Many people agree to be the executor or executrix of a family member’s estate without realizing how large a responsibility they have taken on. In addition to the risk of personal liability and the possibility of legal action for inappropriate handling of the estate, there are over 400 time-consuming tasks that need to be performed to complete your responsibilities, depending on the size of the estate and the nature of the assets and liabilities.
Over the next few months, I would like to bring you some thoughtful information on a few of these questions that you should be asking yourself:
1) What is the risk that I am taking on in accepting the role of being an Executor ( Am I personally liable)?
2) What responsibilities are required of an Executor?
3) What if I feel overwhelmed? Can I find help?
4) Do I have to worry about probate?
5) What should I do when I’m first appointed as Executor?
6) What are my first Executor tasks, once the person has passed away? and so on.
Let’s look at the first question together:
1) What is the risk that I am taking on in accepting the role of being an Executor (Am I personally liable)?
An Executor/Executrix has been given the fiduciary responsibility of managing someone else’s affairs, after that someone has passed away. They are expected to handle all of the assets and liabilities with due care and in a responsible manner. They need to determine firstly, what their responsibilities are, and then execute them in such a manner as to not cause any unnecessary monetary losses to the beneficiaries of the estate.
If it is determined that certain losses to the estate such as late filing penalties, or the sale of assets well below the fair market value of the asset, could have been prevented, the executor could be accused of fraud or negligence. In addition to having to repay any compensation that they may have taken as an executor, he/she could have to use their personal funds to compensate for their actions.
Also, if the executor distributes the estate prematurely, they could have to personally compensate the creditors or other beneficiaries for this misjudgement. The executor’s fiduciary responsibility is to remain honest, avoid any conflict of interest, communicate fully with the beneficiaries, and administer the assets and liabilities as timely and as accurately as possible – in a way that any careful, intelligent person would look after their own affairs.
If the estate is insolvent, for example, it’s debts are greater than the assets available to settle them, the executor should seek legal counsel immediately. If handled properly, the executor is not responsible to personally cover the liabilities of a bankrupt estate. is important to note that lack of expertise is not considered a viable excuse for the mishandling of an estate.
Executors are expected to seek the help of lawyers, accountants, investors and other professionals to ensure that they are administering the estate properly – and in all cases, complete and accurate documentation is a must.
Being an executor is both an honor and a huge responsibility – but if you have been asked to be an executor- you have been personally chosen as the best person available to administer their affairs once they are gone.
Be smart, be honest and be responsible and you will safely execute your duties with minimal risk and exposure.