Carrying out the job of an executor is no easy task. At first, it seems
like an honor, but as time passes the executor soon realizes that it’s
not all sunshine and roses. When people write their wills, they will usually
select a trusted person, such as their spouse, an adult child, a sibling,
or a close friend to act as the executor of their estate.
The executor has the legal responsibility to pay off all debts and taxes
and distribute the remaining portion of the estate to the decedent’s
heirs. Beyond paying off creditors and adhering to strict probate court
rules and deadlines, there can be a minefield of family issues.
Executors Can Be Sued if They Harm the Estate
Not only are executors held the highest standard of fiduciary duty, they
can be sued and held personally liable if they make a mistake that harms
the estate. That said, here are some of the biggest mistakes that executors
make during probate:
Paying off credit cards too quickly. Often, an executor will start paying off a decedent’s credit cards
too quickly without realizing that they don’t have to pay these
debts right away. The truth is that credit cards are not on the top of
the priority list of debts, and paying these too soon can be a breach
of fiduciary duty, and it can expose the executor to personal liability,
especially if a credit card was paid before the decedent’s federal
tax debt and there was no money to pay the tax debt off because the credit
card was paid first.
Taking risks with investments. It can be tempting for an executor to “play the market” in
an attempt to increase the value of the decedent’s estate. If the
executor engages in a risky tactic and loses a lot of money, the executor
can be subjected to a lawsuit for breach of fiduciary duty.
Losing a valuable asset. It is the executor’s responsibility to preserve valuable assets.
For example, if an executor allowed one of the decedent’s daughters
to sell the diamond jewelry and use the proceeds on her rent when the
will said the jewelry was to be divided among the decedent’s four
daughters, the three other daughters could sue the executor.
Executors are responsible for finding all of the decedent’s assets,
including the smaller, less conspicuous items, and add them to the total
value of the estate. Our advice: Don’t succumb to family pressure
to distribute valuables before the timing is right. If you make this common
mistake, you could have insufficient assets to pay the decedent’s
debts, and this could lead to trouble.
If you have accepted the job as an executor or a personal representative,
consult with an experienced probate attorney before you begin carrying
out your fiduciary duties.