Becoming the executor of your parents’ estate may seem like the natural thing to do, but it’s a big responsibility and, depending upon the extent of the estate, will require considerable time and effort on your part. If you are working or have other full-time obligations, keep in mind that it may require time off for travel, contacting beneficiaries, filing court documents, and paying outstanding bills, taxes and other debts.
So, before you agree, be sure you understand the breadth of your fiduciary responsibilities to ensure you execute the estate correctly and don’t find yourself liable for mistakes. Here’s a look at some of the many steps you will need to take after your parents are deceased, as well as actions you and parents can take now to make the process easier.
Contact your parents’ attorney: Although an attorney isn’t required for estate planning, if your parents have one, you should contact him or her first upon their death to determine what if any documents they have and what assistance they can provide. The more complex the estate, the more important it is to work with an attorney specializing in estate planning who knows the laws and processes required to execute the estate. The American Bar Association’s document “Guidelines for Individual Executors & Trustees” provides a glossary of terms, an overview of the complexity of an executor’s duties and ways an attorney can assist. In advance: Be sure your parents provide you with the names and contact information of all attorneys they have retained and for what purpose they were retained.
Compile all records: These include wills and trusts, property deeds, stocks and bonds, bank statements and safe deposit box locations, loan agreements, birth and death certificates, tax records and receipts, life insurance policies, and bills for everyday expenses like utilities, credit cards, auto and homeowner’s insurance, etc. If your parents make payments online, you will want to know which ones and any associated login information. In advance: Create a list of all regular expenses, credit card account numbers, insurers and policy numbers, tax information, and investments, as well as the location of any and all associated documents. To help get you started, the AARP article, “Organize Your Loved Ones Financial Records” offers a common sense approach.
Apply for probate: In Michigan, many estates — but not all — must be administered through the probate court system. According to the State Bar of Michigan, “Generally speaking, probate is only necessary when a person dies leaving property in his or her own name (such as a house titled only in the name of the decedent) or having rights to receive property (such as [a] wrongful death claim or a debt owed to the decedent).”
In fact, there are many ways to avoid probate if you and your parents address it ahead of time. To learn how probate works in Michigan, the SBM document, “Probate Administration of a Decedent’s Estate,” is a great place to start. In advance: After learning about probate, review your parents’ estate planning documents to see if changes can be made to avoid probate. Consulting with an attorney can also help to ensure changes are legal and correct.
Notify heirs and beneficiaries named in the will: This can involve a lot of time and energy on your part if there are estranged family members or people you don’t know on the list. According to Michigan Compiled Laws section 700.3705, the executor or “personal representative” is required to make such notifications by first-class mail within 28 days after they are appointed or as specified by the court. This notification can be tricky for someone who is not well-versed in deciphering legal documents and may require the assistance of an attorney to ensure it is done in a timely and complete manner. In advance: Cerate and update a list of heirs and beneficiaries and update it as needed to reflect name and address changes as well as deaths. Keep this list with the will and other essential documents.
Notify creditors: The executor must also file a notice to creditors in a newspaper near where the deceased resided. According to Michigan Court Rule 5.208, it must include the name and death and birth dates of the deceased; the name and address of the personal representative and of the court where proceedings are filed; and a statement to the effect that “claims will be forever barred unless presented to the personal representative, or to both the court and the personal representative within 4 months after the publication of the notice.” This notice must also be provided personally or by mail “to each known creditor of the estate and to the trustee of a trust of which the decedent is settlor, as defined in MCL 700.7605(1).” In advance: Create and keep updated a list of all creditors and their addresses.
Inventory your parents’ estate assets. Within 91 days after death, the personal representative must inventory the estate including a brief description of all possessions and an estimate of fair market value. This list must then be provided to all heirs and beneficiaries. In advance: Use Charles Schwab & Co., Inc.’s Asset Inventory worksheet to help simplify the process and periodically check to be sure the amounts still represent true market value.
Pay debts and taxes: This can be as simple as making final rent or car payments or it can go on until the estate is fully settled, which could be months or even years. In all cases, creditors should be paid in a timely manner or notified in advance if there is any delay. Taxes must also be paid by the personal representative. In advance: Keep all records of debts and creditors updated including contact information. If your parents used the services of a Certified Public Accountant, be sure to keep the contact information with tax records in case you need to consult with them.
This very high-level look at the responsibilities you accept as your parents’ executor defines only a few of the legal requirements. You should also consider the emotional side of the job, especially if there is an unequal distribution of assets among beneficiaries, or when family members and parents are estranged. Even though you are only carrying out your parents’ wishes, you may be placed in a position that is at best uncomfortable, adding to the stress of the job. If you have any concerns about accepting the role, speak with an attorney before you sign on. The State Bar of Michigan’s Legal Resource and Referral Center can help you locate a qualified attorney near you.