Serving as the executor of an estate in Virginia – sometimes also called a personal representative – comes with a whole list of legal statutes that dictate when and how the executor must complete certain duties. An executor is required to serve regardless of whether the decedent left a last will and testament because the estate still must be probated, although the role is usually defined as an administrator when there's no will, rather than an executor. Assets must still be transferred to living heirs unless the deceased left some other type of estate plan, such as a trust, which makes probate necessary.
How to Become Executor of an Estate in Virginia
Executors don’t have to meet an extensive list of qualifying requirements in Virginia, but they must hire an agent within the state to accept service of any legal papers that are involved in the probate process if they live out of state. The agent must also appear with them at the initial probate hearing.
Virginia law requires that anyone nominated as executor in a last will and testament must be appointed by the court, and interested parties can object to the appointment based on potential conflicts of interest. An executor can’t take any action on behalf of the estate unless and until she's officially been sworn in by the probate court and posted bond. An exception exists for making and paying for funeral arrangements and preserving an estate’s assets to ensure that the executor doesn’t disappear before probate is officially opened.
A corporation nominated to act as an executor has to be licensed to do business in the state of Virginia.
Read More: How Is an Executor of an Estate Determined in the State of Virginia?
The Executor Is a Fiduciary
An executor is considered to be a fiduciary in all states, including Virginia. As such, they’re obligated to put the estate’s best interests before their own and to act on its behalf honestly and in good faith. The term is Latin for trust and it can relate to anyone who has the power to act for another.
This isn’t to say that a Virginia executor can never purchase an asset from the estate, for example, or hire a relative to assist with probate, such as by acting as the estate’s attorney. But written consent must first be obtained from all the estate’s beneficiaries before these types of actions can be taken.
Fiduciary requirements are a bit less exacting when the executor is the only beneficiary of the estate and the decedent left no debts that the estate is responsible for paying.
Bond Requirements for Executors
Virginia executors are required to post bond before they can officially take over. Section 64.2-504 of the Code of Virginia requires that the bond be equal to the full value of the estate unless the estate includes real estate that must be sold, or rents or other profits that must be collected. In this case, the monetary value of those rents and profits are added to the value of the estate. The probate court will determine the exact amount and whether it must be secured by an asset owned by the executor or if it can be unsecured.
The amount of the bond is effectively equal to whatever the executor would be personally liable for repaying if he violated the fiduciary obligation to the estate and financial loss occurred as a result.
The executor can ask the court for a reduction in the amount of the bond or a waiver from this requirement under some circumstances, such as if there are changes in the estate’s market value during the course of probate administration or as assets are distributed to beneficiaries, diminishing the value of the estate. The executor must first file an asset accounting with the court before making such a request, however.
Virginia Executor Duties
After bond has been placed and the executor has been sworn in, the real work begins – and it’s somewhat extensive and riddled with deadlines. All duties fall into one of three categories: gathering and preserving the deceased’s assets; paying the deceased's debts; and transferring ownership of the remaining assets to beneficiaries after all debts and taxes have been paid.
A Virginia executor must:
- Determine exactly what probating the estate is going to involve: This includes reviewing the last will and testament to identify beneficiaries and to determine if there are any heirs not mentioned in the will who would have been entitled to inherit under the law if the decedent hadn’t left one. It includes going through the deceased’s paperwork and tax returns to identify assets and debts.
- Send a Notice of Probate to all beneficiaries, as well as to any heirs who aren’t mentioned in the will: The notice lets these individuals know that probate has been opened and that the executor has been appointed. This must occur within 30 days, and a subsequent affidavit must be submitted to the court within four months, attesting that notice has indeed been sent.
- Apply for a tax identification number, or TIN, from the Internal Revenue Service: The estate is a separate taxpaying entity from the decedent. Although it’s not technically required, an executor might also want to file Form 56 with the IRS to notify the federal government of her appointment for tax purposes.
- Open a checking account for the estate: Savings and money market accounts might also be necessary for estates that hold a significant amount of cash. The TIN will most likely be required for this. The executor should then transfer all of the estate's cash assets from accounts held in the decedent’s name into these accounts in the name of the estate.
- File an inventory of decedent’s property and assets: This filing must be submitted to the Virginia Commissioner of Accounts within four months. The inventory doesn’t have to include assets that aren’t in the executor’s care or control, such as real estate that passes to a joint tenant outside probate through rights of survivorship, or retirement accounts that go to a named beneficiary by operation of law. It covers only assets that must be probated. This requirement can sometimes be waived for small estates.
