Serving as an executor for a probate estate can be tough.
An executor has a duty to gather estate assets, settle estate debts, file the required tax returns, and distribute the remaining property to the beneficiaries per the Will. Often that means wading through a lot of paperwork, dealing with family drama, and not receiving many kudos in return. To add insult to injury, the executor is a fiduciary and can be sued.
Some of the most common missteps are prompted by the best of intentions. For example, an executor may want to pay credit card bills as soon as possible. That would be a mistake. There is a statutory hierarchy for payment of debts, and credit cards fall at the very bottom of the list. Paying a bill out of sequence is a breach of fiduciary duty. Should there not be enough money to pay creditors higher on the list, or to pay tax bills, the executor could end up personally liable for the shortfall.
An executor may think that investing assets to try to get a higher return while the estate is pending is a wise move. However, an executor has a duty to conserve the estate, not increase it. If the executor makes an investment decision that backfires, the executor could be sued.
Some executors make a mistake by not moving quickly enough to take possession of the property in an estate. If a family member is helping himself to personal property and the executor doesn’t take steps to reclaim the property, the executor could be liable to the remaining beneficiaries or the unpaid creditors.
The most challenging estate asset is often real estate, which must be insured, maintained and sold. The executor has to decide if he or she is authorized to make repairs or improvements to a property before it is sold, and then find the money in the estate to do so. If a family member is still living in the property, the executor may have a duty to evict him. If there is personal property on the real estate, the executor has to decide if it should be stored, distributed, or sold.
If you have been named executor in a Will, take the job seriously.