When the assets of a deceased person need to be distributed to their heirs after death, the process is referred to as Probate. During this process, an Executor (who is generally chosen by the Testator prior to their death) is responsible for properly dividing up the Estate to the appropriate beneficiaries.
The Executor has fiduciary duties to the Estate and to its beneficiaries – the law imposes a duty upon them to act with honesty, integrity, fairness and loyalty with respect to the Estate. From a practical standpoint, this means that the Executor must put the interests of the Estate and its beneficiaries above all else.
Sometimes, though, you run into issues with an Executor. They can be sloppy, self-interested or outright fraudulent, and can cause stress and grief for family members who are already going through a tough time.
Fortunately, the law provides an avenue, through litigation, to remove an Executor and compensate beneficiaries for any harm done to them or the Estate. Beneficiaries and heirs that have been wronged by an Executor can sue the Executor for failing to carry out their duties properly, like refusing to distribute property, transferring assets to himself, mismanaging investments, and more.
In this post, we’ll go through some of the Executor’s duties and some of the common breaches we see. If you find yourself in one of these situations, you may require legal help to remove an Executor or compensate beneficiaries who have been denied their fair share.
What Are The Duties Of An Executor?
Executors agree to take on certain responsibilities once they are appointed. Specifically, they are charged with notifying anyone with an interest in the Estate, from direct heirs to creditors, that they are now managing the Estate assets. This will include people like:
- Beneficiaries named in the Will
- Family members
- Financial Institutions
- The Social Security Administration
- The IRS
- The decedent’s employer or former employer, if he or she is retired
- Any known creditors
- Unknown creditors (via a formal notice in the local newspaper, as the law requires)
Once everyone has been notified, the Executor will get to work on specific duties and responsibilities. The most common include:
- Paying debts of the Estate, which may require selling Estate assets to create liquidity
- Identifying, organizing, and distributing Estate assets according to the Will’s instructions
- Preparing and filing tax returns
- Filing an accounting of Estate assets
- Filing certificates of land records
As a final step, the Executor is responsible for “closing” the Estate, which is a vital step in the Probate process. The Executor will need to petition the court to certify that he or she has completed all legal duties and to formally ask to be discharged. At this point, there should not be any assets left in the Estate. If there are, the Executor will need to take additional steps to ensure they are properly distributed.
If the Executor is serving as the Trustee for any ongoing Trusts, he or she must review the Trust instructions regarding any ongoing duties. He or she will also need to review any ongoing Estate Planning concerns or opportunities. For instance, a surviving spouse may need to update his or her Estate Plan or beneficiary designations once the dust settles.
Common Cases Of Executor Abuse
Because the Executor’s responsibilities are extensive, the opportunities to run afoul of them are many, as well. A breach can take numerous forms. Even a single instance of laziness or lack of attention to detail can cause serious issues for an Estate beneficiary waiting for his or her inheritance under the Will. In the most serious cases, a breach can involve fraud, which may give rise to both a criminal and a civil action against the Executor.
Just a few examples of abuse by an Executor include:
- Delaying payment to Estate beneficiaries for no reason
- Hiding or mismanaging Estate assets
- Self dealing
- Co-mingling Estate funds with the Executor’s personal funds
- Failing to diversify the Estate’s investments
- Favoring one beneficiary over another
- Lying to beneficiaries or the court about the Estate’s status
Sometimes, it can be difficult to identify patterns of fraudulent or self-interested behavior, particularly if they are isolated incidents. Nonetheless, even just one misstep by an Executor – whether negligent or intentional – can give rise to a legal claim.
What Are The Remedies Available?
Litigation is often viewed as a last resort. Regardless, it can be a valuable tool in making an aggrieved family or set of beneficiaries whole after an Executor mismanaged or, worst case, depleted an Estate. In some cases, it may be the only option. The most common legal action involves removing an Executor from his or her position. But in many cases, beneficiaries can pursue compensation for what they lost.
The Importance Of Keeping Your Will Updated
With the issues that an errant Executor can cause, it’s critical to keep your Estate Plan updated and current, with someone you trust and are confident that they will faithfully execute their duties in the Executor role. If you need to create or update your Estate Plan, McCollum Law is here and ready to help. Call us today 919-861-4120 or contact us online to schedule a consultation at www.mccollumlawpc.com