In the last blog post, I answered two very important questions to consider when picking an executor: ‘what is an executor?’ and ‘what are the duties of the executor?” This blog will explore two more issues regarding picking an executor.
CAN AN EXECUTOR BE (PERSONALLY) LIABLE TO AN ESTATE?
Executors are NOT personally liable to an Estate that they are administering UNLESS their action (or inaction):
- Constitutes neglect or unreasonable delay in collecting the credits or other assets of the estate or in selling, mortgaging or leasing the property of the estate;
- Constitutes neglect in paying over money or delivering property of the estate the fiduciary shall have in the fiduciary’s hands;
- Constitutes failure to account for or to close the estate within the time provided by this probate code;
- Results in economic loss to the estate arising from the fiduciary’s embezzlement or commingling of the assets of the estate with other property;
- Results in economic loss to the estate through self-dealing;
- Results in economic loss to the estate arising from wrongful acts or omissions of any co-fiduciaries which the fiduciary could have prevented by the exercise of ordinary care;
- Constitutes a negligent or willful act or nonfeasance in the fiduciary’s administration of the estate by which loss to the estate arises.
WHO IS ALLOWED TO BE AN EXECUTOR?
“Natural persons,” including BOTH residents and non-residents may serve as executor.
Banks (provided they have a trust department) and Trust Companies who are properly authorized to do so, may act as executor. Id.
In determining WHICH natural person (or bank) should serve as executor, the Court shall give preference to the following (in order):
- The person (or qualified bank) designated in the will;
- Any beneficiary named in the will, or a person nominated by the beneficiaries;
- Any creditor of the deceased, or a person nominated by such creditor;
- Such other person (or qualified bank) as the court may find to be qualified.
If you have any questions about establishing your estate plan and picking an executor, or if you are an executor and need legal assistance, please feel free to contact us at firstname.lastname@example.org or by calling us at 515-727-0900.
Estate planning is not about dying. It is about attaining the peace of mind that what you want done will get done when you are no longer there to make your wishes known.
In this and the next few blogs, I’ll go through some common estate planning questions and considerations.
WHAT IS AN EXECUTOR?
An executor is a person (or a financial institution) appointed in a valid Will who steps in to make sure that:
- the deceased’s creditors get paid;
- the estate’s tax obligations are fulfilled; and
- the assets of the estate get distributed in accordance with the Will.
An executor is court appointed, and, as such, is an officer of the Court. In fact, the executor is required to sign and file an oath that they will faithfully discharge the duties imposed by law according to the best of their ability.
WHAT ARE THE DUTIES OF THE EXECUTOR?
Simply stated executor’s duty is to administer the estate in accordance with the law, and the Will of the deceased. This Includes:
- Publishing Notice of the opening of the Estate, the time for Creditors to file Claims; and providing notice to a surviving spouse and of the time in which any action must be taken to set aside a Will, or exercise their statutory rights.
- Preparing and filing an Inventory of all of the assets of the deceased within 9 months of the opening of the Estate.
- Selling, mortgaging, or leasing property of the estate, if it is in the best interest of the beneficiaries and/or the creditors of the estate to do so.
- Paying the debts of the estate, which include any taxes (final income taxes of the deceased, Federal Estate taxes, Inheritance Taxes, and Income taxes of the Estate). HOWEVER, these liabilities are limited to the amount of the estate itself- the executor is not personally liable for the debts of the estate unless the estate is insolvent and they have paid the debts without court approval.
- Making a Final Report to the Court which includes: an accounting of all property included in the estate, and their disbursement; a statement that all taxes have been filed and paid; as well as a statement that all debts and charges have been paid.
- Distributing the assets remaining after payment of all debts and taxes to the beneficiaries, in accordance with the Will (Note: often bequests to children are to a trust for the benefit of the child until the child reaches certain ages).
- Upon satisfactory proof that the estate has paid taxes, creditors, costs of administration (including fees of the executor, the Attorney for the Estate, and charges by the Court itself), AND properly distributed the remaining assets to the beneficiaries, the executor is “discharged” and relieved of any further obligation.
WHO IS COMMONLY CHOSEN TO ACT AS EXECUTOR?
Most of our clients chose a surviving spouse, a relative, or a close friend as Executor (in that order). HOWEVER, if you don’t have a Will the COURT will pick one for you.
If we can help you attain the peace of mind that comes from expressing your post mortem wishes contact us via www.kreamerlaw.com, or at 515-727-0900.
