An executor of an estate has the rights to take control of the deceased person’s individually owned assets, open and manage an estate bank account, pay valid debts and taxes, sell property when necessary, hire professionals at the estate’s expense, collect a fee for the work, and distribute what remains to the people named in the will. Those rights only begin once the probate court approves the appointment and issues Letters Testamentary, and every one of them is bounded by a fiduciary duty to put the estate and its beneficiaries ahead of the executor’s own interests.
What Letters Testamentary Let You Do
Letters Testamentary are the document that turns a nominated executor into one with legal authority. Banks, brokerages, and other institutions will not release information or funds without seeing it, so getting certified copies early is essential.
With that authority in hand, you can locate and secure the deceased person’s property, change locks on a home to prevent unauthorized entry, collect mail, and safeguard valuables such as jewelry, vehicles, and art. You can access bank accounts, brokerage accounts, and safe deposit boxes. A standard early step is opening a dedicated bank account in the estate’s name and consolidating funds there. Keeping estate money separate from your own money is not optional; commingling is one of the fastest routes to a breach-of-duty claim.
You also have the authority, and the obligation, to prepare a detailed inventory of what the estate owns and what each asset is worth. For bank accounts the balance speaks for itself. For real estate, collectibles, or business interests, you will likely need a professional appraisal. The inventory eventually goes to the court and to the beneficiaries, so accuracy matters.
Assets You Do Not Control
Not everything a person owned at death passes through the estate, and your authority stops at the probate boundary. Certain assets transfer automatically to a named beneficiary or co-owner, regardless of what the will says.
- Life insurance policies with a named beneficiary other than the estate.
- Retirement accounts like 401(k)s and IRAs with designated beneficiaries.
- Jointly held property with rights of survivorship, which passes directly to the surviving co-owner.
- Payable-on-death and transfer-on-death accounts, where the institution transfers the balance directly to the named person.
- Assets held in a revocable living trust, which are managed by the trustee rather than by you.
If a beneficiary asks about a life insurance payout or a retirement account, the honest answer is that those assets sit outside the estate entirely. The beneficiary deals directly with the insurance company or account custodian.
Paying Debts and Reviewing Creditor Claims
You run the estate’s financial life from the day of appointment until the estate closes. Income that arrives after death, including final paychecks, dividends, rental income, and tax refunds, gets deposited into the estate account. From that same account you pay remaining bills and the ongoing costs of administration, such as utilities on estate-owned property, insurance premiums, and storage fees.
In most states you are required to notify known creditors of the death and publish a notice to alert unknown ones. You then have the right to review each claim and decide whether it is valid. Legitimate debts get paid. If a claim looks inflated, fraudulent, or time-barred, you can reject it, and the creditor’s recourse is to challenge that decision in probate court. Debts are generally paid in a priority order set by state law, with funeral expenses, administrative costs, and taxes typically ranking ahead of unsecured credit card balances.
You are not personally responsible for the deceased person’s debts. The estate pays what it can. If debts exceed assets, the estate is insolvent, and some creditors simply go unpaid; your job in that situation is to follow the state’s priority rules.
Taxes are the exception to the no-personal-liability rule. You must file the deceased person’s final individual income tax return for the year of death. If the estate itself earns income during administration, a separate estate income tax return is required. Larger estates may owe a federal estate tax return as well. Missing a tax deadline can result in penalties that come out of your own pocket, and distributing assets before tax obligations are satisfied can leave the IRS pursuing you personally for the shortfall.
Selling Estate Property
When the estate lacks enough cash to cover debts, taxes, and administrative expenses, you have the authority to sell property to raise funds. Sometimes the will directs a sale explicitly, instructing you to sell a house and split the proceeds. Even without specific instructions, you can sell assets when doing so is necessary or practical for settling the estate.
The fiduciary duty applies with full force. You must seek fair market value for anything sold. Selling a property below market to a friend, or to yourself, is a textbook breach that courts take seriously. An independent appraisal before any major sale gives you both a defensible price and protection against accusations of self-dealing.
Some states require court approval before you can sell real estate; others grant executors broad independent authority. The will itself may expand or restrict your power to sell. If you are unsure whether a particular sale needs court permission, check with a probate attorney before signing anything.
Hiring Professionals at the Estate’s Expense
You are not expected to handle everything alone. The right to hire professionals and pay them from estate funds is well established. Most estates of any complexity need at least an attorney and an accountant. Estates with real property often add a real estate agent and an appraiser.
Those fees are legitimate administrative expenses paid by the estate, not by you personally. You still have a duty to keep costs reasonable. Hiring an unnecessarily expensive specialist when a general practitioner would do, or letting legal fees balloon through inattention, can draw objections from beneficiaries. Get fee estimates up front, and keep records of every payment.
Getting Paid for the Work
Serving as executor is real work, and the law gives you the right to be paid. If the will specifies a fee, whether a flat amount or a percentage, that controls. If the will is silent, state law fills the gap.
Compensation structures vary. Some states set a statutory fee schedule, often a sliding percentage that decreases as the estate’s value increases. Others allow a “reasonable” fee, which the probate court sets based on the size of the estate, the complexity of the administration, and the time you invested. You can also waive the fee, which is common when the executor is a primary beneficiary.
One detail that surprises many first-time executors: the fee is taxable income on your personal return. An inheritance generally is not. If you are already inheriting a large share, waiving the fee and taking a slightly larger inheritance can sometimes make better financial sense.
Where Your Authority Ends: Personal Liability
Broad authority comes with personal exposure. A probate court that finds you breached your fiduciary duty can reverse your actions, order you to compensate the estate for losses, or remove you from the role. In extreme cases involving theft or fraud, criminal charges are possible.
The actions most likely to trigger liability:
- Self-dealing, such as buying estate property for yourself at a discount, lending yourself estate funds, or directing estate business to companies you have a stake in.
- Commingling estate income with your personal account, even temporarily.
- Neglecting assets by letting property fall into disrepair, failing to maintain insurance, or making reckless investments.
- Missing deadlines on tax returns, creditor notices, or claims the estate should have pursued.
- Favoring one beneficiary over another when the will requires impartial treatment.
- Distributing assets before paying debts and taxes, which can leave you personally on the hook for the shortfall.
Distributing What’s Left and Closing Out
Once debts are paid, taxes are settled, and disputes are resolved, you have both the right and the obligation to distribute the remaining assets according to the will. You decide when the estate is ready for distribution, not the beneficiaries.
Before anything goes out, you prepare a final accounting showing every dollar in and out of the estate: asset values at death, income earned during administration, debts paid, administrative expenses, and the proposed distribution to each beneficiary. Beneficiaries typically sign a receipt for what they received, and many estates ask them to sign a release protecting you from future claims. The accounting then goes to the probate court with supporting documentation. If the court approves it, you are formally discharged, and your authority and responsibilities both end. Organized records throughout the process are the single best protection you have against second-guessing by beneficiaries or the court.