Have you wondered how you should proceed if you are the Executor of an Estate? The simple answer is that your primary duty is to the creditors of the Estate. They are your highest and first obligation. Therefore, once you receive your Letters of Administration or Letters Testamentary, you are to obtain a federal identification number (FEIN)from the IRS for that estate. After you’ve obtained your FEIN, you must place an advertisement in the local legal organ which advises all debtors and creditors of the estate to come forward with their claims or their payments.
After this, you should begin the process of closing bank accounts and other financial accounts and consolidating the money into one primary account for the Estate that you open. You then will begin the process of sorting through the tangible property of the deceased and distributing it in accordance with the will, distributing it in accordance with the wishes of the heirs or simply selling all of the tangible assets thereby converting those assets into cash. Naturally, as you receive cash for the property you place the cash in the bank account. As the Personal Representative of the Estate, it ultimately becomes incumbent upon you to report to all heirs, creditors, and beneficiaries concerning the status of the Estate. You should check to determine whether any income tax returns are due. In almost every case, at least a Form 1040 return is required.
It is vital that you keep records of all transactions and try to pay all bills with a check rather than cash. It is much easier to keep up with canceled checks than it is to keep up with receipts for cash transactions.
Once you have converted all assets of the decedent into cash or distributed them as required by the will, you should begin paying all bills of the estate. Once all bills are paid, you are free to begin making distributions to the heirs or beneficiaries in accordance with the will or state law. After you have paid all heirs and beneficiaries, the estate bank account should be zero. Once all distributions have been made you should file a Petition for Discharge with your probate court seeking approval by the court of all of your actions as well as having the court discharge you from further obligation. This discharge is critical to you as it will insulate you from future liability if you have handled all discharge functions properly.