Executor Responsibilities | Executor Fiduciary Duties

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Executor Fiduciary Liabilities

A fiduciary can be held liable if it:

  • Violates any applicable law;
  • Does not comply with the terms of the will, trust or pension plan or, in some instances, court rulings and orders; or
  • Fails to properly discharge any of its duties or responsibilities or abuses any of its powers.

Any present or future beneficiary, or a co-fiduciary, can institute legal action against a fiduciary. The remedies that can be sought are several, depending upon the alleged violation but commonly include:

Compelling the fiduciary to perform its duties; enjoining the fiduciary from committing a further violation;

Compelling the fiduciary to make restitution for the violation; removing the fiduciary; and/or disallowing the fiduciary from ever serving in another fiduciary capacity.

If found liable, the fiduciary is said to have committed a “breach of trust.” If the fiduciary is found to have committed a breach of trust, it will be held liable:

For any loss or depreciation of the account that results from its actions or inactions; for any profit made by the fiduciary through its actions;

Or any profit that would have accrued to the account if there had been no breach.

The amount by which the fiduciary is required by a court of law to pay to the “breached” fiduciary account is known as a “surcharge.”

While there are numerous sources of executor fiduciary liability, the most significant ones generally involve:

  • Imprudent management of account investments, including: the purchase or sale of speculative securities.
  • Self dealing or other conflicts of interest.
  • Failure to properly manage real property, including: the failure to insure the property, the failure to pay taxes or the failure to maintain properties (residential or commercial) in proper repair.
  • Executor Mismanagement of an account, including: making improper or unauthorized distributions; the failure to make timely court accountings or tax filings; and the improper allocation of principal and/or income receipts.
  • Improper delegation of duties, including: allowing or delegating the investment discretion to someone such as an investment advisor without appropriate oversight and the failure to supervise acts of agents such as property managers.
  • Taking actions without approval, including: those actions that require the consent of beneficiaries, prior approval of co-fiduciaries or from a local court with jurisdiction.

Executor responsibilities vary significantly with circumstance for each estate. The executor should consult a probate attorney early in the process, to understand their inherent fiduciary duties and potential risks.

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