Executor Responsibilities to Beneficiaries
Full Answer
While the primary duty of the executor is to follow the instructions of the testator and administer the will as written, the executor has other legal duties, called fiduciary duties, he owes the beneficiaries. State and relevant case law provides that personal representatives or executors have fiduciary duties to the beneficiaries of an estate.
The best way to avoid issues with the beneficiaries of an estate is to communicate clearly and frequently throughout the process. If beneficiaries feel like they have a good idea of how you’re handling the estate, there is much less of a chance for concern or frustration. Tips for Planning Your Estate
Many executors utilize the services of lawyers and accountants. The overarching fiduciary duties still apply, and the executor should take care not to spend carelessly, because that could be viewed as a breach of fiduciary duty.
Executors are individuals who are appointed through a will to ensure the wishes of the testator, person who created the will, are carried out. In some states, executors are called personal representatives.
If you are entrusted with an inheritance after the death of a loved one, you become a beneficiary. In the role of beneficiary, you are awarded certain rights and responsibilities for receiving and managing the assets, be they cash, personal property or investments.
If a fiduciary fails to comply with these responsibilities, they may have breached their fiduciary duty. In the case of an executor or trustee, a breach of fiduciary duty may result in their suspension, removal and/or a surcharge – a court order requiring them to pay money damages for the harm caused by the breach.
A breach of fiduciary duty occurs when a principal fails to act responsibly in the best interests of a client. The consequences of a breach of fiduciary duty are multiple. They can range from reputation damage to loss of a license and monetary penalties.
A trustee has a fiduciary duty to act in the best interests of both current and future beneficiaries of the trust and can be held personally liable for any breach of that duty.
Specifically, fiduciary duties may include the duties of care, confidentiality, loyalty, obedience, and accounting.
Three Key Fiduciary DutiesDuty of Care. Duty of care describes the level of competence and business judgment expected of a board member. ... Duty of Loyalty. Duty of loyalty revolves primarily around board members' financial self-interest and the potential conflict this can create. ... Duty of Obedience.
Breach of Fiduciary Duty ExamplesSharing an employer's trade secrets;Failing to follow the employer's directions;Improperly using or failing to account for employer funds;Acting on behalf of a competitor;Failing to exercise care in carrying out duties; and.Profiting at the employer's expense.
Personal Liability In some cases, a fiduciary can be held personally liable if they violate their duty. For example, if a guardian breaches his or her fiduciary duty owed, he or she can be held personally liable for the resulting damages.
Three Potential Consequences of Breach of Fiduciary DutyCompensatory Damages. If an alleged breach of fiduciary duties leads to litigation then one of the most common outcomes is for the victim to receive compensatory damages. ... Punitive Damages. ... Professional Consequences.
Generally speaking, a trustee cannot withhold money from a beneficiary unless they are acting in accordance with the trust. If the trust does not indicate any conditions for dispersing funds, the trustee cannot make them up or follow their own desires.
The beneficiary has a right, as against the trustee and all persons claiming under him with notice of the trust, to inspect and take copies of the instrument of trust, the documents of title relating solely to the trust-property, the accounts of the trust-property and the vouchers (if any) by which they are supported, ...
In the case of ignoring the beneficiary, the court intervention could be enough to prod the Trustee to action. If an unresponsive trustee has demonstrated animosity toward the beneficiary that results in unreasonable refusal to distribute assets or has a conflict of interest, the court may remove the Trustee.
The process of administration of estate starts immediately after the death of a person and ends after the properties have been accounted for and distributed, and liabilities settled.
Where a deceased person died intestate, the lawyer’s duty in the process of administration of the deceased estate starts with obtaining a letter of authority to act on behalf of the relatives.
For many beneficiaries of a deceased estate, obtaining letters of administration can be challenging.
A lot of times the process of obtaining a letter of administration does not go as smoothly as represented above.
When a deceased dies testate, the first duty is for the lawyer to help the relatives locate the will and have the contents read in court.
The administration of estate involves the payment of various expenses and costs in respect of a deceased estate.
If people owe the deceased person, the executor and personal representatives must identify, demand and recover same. It may require going to court for such recovery.
In addition to formal notification, the beneficiary also has a right to information about the estateand the probate process. This includes what assets are in the estate, how much debtthe estate has and how the executor plans to pay that debt.
The executorof a will has a fiduciary dutyto act in the best interest of the estate. This means that the law prevents you from acting in your own interest to the detriment of the estate. As an extension of this duty, executors also have several responsibilities to the beneficiaries of the will.
The court gives these rights to protect beneficiaries and to ensure executors are able to do their jobs effectively. The best way to avoid issues with the beneficiaries of an estate is to communicate clearly and frequently throughout the process.
Timely Distribution. Another responsibility the executor has is to distribute assets to the beneficiaries in a timely manner. Different states have different interpretations on what constitutes “a timely manner.”.
Either way, a beneficiary of a will has a minimal role in the estate administration process. In most cases, the beneficiary can sit back and wait patiently for their inheritance to arrive.
Beneficiaries should be extremely careful to look through the details of the account, ensuring that there are no mistakes or errors. If a beneficiary notices a discrepancy, they can begin to take action against the executor.
The first on the list of executor responsibilities to the beneficiaries is to get the will probated. The will has to be probated because if it isn’t, the estate will be distributed in accordance with state intestacy laws.
The second executor responsibility to the beneficiaries is to marshal estate assets and make an inventory. The executor should ensure that all probate assets are accounted for. It is a responsibility to the beneficiaries because the higher the value of the estate, the higher the value of the beneficiary’s share.
Simultaneous or after Marshaling estate assets and making an inventory of estate property, one the executor’s responsibilities to the beneficiaries is to pay estate debts. SCPA § 1811 provides the executor with the priority for the payment of debts and funeral expenses: payment of expenses of administration and funeral expenses
One of the last executor responsibilities to the beneficiaries is the distribution of estate assets to them. Generally, the estate must be open for seven months from the date of issuance of letters. This 7-month period corresponds to the 7-month period when creditors may present their claims under SCPA § 1802.
The duty of a trustee is such that it will suffer not the remotest possibility of a conflict of interest, nor the faintest appearance of impropriety. In re Estate of Hawley, 183 Ill.App.3d 107, 538
-Survival Actions. Executor is the “personal representative” of the deceased . A successor trustee is not the personal representative of the deceased settlor. Survival actions can be brought by the appointed personal representative or special administrator.
fiduciary relationship exists between a trustee and beneficiary as a matter of law. Janowiak v. Tiesi, 402 Ill.App.3d 997, 1006, 932 N.E.2d 569, 579 (3rd Dist. 2010). "Trustees are but one example of a myriad of fiduciaries including guardians, executors, administrators, and agents. Each of these fiduciaries owes a duty of loyalty to the person or entity for whom the fiduciary is acting." Janowiak, at 1008. A trustee "owes a fiduciary duty to a trust's beneficiaries and is obligated to carry out the trust according to its terms and to act with the highest degrees of fidelity and utmost good faith." Fuller Family Holdings, LLC v. Northern Trust Co., 371 Ill.App.3d 605, 615, 863 N.E.2d 743, 754 (2007); Hawkins v. Voss, 2015 IL App (5th) 140001, ¶
The executor is the person who is legally responsible for covering all estate expenses, which is why keeping detailed and accurate records is so important. Though being an executor may seem like a daunting task, executors are permitted to hire outside assistance and professionals to assist in administering the estate.
This means the executor is obligated to exercise good faith and diligence as he executes a will; thereby, ensuring beneficiaries receive what they are entitled to under the provisions of the will. Those actions typically require an executor to pay debts of the decedent, taxes for the estate and distribute estate assets. Typically, distribution occurs after the executor has collected assets and presented an accounting to the court. Then, the executor files taxes and ensures other debts are satisfied, while maintaining accurate records of all such activities. This allows the executor to know which assets remain in the estate that can be distributed. Although laws differ between states, most states afford the beneficiaries the right to request an accounting. All of these actions must be performed in the best interest of the beneficiaries. Additionally, fiduciary duties require executors to avoid any negligent actions, as well as any "self-dealing," which means the executor would benefit rather than the beneficiaries. The executor's fiduciary duties terminate when the estate closes.#N#Read More: Failure to Execute Fiduciary Responsibilities as an Executor of a Will
A testator who wishes to have a specific person serve as his executor can assuage some fears regarding the responsibilities and liabilities associated with those responsibilities . Testators may include what is called an exculpatory clause in the will, which can relieve the executor of certain liability. However, that relief typically does not extend to certain actions that involve gross negligence or willful misconduct on the part of the executor. The testator may consult an online legal document provider when drafting his will, as there are some states that do not permit this practice. For example, New York law prohibits exculpatory clauses, but Pennsylvania and Texas allow them.
Executors are individuals who are appointed through a will to ensure the wishes of the testator, person who created the will, are carried out. In some states, executors are called personal representatives. Since the testator is deceased, the executor owes certain duties to those who stand to benefit from the deceased's will, known as beneficiaries.
While the primary duty of the executor is to follow the instructions of the testator and administer the will as written, the executor has other legal duties, called fiduciary duties, he owes the beneficiaries.
If the executor fails to meet his fiduciary duties, including properly distributing the assets of the estate as well as paying the debts and taxes of the estate or the executor acts negligently, the beneficiaries can sue the executor. The executor could find his personal assets vulnerable in these situations.
Even if you are appointed an executor, you do not have to accept the appointment as there is no legal obligation to do so. You must decide whether or not you wish to take on the responsibility and liability, in addition to the emotional issues that come with the job.
When we hear the words will, probate, or estate, most of us think about the people inheriting money — the beneficiaries of an estate.
Sometimes the beneficiaries of an estate are people that the deceased directly supported while they were alive — usually a surviving spouse and minor children. They may need immediate access to funds from the estate.
What about a specific bequest in the will? Do you have to wait until the end of probate to provide it to the intended beneficiary?