Letter to Executor to Pay and Notify Creditors and Other Duties
RE: The Estate of _______________
Dear :
It is our recommendation that Executors undertake the following measures:
1. Conduct a thorough search of the decedent's personal papers and effects for any evidence, which might point you in the direction of a potential creditor;
2. Carefully examine the decedent's checkbook and check register for recurring payments, as these may indicate an existing debt;
3. Contact the issuer of each credit card that the decedent had in his/her possession at the time of his/ her death;
4. Contact all parties who provided medical care, treatment, or assistance to the decedent prior to his/her death;
Law office will not be able to file the NJ inheritance tax return until it is clear as to the amounts of the medical bills. Medical expenses can be deducted on the inheritance tax return.
Since you will be involved as the Personal Representative of this Estate, you should be aware that, pursuant to the United States Supreme Court Case, Tulsa Professional Collection Services, Inc., v. Joanne Pope, Executrix of the Estate of H. Everett Pope, Jr., Deceased, 108 S. Ct. 1340 (1988) the Personal Representative can be personally responsible to provide actual notice to all known or "readily ascertainable" creditors of the decedent. This means that it is your responsibility to diligently search for any "readily ascertainable" creditors.
Other upcoming duties/ Executor to Do
Bring Will to Surrogate
Apply for Federal Tax ID #
Set up Estate Account at bank (pay all bills from estate account)
Pay Bills
Notice of Probate to Beneficiaries (Attorney will handle)
If charity, notice to Atty General
File notice of Probate with Surrogate (Attorney will handle)
File first Federal and State Income Tax Return [CPA- ex Marc Kane]
Prepare Inheritance Tax Return and obtain Tax Waivers (Attorney will handle)
File waivers within 8 months upon receipt (Attorney will handle)
Prepare Informal Accounting
Prepare Release and Refunding Bond (Attorney will handle)
Obtain Child Support Judgment clearance (Attorney will handle)
A checklist is attached
Let's review the major duties involved, which we've set out below.
In General. The executor's job is to (1) administer the estate--i.e., collect and manage assets, file tax returns and pay taxes and debts--and (2) distribute any assets or make any distributions of bequests, whether personal or charitable in nature, as the deceased directed (under the provisions of the Will). Let's take a look at some of the specific steps involved and what these responsibilities can mean. Chronological order of the various duties may vary.
Probate. The executor must "Probate" the Will. Probate is a process by which a Will is admitted. This means that the court gives the Will legal effect. The court's decision that the Will was validly executed under state law gives the executor the power to perform his or her duties under the provisions of the Will.
An employer identification number ("EIN") should be obtained for the estate; this number must be included on all returns and other tax documents having to do with the estate. The executor should also file a written notice with the IRS that he/she is serving as the fiduciary of the estate. This gives the executor the authority to deal with the IRS on the estate's behalf.
Pay the Debts. The claims of the estate's creditors must be paid. Sometimes a claim must be litigated to determine if it is valid. Any estate administration expenses, such as attorneys', accountants' and appraisers' fees, must also be paid.
Manage the Estate. The executor takes legal title to the assets in the Probate estate. The Probate court will sometimes require a public accounting of the estate assets. The assets of the estate must be found and may have to be collected. As part of the asset management function, the executor may have to liquidate or run a business or manage a securities portfolio. To sell marketable securities or real estate, the executor will have to obtain stock power, tax waivers, file affidavits, and so on.
Take Care of Tax Matters. The executor is legally responsible for filing necessary income and estate-tax returns (federal and state) and for paying all death taxes (i.e., estate and inheritance). The executor can, in some cases be held personally liable for unpaid taxes of the estate. Tax returns that will need to be filed can include the estate's income tax return (both federal and state), the federal estate-tax return, the state death tax return (estate and/or inheritance), and the deceased's final income tax return (federal and state). Taxes usually must be paid before other debts. In many instances, federal estate-tax returns are not needed as the size of the estate will be under the amount for which a federal estate-tax return is required.
Sometimes it is necessary to hire an appraiser to value certain assets of the estate, such as a business, pension, or real estate, since estate taxes are based on the "fair market" value of the assets. After the filing of the returns and payment of taxes, the Internal Revenue Service will generally send some type of estate closing letter accepting the return. Occasionally, the return will be audited.
Distribute the Assets. Prior to individuals receiving money Federal law requires a child support lien search so each beneficiary will need to provide their Social Security number prior to inheritance. Your attorney can handle this, upon request. If child support is owed, and not deducted from the person's inheritance, the executor can be personally liable. Each beneficiary must sign a "Release and Refunding Bond". Otherwise, formal Court approval is required to finalize the estate. After all debts and expenses have been paid, the executor will distribute the assets. Frequently, beneficiaries can receive partial distributions of their inheritance without having to wait for the closing of the estate. However, the Executor should still have the beneficiaries sign a partial Release and Refunding Bond.
Duties of an Executor
Collect Assets and Information:
Locate Will and file and/or Probate in the Surrogate's office
Locate and inventory all of the assets of the Estate including:
Veteran's benefits social security benefits, pension benefits, stocks and bonds, automobiles, furniture, jewelry, and other possessions.
Obtain Death Certificate, life insurance claim forms, social security burial allowance (if applicable).
Send notices of the person’s death to the post office, utilities, banks and credit card companies
Assemble deeds, lease, contracts, and insurance policies for each piece of real estate.
Locate names and addresses of all heirs, legatees, devisees and next of kin
Determine Debts and other Claims against the Estate:
Determine current bills owed, doctor, hospital, rent etc.
Check decedent's charge accounts
Research other debts that exist, mortgage, life insurance loans, bank loans etc.
Obtain receipts for every bill paid and keep a record of payments
Check with the deceased’s employer for unpaid salary, insurance and other employee benefits for Social Security, civil service or veteran benefits
Manage the Estate:
Set up an estate account
File for life insurance and other benefits
Register stocks, bonds; arrange for collection of dividends and interest
Have items of property appraised
File City, state and/or federal tax returns
File state death and federal estate tax returns
Determine and Pay all necessary Taxes:
Calculate value of estate and probable state and federal taxes
Determine if administrative expenses should be charged against income taxes or estate taxes
Prepare estate's income tax return in addition to the last income tax return of decedent
Decide how funds will be raised to pay taxes
Prepare inheritance tax returns
Prepare federal inheritance tax forms
Pay personal property or real estate taxes if necessary
Distribute the Estate:
Determine who is entitled to share in the estate
Determine how the assets will be distributed
Pay all final bills etc.
Transfer and reregister securities
Prepare detailed informal or formal account for court
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