The duty of care owed by Executors to the beneficiaries of an Estate is integral to the probate process. Assessing the mental capacity of an individual to act as the Executor is vital if there are concerns that the person may not be able to discharge their duties effectively.
At the time of signing a Will, the Executors should have mental capacity, but what happens if an Executor loses mental capacity either before or after the death of a loved one? Here is everything you need to know about removing an Executor when they lose capacity.
What are the duties of an Executor?
Technically speaking, an Executor must see that the terms of the Will are carried out as stated. Their basic duties consist of submitting a Will for probate, collecting the assets of the deceased person, paying the debts of the Estate, as well as distributing the Estate to the beneficiaries.
This can also mean making funeral arrangements, dealing with the deceased’s bank, selling a house, and locating a property that belongs to the deceased. The Executor is responsible for communicating with the beneficiaries about how the Estate is being distributed as well as managing any arising disputes.
The Risks Associated with an Executor Losing Capacity
It may be difficult to define capacity or to identify when a person has lost capacity, despite both being discussed at length in legislation and case law. A loss of capacity can come about immediately, for instance as a result of an accident or as a result of a degenerative condition, such as dementia. The loss of capacity in Executors can lead to significant issues arising in the administration of your loved one’s Estate. Here are some of the issues that may arise:
The Executor may no longer be able to understand their obligations. They may fail to take the necessary advice or fail to take appropriate decisions in the administration of the Estate. You know that Executors are required to comply with a host of responsibilities and failing to carry out their tasks properly can result in immediate difficulties or serious long-term problems.
An Executor who is losing or has lost capacity may take excessive risks with investing, administering, or protecting Estate property. This can therefore lead to losses that can be avoided by removing the Executor.
Whether caused by one of the issues set out above or simply by an unwell Executor being in a position of trusted responsibility, tensions can emerge or boil over between Co-Executors or among the beneficiaries. In the context of administration and the loss of a loved one, this would only exacerbate what is already a very difficult moment for you.
Also, Co-Executors should understand that they may be held liable for the failures of the incapacitated Executor. It is therefore important that the situation is addressed promptly by removing the Executor who is losing capacity.
Procedure for Removing an Executor
To remove an Executor from a Will after the death of a loved one, you are required to file for a court proceeding. This is assuming that you have a stake in the Estate assets. Filing a court proceeding is usually limited to the beneficiaries of the Will and to creditors. At this proceeding, your attorneys and those of the Executor will try to show why the Executor should be removed, or why he or she should remain.
Before the proceeding takes place, you should request an Estate audit to assist in establishing the reasons for removal. Before attempting to remove an Executor from an Estate, it is advisable to retain the help of an experienced probate attorney. Removal laws and procedures vary from state to state, and successful efforts to remove an Executor will depend on specific facts and the discretion of the court.
That being said, state courts will not remove an Executor simply because you disagree with their decisions or because you are unhappy with their performance. To get an Executor removed, you must submit strong and compelling evidence that proves that the Executor has failed to execute their fiduciary duties. If you have a good cause, then you can get the Executor removed.
Executors May Owe Damages
In some cases, Executors are removed after there has already been considerable financial damage to the beneficiaries of the Estate. In North Carolina, you can file a lawsuit to recover financial compensation for losses sustained as a result of an Executor’s breach of fiduciary duty.
Compensation may be available for all related financial losses and for attorney’s fees. Beyond this, in especially egregious circumstances, punitive damages may even be offered. Punitive damages are usually awarded in civil cases to punish wrongful acts and to deter others from committing similar violations in the future.
Naming a New Executor
If the court removes the Executor, then another Executor must be appointed to take over the responsibility. The first step would be to review and consider the terms of the Will itself. A well-drafted Will usually incorporates provisions allowing a substitute Executor to be appointed if the primary Executor loses capacity.
The Will may appoint an alternate Executor to act in case the first-named Executor has died, resigned, or is incapable of acting due to a loss of capacity. If the Will names an alternate, essentially the court would name that person to serve unless there is some legal reason that bars the person from filling the vacant position.
If the Will doesn’t name an alternate Executor, then the court will turn to state law, which will provide a priority list of those who are entitled to serve as an Executor. In most states, the surviving spouse is first considered, followed by adult children and then more distant family members.
However, this depends on who the beneficiaries of the deceased are. Interested parties, one or more of the beneficiaries of the Will, are required to make an application to the court, accompanied by supporting evidence that the Executor lacks capacity.
Contact Our Experienced Estate Planning Team
Removing an Executor can be a challenging process. If you are considering doing so, it is imperative that you hire an experienced Estate attorney to help you in the process. McCollum Law can help with your Estate Planning needs – contact us today to learn more and get started.