Who is an executor? What can you not do as an executor? What exactly are the boundaries of an executor?
Well, beyond deciding what an executor can and cannot do, this article will cover basically everything you should know about an executor.
Who Exactly Are They?
An executor (or executrix) is a person or organization named by the Testator to carry out the conditions of the Will and Last Testament. The Executor is in charge of all the assets listed in the Will.
The executor of a will or estate administrator is in charge of overseeing and finishing the probate process for the decedent’s estate. A parent’s last will and testament usually names their oldest or most responsible kid as executor. As a result, that kid is in charge of the estate’s probate process, which includes paying debts using estate assets, selling estate property, and distributing assets to heirs and beneficiaries according to the last will and testament.
What Are the Responsibilities of the Executor to the Beneficiaries?
Being chosen executor of a will entails a slew of crucial responsibilities that must be fulfilled in order to carry out the decedent’s desires. If you have been named as an executor, you may be required to do the following tasks:
- Find the will.
- Retain legal counsel.
- Identify and safeguard the assets of the dead.
- Review the will and inform the beneficiaries.
- Notify all other appropriate parties.
- Continue to pay your bills as necessary.
- Begin dispersing the estate’s assets.
- Fill out paperwork to close the estate.
What an Executor Cannot Do
What you cannot do as an Executor is go against the terms of the Will, breach Fiduciary Duty, fail to act, self-deal, embezzle, injure the estate intentionally or unintentionally via neglect, and threaten beneficiaries and heirs.
The most crucial thing an executor cannot do is not be open and honest with the beneficiaries and heirs. Proper bookkeeping is also essential, as is staying on top of matters that may need the purchase or sale of an asset.
Other Things an Executor Cannot Do
You have a fiduciary duty to the estate’s beneficiaries as executor. That implies you must treat the estate as if it were your own and take proper care of the assets. As a result, an executor is prohibited from willfully harming the beneficiaries’ interests.
As an executor, you are unable to:
#1. Try to Carry Out the Will Before the Testator (The Document’s Creator) Passes Away
Before the testator passes away, neither the executor nor the beneficiaries have any rights to the inheritance. You don’t get to start making financial judgments about how your Aunt Sue manages her assets just because you’re named in the will.
#2. On Behalf of the Deceased, Sign an Unsigned Will
The deceased died without a will if he or she died without a signed will. No one else can sign it for them, and the estate will be governed according to the laws of intestate succession in that state.
#3. Take Steps to Handle the Estate Before the Court Appoints You as Executor
To complete the probate petition, you may need to conduct some preliminary research to discover the contents of the estate. However, you cannot take any further action — such as selling assets or settling payments — until the court has approved your petition and appointed you as the executor.
#4. Without the Beneficiaries’ Consent, Sell Assets for Less Than Fair Market Value
Your fiduciary obligation entails treating the estate’s assets as if they were your own and ensuring that the beneficiaries receive the estate’s share as specified in the will. Giving assets away for less than they’re worth — for example, by selling them at a discount to friends – goes against that obligation.
#5. Change Any Provisions in a Will
You cannot amend any terms of the will, just as you cannot sign it. It’s unfortunate if you actually like your cousin and agree with him that he should have been named in the will. If he’s an heir-at-law, he can file a court petition opposing the will, but you don’t have the ability to amend it.
#6. Prevent Heirs or Beneficiaries From Disputing the Will
It’s never fun for the executor when beneficiaries or heirs contest the will. However, they have the right to do so, and you have no power to stop them.
Is It Possible for Executors to Be a Beneficiaries?
Yes. An executor’s role as a beneficiary is extremely prevalent. When one spouse passes away, the decedent’s living spouse is typically named executor. On the other hand, children are also often designated as beneficiaries and executors of wills/trustees in family trusts.
Is it Possible for a Will Executor to Take Everything?
For starters, the Executor has legal responsibilities in relation to the estate. An Executor who is found to be stealing can be held in contempt of court. Contempt of court is punishable not just by penalties but also by imprisonment. As a result, can a Will executor seize everything? Yes, if they want to be sneaky, which is why there are steps beneficiaries can do to avoid this possibility.
What Can Beneficiaries Do to Ensure That Their Rights Are Protected?
An Executor is legally obligated to the estate beneficiaries to maintain adequate bookkeeping so that, if the courts demand an accounting, the Executor can present an inventory list. The inventory list will detail everything that has been accomplished thus far, including supporting documentation, receipts, and cash checks.
Beneficiaries have the right to know the status of an inheritance when they learn that they will be receiving one.
Expect the Executor to do the following;
- The Executor begins by informing the beneficiaries, financial institutions, and any known creditors of their situation.
- They help with funeral arrangements, among other things.
- They establish trust bank accounts to manage the Testator’s entire financial situation.
- To present to all creditors and banking institutions, they obtain several copies of the death certificate.
- Arrange a first meeting with recipients.
Essentially, communication is critical at this time. The Executor will not have to explain every step they take on a daily basis, but they should provide updates on a regular basis. It’s best to define the communication mechanism ahead of time so that no one gets surprised during this lengthy procedure. Please keep in mind what happens if the executor fails to communicate with the beneficiaries.
The trust documents may include a provision to shift assets from one beneficiary to another. When the Trustor/Grantor creates the trust, they expressly say that they have the authority to do so. If a beneficiary challenges the trust, a proviso is that if you lose in court, a no-contest condition may prevent you from obtaining any trust distribution.
