Executors and Administrators

Your Aunt Lillian has just called to ask if you will serve as executor for her estate after her death. You are honored that she has considered you for this important responsibility, but you also know that there are risks associated with becoming an executor or administrator.

The most potentially damaging risk is liability for actions undertaken on behalf of the estate. The estate's beneficiaries, who are likely your relatives, may sue you if any of the following situations occur:

• You fail to properly secure and insure the assets of the estate, and it suffers a loss as a result.
• You diminish the estate through imprudent investments or inadequate record keeping.
• You fail to pay taxes on the estate, in which case you may be personally liable for interest and penalties.
• You sell an asset of the estate without authority to do so.
• You delay settlement of the estate unnecessarily or are tardy in executing important transactions.
• You engage in actions that constitute a conflict of interest.
• You improperly delegate decisions to others who have no legal authority over the estate.
• You approve a coexecutor's or coadministrator's breach of duty.

Fortunately, you can usually avoid these problems by taking a few simple steps:

• Most important of all, stay in touch with the estate's beneficiaries. Keep them informed of your actions and the general condition of the estate.
• Promptly meet all required deadlines.
• Maintain accurate records of all estate transactions and document all decisions made. Keep receipts of distributions made to beneficiaries.
• Obtain the written consent of all beneficiaries when changing estate investments.
• Obtain a court order from the probate court for significant estate transactions. Petition the court if the will is unclear regarding particular items.
• Keep affairs of the estate confidential.
• Avoid conflicts of interest. Do not put your own interests ahead of the interests of the estate's beneficiaries, and do not use assets of the estate for your own gain or profit.
• By using common sense and following these guidelines, you can effectively settle an estate and avoid potential lawsuits.