Last week, we answered a couple questions about what happens to food and liquor inventory during the sale of a restaurant. Our clients have also inquired as to whether the licenses from the health inspectors or alcoholic beverages division can be transferred to the new owner of the restaurant.
FOOD/HEALTH INSPECTION LICENSE: A food license is not transferable from one owner to the next. (IA ADC 481-30.3). Any time a new owner takes over operations or is added in as a partner, a new license must be obtained. The same is also true if an establishment simply changes location. In order to obtain a new license, an owner must apply for the license with the Department of Inspections and Appeals, an inspection will be done, and upon approval, the license will be distributed. On the other hand, if a corporation owns a restaurant, a change in officers or stockholders of the corporation does not require a new license. (Judy Harrison, Bureau Chief, IA Dept. of Inspections and Appeals, 515-281-6538).
LIQUOR LICENSE: A liquor license may not be transferred from one person to another. (IA ADC 185-4.13). Consecutive owners must reapply for the license through the Alcoholic Beverages Division. However, a liquor license may be transferred from one location to another, as long as the ownership remains the same. In order to do this, the licensee must file an application for transfer of liquor license, wine permit, or beer permit with the Iowa Alcoholic Beverages Division. The transfer is limited by jurisdiction, depending on the boundaries of the issuing authority. If the authority was on the county-level, it may be transferred within the county, but if the authority was a city authority, it may only be transferred within the incorporated city limits.
CONCLUSION: Licenses, whether for food/health inspections or allowing the sale of liquor, cannot be transferred to a new owner. Each owner must apply for a license through the respective Iowa administrative agency.
At Kreamer Law Firm P.C., we can help make each step in transferring ownership of a restaurant easier for both the buyer and the seller. If you, or someone you know, have any questions about buying or selling a restaurant, contact us at email@example.com or call us at 515-727-0900.
Many times we have clients who come in for assistance in purchasing an existing restaurant. Typically the scenario is that Bill Buyer (B) is planning to buy a restaurant from Owen Owner (O). B wonders if he can buy any of the liquor or food inventory that O has in stock. He also wonders if any of the licenses from the health inspectors or alcoholic beverages division can be transferred from O to B.
What restrictions are placed on the sale of liquor or food inventory during the sale of a restaurant?
SALE OF LIQUOR OR WINE INVENTORY: In order to legally sell wine, beer, and/or liquor the business owner must have a license. These are normally issued by the City in which the restaurant/bar is located. The seller of the restaurant/bar (the “licensee”) may sell their stock of alcoholic liquor and wine to the new owner, as long as the new owner will be operating the business in the same location. (IA ADC 185-4.36). When making this transfer, it is strongly advised that the new owner make certain to detail within their records which inventory was received as a part of the sale of the business, since liquor sale records are required to be open for inspection. (IA Code § 123.33). They must also make certain that the inventory is affixed with the proper seals (IA refund 5¢), as all liquor must be obtained from a licensed wholesaler. (Lynn Walding, Administrator, IA ABD, 515-281-7402).
SALE OF FOOD INVENTORY: Food inventory is frequently sold as part of the sale of a restaurant. There are really no code provisions regulating this. The sale of food inventory should be itemized in the contract for the sale of the restaurant, with specific provisions identifying the items and quantities requested. Frequently, the contract will include a minimum dollar amount of inventory (including food, to-go containers, etc.) that must be on hand for the sale of the business, with discrepancies affecting the sale price.
Be sure to check back next week where I’ll be discussing whether of the licenses from the health inspectors or alcoholic beverages division can be transferred as part of a sale of a restaurant and/or bar. In the meantime, if you need any help or have any questions about buying, or selling, a restaurant feel free to email us at firstname.lastname@example.org or call us at 515-727-0900.
Again, I go on air to discuss with Michael Libbie the final part of our Three-Part Interview on “What Happens to Your Business If Anything Happens to You?” This time we’re discussing who will have the power to make the decisions for your business if you can’t.
Click the link below to watch the podcast, and if you need legal help with any business questions or concerns, please feel free to email us at email@example.com or call us at (515)727-0900.
Recently I was able to record a short video explaining what it is we do at Kreamer Law firm and how we can help you with legal assistance in your Business, Corporate, Estate Planning, and Probate needs.
Click the link below to watch our video, then head over to our Practice Areas tab for more information!
If we can help you in any of our various practice areas, feel free to call us at (515)727-0900, or email us at firstname.lastname@example.org.