Having a fiduciary of an estate may be as important after your death as having drawn up a will and having a good estate plan. If your estate is not dispersed properly, problems you have spent time and money to avoid could still arise. What is a fiduciary and what is their responsibility?
A fiduciary can be an individual, trust company or bank that acts for the benefit of another. They can be a trustee, personal representative or an executor of an estate. Because of the complications often involved in being a fiduciary or executor of an estate, it is usually in the best interest of the fiduciary to retain an attorney, who can help with legal advisement, forms and paperwork.
A fiduciary of a person's estate has the responsibility of dispersing the estate after the death of the individual. They must gather the assets for distribution, settle all business affairs -- which may include paying unpaid bills and filing tax returns -- and ensure that assets are distributed per the decedent's instructions. In some cases, the fiduciary may be required to set up a trust for someone pinpointed in the decedent's will.
The fiduciary may need to have assets valued, and this should be done as soon as possible to avoid delays in disbursement. Some assets may require a specific type of appraiser, such as an antique family heirloom. Valuation of assets should be recorded for court or tax documents as needed. Brokerage accounts may be accessed shortly after the decedent's death; however, first a formal authorization from the court must be obtained, as well as a submission of a death certificate.
The fiduciary also has the responsibility of resolving unpaid bills for the decedent. Some unpaid bills may have consequences that affect property, such as property taxes or insurance premiums. The fiduciary can be held responsible if he or she mismanages funds or fails to properly protect the assets of the decedent's estate.
Filing final and/or past due tax returns for the decedent is also the responsibility of the fiduciary. If the decedent had a spouse, who intends to use an unused exemption for the estate tax, a tax return for the estate must also be filed. The estate must have its own tax identification number, which be can obtained from the IRS website.
Source: American Bar Association, "Guidelines for Individual Executors & Trustees," accessed Sep. 04, 2015