- Arrange and pay for appraisals: This might be necessary for any assets with values that are murky and not easily defined. It isn’t necessarily required for the court’s inventory, but the IRS will require it if the estate must file an estate tax return, and states that impose an estate tax might require it as well if the decedent owned any property located there. Virginia itself doesn’t have an estate tax.
- Sell assets as necessary to pay the decedent’s debts: Debts are normally paid out of cash accounts left by the deceased, but the executor might have to liquidate assets if the debts are extensive and not enough cash is available. The executor can’t sell real estate without first getting approval from the court, unless it’s specifically provided for in the decedent’s last will and testament.
- File an annual accounting as long as the estate remains open: These accountings tell the court exactly what actions the executor has taken on behalf of the estate. The first accounting is due within 16 months and covers the estate’s first year. Subsequent accountings, if necessary, are due within four months of the close of the accounting period the executor chooses, but no later than 16 months after the last accounting was submitted.
- Prepare and file tax returns: This includes any estate tax returns that might be due, as well as personal income tax returns for the decedent’s last year of life, and earlier years if the decedent failed to file them when due. It also includes estate income tax returns if the estate takes in any money before it closes. The estate tax return is due within nine months of the date of death. As a practical matter, however, the federal estate tax exemption is set at $11.58 million as of 2020, and only estates with values over this amount are required to pay estate taxes on the balance over this threshold.
The executor can transfer bequests to beneficiaries after all these steps have been taken and after receiving approval from the court.
Executors can be removed from office and replaced if they miss any of these deadlines, and the court can also assess fines on executors. Virginia has financial penalties in place for executors who violate their fiduciary duties, ranging from $30 for late filing of required paperwork up to $220 for egregious actions that require the executor to appear in court to defend actions they’ve taken.
Virginia Executor Fees
Serving as an executor in Virginia is an extensive and complicated job, fraught with the potential for missteps that could potentially cost the executor money of his own. Needless to say, anyone writing a will should make sure the person they’re considering naming as executor is willing to accept the job. This can avoid complications down the line if the named executor balks and doesn’t want to take on such responsibilities.
And Virginia law does recognize that executors should be compensated for all this. First, Virginia Code Section 64.2-1208 provides for reimbursement of any out-of-pocket expenses as long as they’re considered reasonable. Taking a limo to court wouldn’t be considered reasonable, but taxi fare or the cost of gas would certainly be covered. In any case, the executor should keep all receipts.
Sometimes the last will and testament will state how much the executor should be paid, and the court is obligated to approve this amount unless it’s excessive. Absent that, the court can designate compensation according to the extent of the work the executor did on behalf of the estate. This isn’t as arbitrary as it might sound. The determination is based on the state’s Guidelines for Fiduciary Compensation.
Guidelines for Fiduciary Compensation
The rationale behind the Guidelines for Fiduciary Compensation is that the larger the estate, the more work and responsibility is involved. The compensation breaks down like this:
- 5 percent of the first $400,000 of the estate’s value.
- 4 percent of the next $300,000.
- 3 percent of the next $300,000.
- 2 percent of the value over $1 million.
As an example, an estate worth $500,000 would result in compensation of $24,000: $20,000 on the first $400,000 in value and $4,000 based on the $100,000 balance over $400,000.
Virginia executors are additionally entitled to 5 percent of any income the estate takes in while it’s open, although this doesn’t include capital gains. Interest earned on investments is fine, but if a property initially purchased by the decedent for $100,000 is sold during probate for $500,000, this is considered a $400,000 capital gain and the executor doesn’t get a cut.
- NOLO: Virginia Restrictions on Who Can Serve as Executor
- The Virginia Bar Association: Guide to the Administration of Decedents’ Estates in Virginia
- LIS Virginia Law: Code of Virginia Section 64.2-511
- Price Benowitz LLP: Role of an Executor in Virginia
- LIS Virginia Law: Code of Virginia Section 64.2-504
- Loudoun County, Virginia Document Center: Instructions and Duties of an Executor or Administrator (Fiduciary) of a Decedent’s Estate
- Law.com: Fiduciary
- Internal Revenue Service: What’s New – Estate and Gift Tax