Does the executor have to follow the Will? Yes, of course. But acting as the executor of someone’s estate involves a lot more than following the Will. An executor assumes the legal responsibility to essentially “close the books” on that life and act in the best interest of the estate. Responsibilities include but not limited to:
- Working with creditors.
- Gathering and accounting for assets.
- Filing and paying income taxes as well as estate taxes.
- Distributing assets according to the person’s wishes and the laws in the state in which the deceased person lived.
The executor responsibilities to beneficiaries come with potential legal liabilities if the assets aren’t handled properly. Even when executors follow the Will, they make common mistakes. Below are three of those mistakes, along with tips for how to avoid them.
Even when executors follow the Will, they make common mistakes. Here are three, along with tips for how to avoid them.
1. Misunderstanding Fiduciary Responsibilities
Once you’ve been appointed the executor of an estate you also become a “fiduciary,” and expectations around your actions are high. As a fiduciary, your responsibility is to manage the money on behalf of the state. This that can get emotionally dicey for everyone, especially if the executor is also an heir or beneficiary.
Unfortunately, being fair and honest when following the Will isn’t enough. You have to be able to prove that all of your actions and motives are transparent, objective, and completely above board. This is where we’ve seen many get tangled up in executor misconduct. As executor, your record keeping must be scrupulous, with paper copies of every transaction. Your communications with beneficiaries should be clear and consistent. That means everything related to the estate and probate should be put in writing and sent to everyone at the same time. Keeping everyone up-to-date on what’s happening with their inheritance can help allay concerns and resentment down the road.
2. Mismanaging Real Estate
This is an issue we run into all too frequently. Scammers and flippers make their living combing through death notices and hitting grieving relatives with hard sales pitches. Executors overwhelmed with their grief and the job in front of them are often quick to take the first offer they receive. It doesn’t help when there is little cash in the estate or if the house is in disrepair.
As the executor, though, you have a fiduciary duty to make your best effort to receive the “fair market value” of that asset. So, while you do want to move quickly on a house sale you also want to move deliberately to maximize the value of the house.
First, you’ll need to have the property appraised for probate court. Then you should talk to a trusted real estate professional about the best way to move forward. For example, if the house has a lot of deferred maintenance, is it better to invest estate assets in repairs before putting it on the market or selling it as is.
If the property is to be sold and the proceeds distributed through the estate, the executor decides on the sale price and the amount of the commission. In order to head off questions from the beneficiaries about those numbers, it’s wise to get the blessing of the probate court before signing a contract.
3. Not Securing Tangible Assets
Yes, your father willed his valuable coin collection to your brother. But when your father died, the ownership of that collection didn’t immediately transfer to the brother. When the executor follows the Will and probate requirements, the coin collection is the property of the estate until probate is settled. It’s the executor’s responsibility to ensure the safekeeping of the collection until that time.
We’ve seen this legal hurdle trip up many executors, especially when multiple family members have keys to the decedent’s house. It’s very common for even well-meaning beneficiaries to come in and help themselves to whatever they were promised. It becomes a huge problem if there are valuable antiques, collections or artwork left unprotected in the house.
As an executor, one of the first things you need to do is change the locks of the house and secure anything of value. As part of the required estate accounting, you may need to have valuable items appraised and secured until probate is settled. Only then can they be distributed or sold.
Does the executor have to follow the Will? Absolutely. But make sure that you are also correctly managing the myriad other details that probate will throw your way.
WayForth is a downsizing, senior move management, and estate clean-out company. We offer our probate resources as support for families settling an estate, but we do not offer legal services.