Executors have broad authority from the courts to navigate an estate through the probate process. However, there are limits on what executors can do. These limitations stem mostly from an executor’s fiduciary duty to the estate. We’ll dive in to what fiduciary duty is, what it keeps executors from doing and what can happen if they fail.Fiduciary Duty for Executors
All executors are fiduciaries to the estates that they’re in charge of. That means they have an obligation to act in the best interest of the estate at all times. Every decision regarding the estate must be for the good of the estate rather than the good of the executor. The probate court enforces this fiduciary duty.
In most circumstances, the line between the estate’s best interests and the executor’s is easy enough to discern. If the executor is one of the beneficiaries, it can get a bit trickier. In these instances, the executor may face a conflict of interest. If circumstances dictate that any bequests must be altered, the executor must decide upon the change fairly and not in her own self-interest.
Executors have formal authority from the probate court to spend money from the estate and distribute assets. But that doesn’t equate to free reign. There are a range of actions that can qualify as executor misconduct. The simplest example is failing to follow the instructions of the will. If the executor violates the terms of the will by either distributing the assets to people other than the beneficiaries or failing to distribute them at all, she can be held liable in probate court.
Another example of misconduct is failing to submit the will to probate court in the first place. Even if the deceased names the executor in the will, the probate court still needs to give formal permission before the executor can touch the estate. Failure to seek this permission could mean trouble. The executor also needs to report all the appraisals, expenditures and other actions to the court. Only then will she be able to distribute the inheritances and close the estate.
If the executor uses any money from the estate for a personal expense, that qualifies as a serious case of executor misconduct. More generally, an executor can get in hot water for misconduct for a mismanagement of the estate that results in a significant loss of value. This could take a few forms. The executor could sell assets for significantly less than they’re worth. If the probate process is lengthy, the executor could also lose money through bad investments intended to preserve assets in the estate.Can an Executor be Fired?
The probate court has the power to remove an executor if it deems that the executor engaged in misconduct or is incompetent. The court won’t usually do this of its own volition, however. The most likely scenario is that a beneficiary will present evidence of misconduct or incompetence to the court. After that, the court will decide whether to remove the executor or not.
If the probate court rules to remove the current executor, it will look first to the will to see if the deceased named an alternate executor. If there’s no alternate or the named alternate can’t serve, then the court will likely look to a surviving spouse or an adult child of the deceased. Each court has its own priority system for determining executors.
Acting as an estate’s executor is a very important job. Understandably, then, there is a system in place to hold executors accountable. If you are acting as an executor, the best way to make sure you’re acting within the limits of your authority is to always follow the terms of the will, keep records of your actions and routinely ask yourself if what you’re doing is in the estate’s best interest. If you do those three things, you should have no problem avoiding executor misconduct and navigating the probate process.Tips for Planning Your Estate
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