Being appointed the executor of a deceased person’s estate involves significant responsibilities. It’s crucial for executors to understand what they are required to do, because failing to fulfill their duties can result in liability to the estate, the beneficiaries, or even to the government for taxes. In some cases, liability may be imposed even for actions a person takes even prior to their appointment as executor.
Duties of an executor include the following:
- locating and obtaining important documents such as the will and death certificate;
- hiring an attorney if necessary to ensure that all proper steps are taken;
- submitting the will to New York State Surrogate’s Court for probate;
- notifying interested parties, including heirs and creditors;
- managing the property of the deceased person, and having it appraised;
- paying valid claims of creditors;
- distributing the assets to the beneficiaries as the will directs;
- keeping accurate records of distributions and expenses; and
- filing a final accounting with beneficiaries and the court.
In a recent case, the spouse of a deceased person transferred assets to herself, both before and after being appointed as executor of her spouse’s estate, though she knew the estate was insolvent due to federal tax liability. The executor attempted to avoid liability for the first transfer — the one that took place before she was appointed executor — because the relevant statute refers only to liability for a representative of an estate. However, that argument failed in court, because she had control over the assets prior to being appointed executor.
Executors must follow the law in their management of the estate’s assets, including paying valid claims of creditors before distributing assets to beneficiaries. Of all creditors, the IRS usually has first priority, and executors or representatives of the estate who fail to pay federal taxes owed may become personally liable to the government for the taxes, provided the estate was insolvent and the executor knew of the liability.