pictures, books, emails, proprietary items, graphic design creations, etc.
You want to make sure that you have a comprehensive picture of all of the assets and liabilities. Look through the decedent’s mail, emails, or apps on their phone to find accounts. Within 3 months, you will need to file an inventory with the probate court.
Give Notice to Creditors
You will need to put a notice out about the probate and give 3 months for creditors to make claims on the estate. You are responsible to pay any bills that come into the estate that are legitimate.
Settle the Finances
Once you’ve made an inventory and given notice to creditors, your primary job is to pay bills and keep track of the expenses of the estate. If it is a relatively simple estate, this may only take 4-6 months total and you’ll be able to pay and close all accounts.
In a more complicated or vast estate, this process can get very extensive and can include making investment decisions for portfolios and retirement accounts.
File Income tax
If the decedent was single, you will file taxes for the year they passed away. You will consider the medical bills that have already been paid for this tax return, but you can also deduct medical expenses that you pay out of the estate monies after their death “to the extent that they exceed 7.5% of adjusted gross income (or 10% of AGI for someone under age 65)” (1)
If they are married, the spouse files as usual including the spouse for the year they died as if they were alive through the end of that year.
Other Possible Taxes
Federal & State Estate (Death) Tax
In 2020, if the estate is worth more than 11.4 million, you will need to file an Federal Estate (Death) Tax return that can require up to a 40% tax payment. North Carolina does not have an estate tax.
Income Tax for Trusts & Estates
If the estate itself (or Trust) generates more than $600 in annual gross income, then you will also need to file an Income Tax Return for Estates and Trusts. Unless everything is owned in a trust that has its own tax ID number, you will need to order the tax ID number for the estate so that you can file taxes in the name of the estate.
Don’t Forget to Pay Yourself
Being an executor for a will is a long and arduous process whether the estate is simple or not. The will often allows a payment for this job but even if the will doesn’t, NC allows payment for the executor of up to 5% of the estate. This income is subject to income tax however.
Once you have finished paying creditors, you can follow the instructions of the will to distribute assets to the beneficiaries who are named. This can be very simple or get complicated by financial instructions related to trusts and large sums of money given out over time.
After you distribute the assets, you will file a Petition to close the probate.
If you are struggling with all of the details and minutiae involved in closing an estate, contact us for help working through what needs to happen next. Our knowledgeable estate probate lawyers know how to guide you and your family through this process with the least amount of stress and worry.