Why being named an executor comes with serious risks

This article looks at three of the pitfalls people named as executors of an estate may face.

Being named an executor of a friend or loved one's estate can feel like a great honor, but when people actually learn what the duties of an executor entail that sense of honor can quickly turn into stress and anxiety. As CNBC reports, the role of an executor can take two years to complete and even longer for complex estates. Furthermore, many executors simply do not have the legal and financial training necessary to avoid some common estate administration pitfalls. Below is a look at the risks people face when they agree to take on the role of executor.

Understanding who takes precedence

One of the most important jobs of an executor is ensuring that the estate is distributed properly. Many different parties may have claims on an estate, including family members, creditors, and even the IRS. As MarketWatch reports, many executors will immediately use funds from the estate to settle any unpaid bills, such as for utilities and credit cards. While executors may think they are doing the right thing in those cases, what they often fail to appreciate is that there is an order of precedence for which party gets paid from the estate first. While paying off a credit card debt may seem like a responsible choice, it could prove problematic if it depletes funds that will later be needed to pay for a tax bill.

Mishandling real estate

Real estate is a particularly tricky asset to handle, not only because it is often the most valuable tangible asset in the estate but also because its value can fluctuate. Some family members, for example, may insist that the house be sold immediately, while others may want to "sit on it" either because market prices may rise or because one of the heirs is still living in the property. Furthermore, an executor may try to improve the value of the house by investing in repairs and maintenance, but the use of estate funds to pay for such maintenance could lead to disputes with other parties who have a stake in the estate.

Not keeping track of assets

Executors are under an enormous amount of pressure by the deceased's family to distribute assets quickly. However, heirs are rarely the first in line when it comes to distributing assets and funds. Nonetheless, some family members may take it upon themselves to simply take what they believe to be "rightfully" theirs. That's why the executor needs to secure the deceased's property and ensure that all assets are accounted for.

Estate planning and litigation

The above issues give some idea of why it is so important for anybody who has been named an executor to reach out to an estate planning and litigation attorney immediately. An attorney can help executors understand what their duties and responsibilities are, so as to avoid disputes from arising as much as possible.

Email Us For A Response

Contact Us For A Consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy