The person tasked with managing the estate of the deceased is the executor. The executor manages assets, pays debts and taxes and distributes assets upon a person’s death.
Nonetheless, the role of an executor is about more than administrative duties. Executors have fiduciary duties, which are legal obligations to act in the best interests of the estate and its beneficiaries.
What are the fiduciary duties of an executor?
Fiduciary Duties Explained
Broadly speaking, fiduciary duties mean acting in the best interests of the estate. Some key aspects of this include:
- The Duty of Loyalty: The executor must be loyal to beneficiaries and refrain from using their position for personal gain.
- Duty of Care: Executors may handle valuable assets. They must exercise reasonable care to preserve the estate’s value.
- Duty of Impartiality: The executor cannot show favoritism between beneficiaries and must adhere strictly to the deceased’s wishes.
- Duty of Accounting: The executor must provide accurate records of all financial transactions and share these details with beneficiaries upon request.
What If These Duties Are Breached?
In some cases, an executor may breach their fiduciary duties. This can result in legal challenges, disputes among beneficiaries, and even the removal of the designated executor. Common examples of breaches of fiduciary duties include:
- Self-Dealing: When the executor abuses their position for personal profit, such as undervaluing assets to purchase them personally.
- Carelessness: When the executor fails to pay debts or file taxes or neglects other essential responsibilities, leading to financial losses.
- Favoritism: When the executor ignores the wishes of the testator to distribute more assets to a particular beneficiary.
Choosing the right executor is a key component of estate planning. You want someone who is trustworthy, motivated, and competent in managing financial affairs. By seeking legal guidance, you stand the best chance of drafting an estate plan that truly reflects your wishes.
