A loved one has named you as an executor. While this is a great honor and shows the level of trust this person has in you, it is also a great responsibility. If you do not complete your job correctly, you could get in hot water with beneficiaries or the probate court, so it’s essential you know your role and what you can and cannot do as an executor.
What Is an Executor?
A testator is the person who the decedent named in their last will and testament who is responsible for carrying out the terms of the will. This is often a surviving spouse, adult child, or other trusted individual the decedent believed could carry out their final wishes. Other terms for an executor are personal representative or administrator, but these terms often refer to someone the court has appointed to tend to the administration of the estate rather than the person nominated by the decedent.
What Is the Executor’s Role?
The executor of an estate serves as a fiduciary, meaning that they are in a position of trust and must put the best interests of the beneficiaries and the best interest of the estate above their own interests. The fiduciary duty involves many distinct duties, including:
- Duty of care – The duty to inform themselves of all material information reasonably available to them before making a decision that affects the estate.
- Duty of loyalty – The duty to act without economic conflict of interest. A fiduciary should not use their position of trust and confidence to advance their private economic interest and should not engage in self-dealing.
- Duty of good faith – The duty to advance the interests of the decedent’s estate and fulfill their duties without violating the law.
- Duty of confidentiality – The duty to keep information confidential and not disclose it for the executor’s own benefit.
- Duty of prudence – The duty to manage the administration of the estate with the degree of care, skill, and caution that a prudent executor would exercise.
- Duty of disclosure – The duty to disclose relevant information to the beneficiaries.
These are the general fiduciary duties stemming from common law. State law or the terms of the will may impose other or additional duties.
What Are Executor Responsibilities?
The executor has many responsibilities. The executor of an estate is responsible for managing assets of the estate, notifying heirs, and paying outstanding taxes or debts. The executor usually won’t start distributing the assets of the estate to the decedent’s beneficiaries until the executor has completed the foregoing responsibilities. Most importantly, the executor is responsible for carrying out the terms of the will and not substituting their own preferences for those of the decedent.
Executors and the Probate Process
The probate process is where the executor will really start to act on behalf of the estate. As part of the probate process, the executor of an estate may do the following:
- Submit the last will and testament to the court
- Open the case in probate court
- Request letters testamentary from the court to act on behalf of the estate
- Gather, collect, inventory, account for, and safeguard estate assets
- Go through letters, bills, and other personal effects of the deceased person to identify outstanding bills and claims against the estate
- Notify family members, heirs, and beneficiaries of the death of the decedent and their appointment as executor
- Request death certificates
- Open bank accounts in the name of the estate
- Work with other people named in the decedent’s estate planning documents, such as the trustee of a trust
- Prepare documents and file them with the probate court, as required
- Manage the administration of the estate
- Determine the fair market value of real estate and other estate assets
- Sell real estate and other estate assets
- Provide maintenance to the surviving spouse and dependents of the decedent while the will is probated
- Handle the decedent’s final income tax return and estate tax return
- Pay any estate tax
- Use the assets of the estate to pay valid claims against it
- Distribute the remaining assets to the beneficiaries
- Close the estate
The executor’s duties are extensive, so many executors choose to hire a probate lawyer or law firm to help them throughout this process. A lawyer can provide personalized legal advice and walk the executor through the probate process to protect their interests and those of the beneficiaries.
10 Things Executors Cannot Do
Now that you know what an executor can do, we can focus on what an executor can’t do:
- Disregard the terms of the will – The most fundamental responsibility of an executor is to follow the provisions in the will. You cannot change any of the terms of the will. You must act in accordance with the decedent’s instructions.
- Carry out the will’s provisions prior to death – The powers provided in a will only come into effect after the death of the decedent and the appointment as executor by the probate court. You cannot begin making financial or medical decisions for the testator unless you are named as an agent in other estate planning documents.
- Act on behalf of the estate before appointment – You must also wait for the probate court to appoint you as the executor before you can begin acting on behalf of the estate.
- Sign an unsigned will – If the testator failed to sign the will, you cannot sign it for them. This would mean the testator died intestate, and their assets would be distributed to their closest family members according to state law.
- Act against the best interests of the beneficiaries – You owe a fiduciary duty to the beneficiaries, so you cannot act against their interests. You cannot do anything that intentionally harms the beneficiaries. You also cannot act in a way that favors one beneficiary over another.
- Engage in self-dealing – Generally speaking, an executor cannot engage in self-dealing as part of their duty of loyalty. However, there may be exceptions such as when the executor is the surviving spouse or adult child of the testator.
- Jeopardize estate funds – You have a responsibility to safeguard the probate assets, including the real property and personal property owned by the estate. You also have a duty to act in a prudent manner when investing estate assets.
- Manage property that is not part of the probate estate – The executor only has powers and responsibilities related to probate assets, not assets that transfer outside this process, such as life insurance proceeds or real property owned as joint tenants with the right of survivorship.
- Sell probate assets for less than fair market value – While you may have the power to sell assets of the estate, you cannot sell them for less than they’re worth, such as offering them at a discount to loved ones. Doing so could be a violation of your fiduciary duty.
- Prevent beneficiaries or heirs from contesting the will – You cannot control the actions of others. If a loved one decides to contest the will, you cannot interfere with that legal action.
Consequences for Mismanaging the Estate or Violating Your Duty
If an executor mismanages the estate, there can be dire consequences. An heir or beneficiary can petition the court to receive a full accounting of the estate and can also ask that the court remove you as executor of the estate. Additionally, the executor can be held personally liable for the harm they have caused the estate. They can potentially be held in contempt of court or named as the defendant in a civil lawsuit.
Takeaway
The executor of an estate has many responsibilities, but there are also important limitations. The executor must carefully manage estate property and uphold their fiduciary duty. They must also carry out the terms of the will. Executors can seek help from a probate attorney to assist them with this important role.