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 What is Executor Liability?

When a person creates their will, they name an “executor.” An executor acts as the personal representative of the person who created the will. The executor administers the estate of the person after they die. Executors have legal duties both to the deceased and the estate. Executors may be sued in court if they violate these duties.

Who is the Executor of an Estate?

The executor of an estate can be one or more people responsible for distributing the estate’s assets to the will beneficiaries. This person, also known as the “testator,” is named in the will. An executor of an estate can be a relative or a friend. If the testator has not named one or more executors, the probate court may appoint an executor.

A probate court supervises the executor’s distributing estate assets. The probate court also supervises the process of paying debts or taxes owed by the estate. Whoever is appointed agrees to manage the estate per the deceased person’s wishes, as expressed in the will.

What Are Specific Executor Duties?

Specific duties of an executor may include:

  • Locating the will: The will may be located among the testator’s personal items or held by the attorney who assisted the testator in preparing it
  • Conducting an inventory of the testator’s assets: The testator must locate all of the testator’s assets and liabilities, and debts and provide an inventory to the probate court;
  • Paying creditors to whom the estate owes a debt: Creditors include tax authorities, like the IRS. Creditors also include other people and entities legally allowed to collect on a debt
  • Filing a petition to probate the will with the probate court: The executor must give notice of this filing to all known persons who may have an interest in the will
  • Performing other duties named in the will: These duties may include arranging for a funeral or a burial.

Additional duties may include:

  • Obtaining a copy of the death certificate
  • Distributing assets according to the will’s terms

How Does an Executor Violate Their Duties?

The law imposes a duty on the executor to perform their duties diligently and honestly. This duty is known as a fiduciary duty. A fiduciary duty requires that an executor act in good faith in the course of administration and distribution of a will.

Actions that violate the fiduciary duty can include:

  • Stealing money from the assets of the estate
  • Taking money from the sale of any assets belonging to the estate
  • Distributing assets in a manner that defies the testator’s wishes
  • Improper management of estate funds
  • Failing to comply with court-ordered deadlines
  • Taking an excessive amount of time to perform executor duties

What Is a Claim Against an Estate?

State laws vary, but filing a claim is similar across most jurisdictions. In a claim against an estate, a person states under oath what the decedent owed them. Any supporting documentation must be provided. The claim is filed with the probate court.

Some states require a copy of the claim to be sent to the executor. Almost every state requires creditors to file a claim within a certain time period, or they cannot recover.

What are the Consequences of Breaching a Fiduciary Duty?

If an executor has breached their fiduciary duty, one or more parties with an interest in the will may file a lawsuit with the probate court. If the court finds that the breach has resulted in a loss to a beneficiary, the court may order the removal of the executor from their position. In these cases, the court will appoint a new executor. The court may order the executor personally liable to the beneficiary. The court may require that the executor compensate the beneficiary for their loss.

If the executor’s actions have depleted assets of the estate, or if the executor takes assets for personal use, the court may order these assets disgorged. Disgorging assets requires someone who has obtained an improper benefit to “pay back” that benefit.

An executor can be subject to criminal penalties for using estate property improperly in extreme cases. An executor may face jail time for disobeying an order of the probate court. For example, the judge may order the executor to distribute an asset to a beneficiary. The executor may refuse to do so in disregarding the will’s terms and the testator’s wishes. If the executor disobeys the judge’s order, the executor faces criminal prosecution.

Do Executors Have to Pay Proper Claims in Order of Priority?

If the estate has enough assets, claims should be paid before the executor distributes any property to beneficiaries. If the estate is insolvent and can’t pay all creditors, the claims are paid in order of priority as determined by state law.

Injured creditors can sue the executor if the executor pays creditors in the wrong order. In such situations, the executor’s liability is limited to the amount of estate assets.

What if Executors Have Disputes With Heirs?

An executor’s job is to secure the assets of an estate and distribute them according to the deceased person’s wishes. In some cases, heirs may descend on a decedent’s home before the funeral to collect heirlooms or other valuables. A will may give discretion to an executor in making disbursements to heirs. Executors may create tension by doing their job.

Executors should secure the home and other assets as quickly as possible. They should inform heirs that this is the law. Information about the decedent’s wishes should be shared. The decedent’s wishes may be described in a will or listed in a separate document. A separate document isn’t binding on the executor.

When Can Beneficiaries of an Estate Sue the Executor?

Although state law does not require an executor to be a lawyer, it imposes the obligation on every executor to act with honesty, good faith, and diligence.

This obligation is called a “fiduciary duty.” An executor may breach their fiduciary duty intentionally or unintentionally in many ways.

An executor may breach their duty by:

  • Not paying taxes or filing tax returns on time
  • Distributing assets to beneficiaries too soon
  • Making improper investment choices
  • Having a conflict of interest
  • Self-dealing
  • Losing property
  • Outright crime

If the executor fails to withhold their legal obligations, a beneficiary can sue them for breach of fiduciary duty. If there is more than one beneficiary, all beneficiaries must agree to sue an executor.

Generally, courts can:

  • Remove the executor and replace them with someone else
  • Hold the executor personally liable and award damages

Do I Need a Lawyer’s Help Over Issues With the Executor?

If you are interested in the will and believe the executor has harmed you by breaching a legal duty, you may wish to consult with an estate attorney. Experienced wills, trusts, and estates attorneys can advise you on the appropriate course of action. The attorney can also assist you with filing the necessary legal documents and represent you in court.

An executor can allow an estate attorney to handle many matters, although the attorney will bill the estate for their time and costs. A tax preparer can work on the decedent’s final income tax return, including income tax returns for the estate.

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