Have you been named estate executor or trustee for a recently deceased individual? If so, you may be feeling a little overwhelmed.
Estate executors, personal representatives, administrators, and trustees are interchangeable terms for the person responsible for managing a decedent’s assets after their death. These roles come with immense responsibility, and unfortunately, mistakes and legal traps abound.
Read on to learn five hidden costs and legal traps to know when fulfilling your executor duties.
1. Over-Reporting Assets on the Court Inventory Forms
Filing an accurate estate inventory is one of your primary duties as an executor. This inventory will provide descriptions and values of all of the decedent’s assets as of the date of their death.
Some of the mistakes we commonly see executors make is over-reporting and including assets on inventories that do not need to be on the forms. Even if you knew the decedent well, you might have trouble determining the exact values of their intangible assets, such as their real estate and vehicles.
However, the filing fees and court fees you must pay out of the decedent’s estate depend on the value of the assets listed in their inventory. As a result, over-valuing these assets may lead you to owe more fees.
2. Paying Creditors That Don’t Need to be Paid
Settling the decedent’s debts is another duty you must perform as executor of the estate. Creditors may send you bills or invoices for the decedent’s debts, and you will need to use funds from the estate to pay these bills.
However, not all bills you receive will be valid claims against the estate. Sometimes, organizations may send you false invoices, attempting to steal from the estate.
Failing to identify these invalid claims correctly could cause you to pay more money to settle the estate than is needed. As we’ll discuss later, if you distribute the estate incorrectly, you may need to pay for any mistakes out of pocket.
Some of the decedent’s debts may be negotiable. An estate administration attorney may be able to help you negotiate more favorable terms on bills you receive, as well as help you determine which invoices are legitimate.
3. Being Liable for Mistakes
When you accept the role of executor of an estate, you accept a fiduciary duty over the decedent’s assets. This means that you must act in the estate’s best interests.
Even if you have the best intentions, there is a chance that you may make a costly mistake during your executor rule, leaving you personally liable for any errors. As a result, you must pay out of pocket.
For example, if you pay a creditor that does not need to be paid or give funds to the wrong person and fail to recover them, you’ll need to make up for them yourself.
Most executors are not experts in estate administration. They’re ordinary people who had a close personal relationship with a recent decedent. That’s why many executors enlist the assistance of an estate administration lawyer to avoid costly mistakes like the ones described.
4. Wasting Time
As an executor, you must complete certain tasks within specific time frames after the decedent’s death. For example, you must complete the estate inventory within three months.
However, if you’re unfamiliar with the responsibilities in this role, you may end up wasting time as you attempt to navigate your duties. For example, you may fill out forms incorrectly and have to redo them.
Each time this happens, it will delay the estate by weeks or months, prolonging your executor responsibilities. The decedent’s beneficiaries may also become impatient if they must wait too long to receive their assets.
5. Improper Distribution of Funds
As an estate executor, you’ll also be responsible for distributing assets to the beneficiaries. If you’re unfamiliar with the legal terminology in the will or are simply unclear about your responsibilities, you may be prone to mistakes when transferring assets.
For example, you may accidentally make distributions to people who shouldn't receive them or distribute improper amounts to the decedent’s beneficiaries. If you cannot get those funds back, you may need to correct them out of your own pocket.
Executor duties are numerous, complex, and time-consuming. If you’ve been named executor of an estate, having an estate administration attorney on your side to walk you through the process can help you avoid the above mistakes and streamline your duties.
Our team has extensive experience helping executors like you navigate their duties effectively. Contact our probate lawyer team today at 919-443-3035 or fill out our online form to schedule your needs-assessment call.
Copyright © 2022. Carolina Family Estate Planning. All rights reserved.
The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.