When a person dies, his assets must be distributed to the appropriate beneficiaries or heirs. To accomplish this, most of these assets go through the probate process first. This process, often administered by the courts, varies according to each state’s laws. Typically, title to a deceased person’s property cannot be changed without first going through the probate steps.
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Probate is the legal process that passes ownership from the deceased person to his heir or beneficiary. It requires notifying the deceased person’s creditors and other potentially interested parties before the deceased’s property is officially transferred. Not all assets are included in the deceased’s probate estate since property that passes by contract or deed is considered non-probate property. For example, the proceeds of life insurance policies that go directly to a named beneficiary do not pass through the probate estate. Similarly, some forms of jointly owned real estate pass directly to the remaining owners when one owner dies. Neither the court nor an executor has control over these non-probate assets, and they cannot be converted to probate assets.
Executors are individuals who manage the probate process for the deceased person’s estate. Typically, the court appoints the executor named in the deceased’s will unless there are objections, but that person has no power to act until he is officially appointed by the court and provides a bond, if required. Once appointed, the person named as executor begins the probate proceeding by filing an application with the probate court where the decedent lived at the time of his death, along with the will if it has not been filed yet. If the deceased did not leave a will, so no executor was named, the court will usually appoint a close relative to act on behalf of the probate estate. This person is called a personal representative or estate administrator.
The executor must follow state laws and regulations when managing a probate estate, and these can vary from state to state. The probate court will oversee the executor’s actions in most cases. For example, state laws typically require the executor to notify potential creditors in a certain manner, and pay only valid creditors’ claims out of the estate assets. Executors usually have the duty to manage the estate assets until they are finally distributed, including operating the deceased's business or maintaining property. He must do so with the same level of care that a reasonable person would use when managing his own property. If the executor does not exercise sufficient care dealing with the deceased’s assets, he can be removed from his position.
The executor has a duty to pay valid claims from the estate’s assets. Claims can include the deceased’s final expenses, credit card balances, personal loans or other debts. The executor may have to sell some of the estate’s assets to pay these claims. If any assets are left in the estate after the creditors are paid, ownership will pass through the probate proceeding to the beneficiaries according to the terms of the deceased’s will. Depending on state law and the type and value of the asset, the executor may have to obtain prior court approval before selling any estate property.