When someone dies, everything that he owns becomes known as his “estate.” This estate is the sum total of assets, debts and property owned and owed by the decedent (a legal term for the person who died). Someone has to manage these assets and make sure they get to the right place. That someone is known as either the executor or the administrator. Consider working with a financial planner as you create or update an estate plan.
A Note On State Laws
It is important to note at the outset that laws covering estate planning, like property law, is extremely state-specific. As a result this article will only discuss the subject of executors and administrators from a very general perspective. Most states share the same general definition for these roles, and most appoint them using similar procedures. However, beyond that the details will vary widely. And some states don’t even share the same general principles.
What Is an Executor?
Executors and administrators both manage the estate and assets of someone who has died. Typically these roles share largely the same rights and responsibilities.
An executor (or executrix for females) is someone who has been named in a last will and testament to administer the decedent’s estate.
Overall, the job of an executor is to ensure that the decedent’s estate is protected and distributed to all legal heirs. Depending on the size of the estate this can be a complicated job, but most of the time it requires a few main responsibilities:
- Gather or identify the decedent’s assets and preserve them intact;
- Pay any debts and taxes that the decedent still owes;
- Distribute the estate according to the terms of the will; and
- To the extent that the estate cannot be fully distributed based on the terms of the will, identify any existing heirs and distribute the remainder of the estate.
For someone who has a simple estate or a simple will, this process can be very straightforward. However, this isn’t always the case. Often an executor will have to divide up property or find missing assets based on the terms of the will. In other cases the executor will have to sell off assets in order pay off remaining debts or taxes. This process can take a significant amount of time and effort depending on the size of the estate.
Usually the biggest challenge for an executor is ensuring that the estate is distributed according to the terms of the will. If the decedent made a complicated will or set conditions under which different heirs can inherit, this can lead to a lengthy process of determining exactly who is the legal heir for any given asset. If someone challenges the will, the executor is responsible for defending it (or seeing that it is defended).
An executor will usually receive compensation for their time. Typically this compensation is written into the will. In many places, if the will does not provide for specific compensation, state law allows for executors to claim statutorily approved rate of compensation.
What Is an Administrator?
An administrator serves the same role as an executor. They manage the assets of someone who has died and see that those assets go to the legal heirs. The biggest difference is that an administrator is appointed by the probate court in cases where someone dies without a will. (This is known as dying intestate.) Since they have died without a will, the decedent could not name an executor. So instead the court appoints an administrator to handle things.
An administrator’s job is technically identical to that of an executor: gather the estate’s assets; pay off any debts; distribute the remainder among the legal heirs.
The main difference is that, because an administrator does not have a will to work from, they must base their decisions on statute. An administrator is first and foremost responsible finding any potential heirs. This can be difficult as, in many cases, people may not have known that a relative has died or may not have even been in contact.
Then the administrator must determine who is legally entitled to which portions of the estate and distribute the property accordingly. In case anyone challenges their inheritance, the administrator is responsible for defending the issue.
Like an executor, an administrator is entitled to reasonable payment for their time. The details of those compensation schemes differ between states.
The Bottom Line
An executor is someone who has been named in the will to manage your estate after you die. An administrator is someone who takes charge of your estate if you die without a will. Keep in mind that estate law is state-specific. While most states share the same general practices there are few, if any, federal laws that govern estates and inheritance. It is important to consult a local attorney before making any decisions on your own assets and estate.
Tips on Estate Planning
- Planning for after you’re gone is never pleasant, but if you have a family it’s absolutely essential. Working with a financial advisor is the wisest way to go about this. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor, get started now.
- Estate taxes can be hefty, but you can maximize inheritance for your family by gifting portions of your estate in advance to heirs, or even setting up a trust.
- Some inherited assets can have tax implications. Before you spend or invest your inheritance, read more inheritance taxes and exemptions.
Photo credit: ©iStock.com/andresr, ©iStock.com/unomat, ©iStock.com/fizkes