Most people have no idea what they’re getting themselves into when they agree to act as executor for a loved one or a friend. Executor responsibility and the personal risks and liabilities involved with the role are important to understand if and when you agree to act as an executor of an estate.
Myth: Being named executor is an honor and a privilege.
Reality: Being named executor involves a huge amount of time, work and legal risk.
Accepting the role of executor requires careful thought about who and what is involved. The job can turn your life upside down in terms of the time commitment and potetial familial friction. If the Estate Organizer’s affairs were disorganized or messy when they died, it can open the door to endless problems, for which you could be held responsible as the executor.
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In the eyes of the law, an executor is appointed to the highest position of trust; in legal terms, acting in a “fiduciary capacity”. What does this mean?
A fiduciary is someone who has been given control over the property of another person and is responsible for acting solely in the interests of that person or their heirs. Your fiduciary responsibilities begin when the person dies, and their Will takes effect.
As a fiduciary, you are legally responsible to behave in the following manner:
- Follow directions in the Will and/or apply to the Court for direction when necessary.
- Put the interests of the beneficiaries ahead of all other interests.
- Act prudently at all times in dealing with all aspects of the estate.
- Keep the affairs of the estate strictly confidential.
- Avoid breaching the trust of the deceased and the beneficiaries.
- Treat the beneficiaries with an even hand, not favoring one beneficiary or a class of beneficiaries over another beneficiary or a class of beneficiaries. There is an Executor Responsibility to remain impartial at all times.
- Ensure there are no conflicts of interest between your own affairs and the affairs of the estate.
- Receive fair and reasonable compensation for your work, but do not unduly profit from the estate.
- Be prepared to provide a formal accounting of the estate to the beneficiaries and, if necessary, the Court.
Personal Liability: Real Risk
If you don’t get informed on all that has to be done, if you procrastinate, if you’re disorganized, careless, or behave imprudently, such that the estate loses money, you may be sued by the beneficiaries and held personally responsible for the loss.
This is real risk. Estates involve family members, so they are emotionally charged. Estate litigation is one of the fastest growing areas of law practice. No one wants to go down a road where the only winners are lawyers.
How do I Protect Myself from Risk?
From the moment that you accept the role, you must protect the interests of the beneficiaries and protect yourself from liability. In carrying out your Executor Responsibilities, apply these principles of good governance, which largely fall in the realm of common sense:
- Asking “what could possibly go wrong?”, then using prudence and common sense to prevent such occurrences.
- Understanding what steps need to be taken and identifying priorities.
- Documenting your work with detailed notes, records, receipts, and professional opinions.
- Staying organized and on track, not allowing anything to fall through the cracks.
- Working to a schedule to complete the work expeditiously as possible, logging the time spent.
- Staying current on all aspects of the estate assets and debts at all times.
- Following up on outstanding items on a timely basis.
- Providing regular progress reports to the beneficiaries, seeking their input and assistance as necessary.
- Obtaining professional guidance from estate lawyers, accountants, other professionals, and the Court, when necessary.
What if I Cannot Do the Job?
If you cannot accept the role and Executor Responsibility, you must avoid any involvement with the estate and immediately contact an estate lawyer to make a Court application to formally resign or “renounce”. The Court will name a replacement, who may be a family member, lawyer or trust company.
This process takes time, costs the estate money and is easily avoided by learning what’s involved before accepting the role.
By naming you executor, your loved one has placed a great deal of trust in you. The security of their family depends on you doing a good job.
Most estate problems can be avoided by knowing who and what’s involved, before the person passes away, and by getting informed about everything that has to be done after they’re gone.
This is where QuickEstate™ steps in. Check out our Estate Organizer and Estate Executor Toolkit. Our online tools make the process of organizing your estate for your executor, and becoming an executor of a loved one’s estate easier, less time intensive, and less strenuous for your family.
If a loved one or friend has put you in this position of trust, ask them to pay it forward by getting their affairs organized and keeping you informed to make your job infinitely easier, with less risk to their beneficiaries and to yourself.