In Texas, an executor closes a decedent’s estate according to the guidelines established in Texas Estates Code Chapter 351. In general, these duties involve asset management and liquidation, paying debts and taxes and distributing the remaining assets to the decedent’s heirs. According to Nolo, a legal information website, most executors act as independent executors, which means you neither have to post a cash bond nor work under strict court supervision. However, because closing an estate can be difficult, you might want to work with an attorney.
Notify Beneficiaries and Creditors
Deadlines govern most of an executor’s duties. For example, Section 128A of the Probate Code says you have 60 days to locate and notify beneficiaries by certified mail with a return receipt about the decedent’s death. Within 90 days, you must file a sworn affidavit of compliance containing the names and addresses of each beneficiary you contacted. In addition, you must publish a notice to creditors in a local newspaper within 30 days and give written notice to all secured creditors by certified mail with a return receipt within 60 days.
Gather and Manage Assets
Gathering a decedent’s personal property, vehicle titles, real estate deeds and bank and investment accounts involves locating and taking physical possession of these items and transferring ownership from the decedent to the estate. Within 90 days, you must complete and file an estate inventory that lists and values personal and community cash, personal and real estate assets separately. Until you liquidate or transfer ownership to beneficiaries, you must continue meeting all financial obligations for secured assets, such as paying taxes for real estate or loan payments for the decedent’s vehicle.
Liquidate the Estate and Pay Outstanding Debts
Liquidation involves disposing of or selling a decedent’s personal property either privately or through an estate sale. Hold all cash received in an estate bank account and pay outstanding debts before distributing the remainder to the decedent’s beneficiaries. Debts include funeral expenses, attorney fees, creditor obligations, outstanding child support and federal income tax. You will not have to file a final state tax return, as Texas does not collect income tax.
File and Pay Taxes
Refer to Internal Revenue Service Publication 559, Survivors, Executors and Administrators, for the most current information about taxes. The IRS requires an executor to file a final tax return that covers the period from Jan. 1 of the current year through the date of death. File the return using Form 1040 to report any income received by the estate between the date of death and the date the estate closes. In addition, if the estate has a gross value of $5,340,000 or more, you’ll need to file United States Estate Tax Return, IRS Form 706, and a Texas Inheritance Tax Return and pay the required taxes.
- Texas Constitution and Statutes: Estates Code
- Harris County Clerk’s Office: Inventory and Appraisement of the Estate
- Internal Revenue Service: Publication 559 -- Survivors, Executors and Administrators
- Internal Revenue Service: Form 706 Instructions
- State of Texas: Inheritance Tax Return -- Federal Estate Tax Credit
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