What Executors Aren’t Able to Do (Executor vs. Beneficiary Rights)
- Inability to discover the Will
- To be irresponsible and let the assets listed in the Will to vanish.
- Not managing debtors and not paying taxes
- Self-dealing (demonstrated by selling assets far below fair market value).
- Mismanage Real Estate: Selling a property without first conducting due diligence, such as obtaining an appraisal and maybe receiving other offers.
- Mixing the Executor’s funds with the estate is known as co-mingling.
Is It True That an Executor Can’t Be a Relative or a Friend?
False. An executor is often a family member or acquaintance.
Mostly, parents name their spouses or children as executors of their wills, while children name their parents or siblings as executors.
As estates get more complicated, loyal family friends are sometimes named executors. Why? The estate’s principals may believe that the family friend has the most estate planning experience, is best equipped to deal with the estate’s assets or family dynamics, and/or has the time to handle the probate process in the case of the parent’s death.
A parent’s estate, for example, is worth at $3 million dollars and contains three real estate properties as well as a small business. Because the executor is a retired accountant, the parent may opt to name a trusted family friend, while the parent’s children are working full-time and have their own busy families.
In this situation, the parent feels their estate is in excellent hands, and the children are grateful that one of them was chosen above the others, while they are also relieved that they are not obligated to spend the time necessary to navigate their parent’s estate through probate.
What if the Executor of a Will Is Unknown to the Beneficiaries?
If the beneficiaries and heirs of an estate are unable to locate the executor, or if the executor dies, a new one will be appointed by the local probate court. The court will issue “letters testamentary,” which allow the replacment to act on behalf of the estate and in its best interests.
A live executor can also be removed from their position if they are disabled, convicted of a crime, or indicate a conflict of interest that the court or beneficiaries feel exists.
What Happens if the Executor Is Unable to Find a Beneficiary?
If an executor is unable to locate a beneficiary, the courts must be persuaded that the beneficiary is deceased. Before the court will do so, the executor must demonstrate and document the following:
- Any living spouses or family members of the beneficiary were contacted.
- Looked up the beneficiary’s most recent postal address.
- Contacted past employers.
- Reached out to other members of the community.
If neither the executor nor the probate court officials are able to identify the beneficiary after a certain amount of time has passed, the missing beneficiary’s inheritance assets are dispersed equitably among the other heirs and beneficiaries under the state’s intestate succession code.
If the First Choice or Primary Beneficiary Is Unable to Inherit, Does the Executor Inherit?
To begin with, an executor’s position is that of a fiduciary, not a beneficiary, and as such, the executor is only entitled to their executor fee, not an inheritance. The executor fee covers the legal entitlement to be compensated for their time and effort by the estate.
This sum is set by state probate law, and it is also the same as the fee paid to the probate attorney who is handling the estate. In California, for example, the executor of a $1 million estate is entitled to $23,000 in compensation for their time and labor.
An executor may be entitled to extraordinary executor fees in addition to their statutory fee for acts that are not normally part of an administration, such as selling real estate, running a business, litigation, and so on.
Secondly, if the executor is also a beneficiary, they are entitled to receive their inheritance according to the terms of the will, trust, or state intestacy legislation.
They also have a right to be compensated for their time and work.
When working with a probate lawyer, many executors decline their executor remuneration, according to RMO. Why? Because the probate lawyer is in charge of the probate process, the named executor is likely to prefer that their executor fee be allocated evenly among the other beneficiaries.
Can an Executor Take the Place of a Beneficiary?
The final will and testament cannot be changed by the executor. The executor has a specific responsibility to work in the best interests of the beneficiaries and estate, as well as to complete the probate procedure, which includes dispersing inheritance assets to intended beneficiaries and heirs.
If an heir or beneficiary believes the executor is not carrying out the decedent’s wishes as stated in the will, the heir or beneficiary has the right to contest the will and seek litigation to obtain what they believe is fair and intended by the decedent.
Can I Sue the Executor of a Will or the Estate Administrator?
Yes, just like anyone else, an executor or administrator can be sued.
If you want to question a will or trust’s distributions, you’ll need to oppose the will or trust through probate or trust litigation.
If an heir believes they are entitled to a larger inheritance than what the will or trust provides, they must retain lawyers and prepare and file a challenge petition.
Alternatively, if an heir believes they are entitled to assets from the estate not as inheritance but as repayment because they paid more of the decedent’s medical expenditures than the other heirs, they may be able to file a creditor’s claim to recover those funds.
When Should I Get a Probate Lawyer?
As quickly as possible, contact a probate lawyer.
The sooner you call a probate attorney, the more they can do to safeguard your rights and ensure that you receive your proper inheritance.
In general, obtaining your rightful inheritance through lawsuit before the estate assets are divided is substantially easier.
What does this imply?
Assume the estate is divided equally among the three remaining children, and each child has received their inheritance. Then, after paying $100,000 out of pocket for the decedent’s medical expenditures, one kid files a lawsuit to recover an additional $100,000 from the estate. The other two children are now required to repay $50,000 each.
What if they’ve already spent everything? Suddenly, the procedure becomes longer and more litigious than if the $100,000 was paid prior to any estate distributions.