Executives and trustees are responsible for the management of decedent estates in many circumstances. Deceased estates are assets that pass from one person to another after the decedent has died. They include personal property held by the decedent, financial assets held by the decedent or jointly held with others, real property held by the decedent or jointly owned with others, inherited property, trust funds, exempt personal income life insurance. Trusts represent a legal agreement between the decedent and his/her representative that promises to pay the beneficiary an amount based on the decedent’s life expectancy. To protect these interests, many people hire an executor.
In customary law, the court will appoint individuals or groups of individuals to act as an executor on the estate. In cases where there is no provision in the customary law for an executor’s appointment, the State will appoint such an individual. In many states, an executor need not be a member of the family. However, he/she must have a reasonable understanding of the law and the powers and duties of the position.
Many states require that the appointed executors perform their duties consistent with the standards of everyday experience and prudent business practice. The general principle underlying this principle is that if the deceased estates had a market value at the time of the decedent’s death, then the value of the estate at the date of its sale should be less than, if not the same, then the market value at the date of the decedent’s death. This principle is called the estate appreciation doctrine. Because the executors of the estate have performed an essential function in the administration of decedent estates, they should also be compensated for their services in a manner that reflects the standard of living that would have been available to them in the decedent’s estate.
Applying this approach to deceased estates today, the probate court must determine what the decedent’s estate would be worth after his or her death, based on all of the decedents’ debts and assets. To make this determination, the estate must be divided into “pieces,” and the “pieces” must be further divided into “dispersed” or distributed among beneficiaries. If no written instructions specify how the property will be valued, then the probate court must assign an estate executor. The appointed estate executor’s purpose is to administer the estate and account for all the decedents’ property, assets, debts, and life insurance payments. If there are specific instructions included in the will, these will be reviewed by the estate executor to ensure they are followed.