Executors and Breach of Fiduciary Duty

After someone passes away, an executor or personal representative will be appointed to administer their estate during probate proceedings. The executor/personal representative will gather the decedent’s assets, settle the decedent’s taxes and debts, and distribute any remaining assets to the beneficiaries of the estate.

The executor who conducts these activities does so in a “fiduciary capacity,” which means they have a fiduciary duty to act in the best interests of the estate and the heirs who stand to inherit from the estate.

By definition, a fiduciary is an individual, a bank, or a trust company that acts on behalf of another, and for their benefit. Executors, personal representatives and trustees are all fiduciaries.

Role of the Executor or Personal Representative

There is a lot of responsibility on the executor or personal representative’s shoulders. He or she must carefully read the will or trust so they know who the beneficiaries are, what they are to receive, and when they are to receive it.

Managing an estate through probate is a complicated process. Because of this, most fiduciaries decide to retain a probate attorney who can ensure that they perform their duties in accordance with the law. Executors must be mindful of the fact that if they accept their appointment and agree to serve as a personal representative of the estate, they will be held to the highest standards of fiduciary duty.

If an executor or personal representative fails to understand and properly implement the terms of the trust or will, they can be held personally responsible for any harm caused to the estate or the beneficiaries. There are dozens of ways that an executor can breach their fiduciary duty, including but not limited to:

  • Engaging in self-dealing
  • Using the estate’s funds for personal use
  • Showing preference for one heir over another
  • Allowing insurance, such as property insurance to lapse
  • Commingling the estate’s funds with personal funds
  • Failure to pay the estate’s debts or taxes
  • Failure to keep accurate or detailed records
  • Making speculative investments

How can I be held personally liable?

If you mismanage the estate or make an error, the probate court can hold you personally liable and you could be removed from your duties at the beneficiaries’ request. The best way to protect yourself is to retain the services of a good probate lawyer as early as possible in the probate process. We also recommend communicating regularly with the beneficiaries, and fully documenting everything that you do.

To gain access to the professional legal advice you need, contact a probate attorney near you.

Categories: Probate, Fiduciary Duty, Trusts