Being named an executor of someone’s estate is a serious responsibility. Executors are responsible for locating the will, determining whether probate is necessary, and notifying banks, credit card companies, and government agencies. But these responsibilities may be the tip of the iceberg. They must follow the wishes of the will.
As part of the executor’s fiduciary duty, they must also act as a reasonably prudent person would in similar circumstances, act impartially, and be honest and fair in dealings. Ultimately, an executor must act in the best interest of the estate.
Executor Delay
It can be a time-consuming experience to wrap up an estate. Heirs and beneficiaries are often impatient. Probate takes a long time. It has many steps. But when the executor delays, it adds to the problem.If an executor has many tasks to do and is busy with their own life, and doesn’t address them in a timely manner, it can stretch out the process. In some instances, if it is dragged out too long, it may take up to a year to settle.
Paying Out Funds Too Early
According to Michael B. Cohen, attorney and counselor at law, beneficiaries often request distributions before debts, taxes, or other liabilities are paid, leaving insufficient estate funds. This could make the executor personally liable.Not Following Terms of the Will
Even if the deceased has told the executor something different, the terms of the will must be met. The deceased may have indicated they wanted someone not in the will to have a portion of the funds, but the executor doesn’t have the authority to give funds to anyone not listed in the will.Confusing Probate and Nonprobate Assets
Some assets don’t need to go through probate. These include:- retirement accounts
- life insurance policies
- annuities
- bank accounts with beneficiary designations
If the deceased owns a business or holds shares in a private company, these interests must go through probate. The exception may be if there is no succession plan or co-ownership.
Failure to Put Estate Funds Into an Estate Account
This is typically a problem if there is more than one beneficiary. It also is a problem if the estate has creditors. Not having the funds in an estate account looks bad and creates a liability if the executor transfers the funds to their own account.Self-Dealing Estate Funds
There’s a lot of work that goes into settling an estate. The executor is allowed executor compensation; however, the amount varies from state to state.But the executor can’t self-deal. Self-dealing is when an executor pays themselves any amount of the estate funds that they want.
For example, say if the deceased has a $50,000 BMW and the executor decides they want it. They can’t pay the estate less money than what it’s worth because they want it.
Other Errors That an Executor Can Make
An executor who doesn’t pick up the decedent’s mail is making a mistake. The executor can learn about creditors as well as diminish the risk of burglars who might see a house vacant if the mail starts to stack up.Sometimes executors file the first will they find instead of the most recent one. This can create delays and possible legal action. It’s important to meet with the decedent’s attorney and verify which will is the most recent.
Some executors will invest some of the estate’s assets to increase its profitability. Although this might be well-intended, the executor takes on a liability risk.
Acrimony may result between the beneficiaries and the executor if the executor attempts to distribute personal property not listed in the will. The executor should attempt to divide the will in an equitable manner among the heirs, instead of making the decision themselves. This will reduce the executor’s liability risk.
According to Cohen, executors often ignore claims against the estate, such as credit card bills. But if the executor distributes the assets without paying these bills, the creditor could receive a judgement against the estate at a later date.
Executors Should Work With a Professional
Acting as executor of an estate is a large responsibility. It’s not wise to do it alone. Work with a legal professional. They can assist with estate valuation and probate.The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.
From The Epoch Times