Executors hold powerful and trusted positions over the assets left to estate beneficiaries. Typically selected for their trustworthiness and financial abilities, most are honest and diligent in their estate management. Most are loyal to a Decedent’s wishes.
However, some Executors engage in misconduct which puts at risk estate assets and the beneficiaries who are expecting to receive those assets. Some Executors are incompetent or negligent. An inheritance in some cases may be the largest amount of money that anyone may receive in their lifetime. Once lost, a beneficiary may never recover their expected inheritance.
At Russell Law, we are receiving more and more inquiries from beneficiaries asking questions about an Executor’s conduct and requesting that our firm oversee the Executor and the estate administration to ensure a fair and honest process and distribution.
What are the Fiduciary Duties of an Executor?
Executors have several primary duties:
- Identify and Gather assets: The Executor is initially tasked to identify and gather the estate assets. Identification is helped by receiving mail and reviewing tax returns.
- Preserve and Manage assets: Once the assets are under the Executor’s control, the Executor must preserve (e.g., make sure the real estate is insured) and manage assets (e.g., sell, liquidate and/or invest assets).
- Act in good faith: During this process, the executor has a “fiduciary duty” (i.e., to act in good faith), meaning his or her conduct will be in the best interest of the estate and heirs. It is unlawful for an Executor to benefit themselves, to waste estate assets or to engage in any conduct which is detrimental to the estate.
- Accurately record: The executor is responsible to document a complete and proper record of the assets, debts, income, and expenses of the estate. Typically, the records include receipts, disbursements, and distributions.
- Distributing assets: Once the debts and taxes on the estate have been paid, the executor is required to distribute the remaining the assets to the beneficiaries in accordance with the Will Prior to the distribution and to properly finalize an estate, the Executor either provides an informal accounting to the beneficiaries or files a Court Accounting (served on the beneficiaries for response). The beneficiaries are able to have a full and transparent view of the Executor’s actions prior to signing off of the estate and receiving their bequest.
What are some Examples of Executor Misconduct?
An executor can be held liable for any breach of his or her fiduciary liability. Here are five of the most common types of executor misconduct.
- An executor may misappropriate estate funds through outright theft, fraud, and embezzlement. This conduct is not only a breach of fiduciary duty, it’s a crime.
- Executors sometime inappropriately co-mingle personal funds with the estate assets, making it difficult to track estate assets.
- Executors may have conflicts of interest with the estate where the Executor acts in his or her own interest not the beneficiaries’ best interest.
- Executors frequently mismanage assets, such as failing to sell stock, not ensuring assets, failing to get the best price for an asset, or not acting quickly enough to handle the assets.
- Executors may fail to pay creditors, taxes, or expenses.
- Executors may delay the administration.
- Executors may hide or misrepresent assets.
- Executors may charge inflated executors’ fees.
- Executors may fail to appropriately account for all the estate transactions.
How do I Prevent Misconduct and Receive My Full Inheritance?
A proactive beneficiary can ensure faithful and efficient administration of an estate.
- Transparency. The best protection against dishonest, wasteful or an incompetent Executor is in the initial selection process. But, if you are left with the Executor chosen, it is critical to create transparency in the estate administration process. “Light is the best disinfectant” and a good Executor and his or her attorney will provide the necessary transparency to create confidence and trust in the Estate administration process. A letter requesting information, or an attorney hired to view the administration with a learned eye is the first step. Failure to provide those assurances should be a “red flag” and requires a beneficiary to take further steps.
- Court Enforced Transparency. In the absence of voluntary transparency, a Court will force transparency. After a short period, an attorney can file a court request for an Accounting. The Petition does not need to allege wrongdoing, merely the passage of the appropriate time period. Requests for Accounting are typically granted. The Court Accounting is a full explanation of assets, debts, income and expenses of the estate.
- Litigation. If a beneficiary is not happy with the accounting or an aspect of the accounting, the beneficiary may move to litigate against the Executor. Litigation is initiated by filing objections to the accounting or a separate Petition and asking the Court to resolve the issues identified.
- Removal of the Executor. If a beneficiary believes that the Executor’s conduct warrants sanction, the beneficiary can move for removal or any other relief which would require immediate action.
All the above steps must be made with an eye towards the costs associated with the actions and the size of the estate and the inheritance.
Russell Law can help prevent Executor misconduct to preserve your inheritance.
Russell Law has attorneys experienced in administering estates as well as supporting beneficiaries to secure transparency, litigating against wayward executors, and ensuring beneficiaries receive their appropriate inheritance. If you have any questions about your inheritance or an Executor, give Russell Law, expert estate administration lawyers in Pennsylvania, a call today.