You may not have known it at the time, but having a loved one name you as executor of his or her estate placed a great deal of responsibility on your shoulders. You may have known that you would have to handle certain steps in closing the estate and settling final affairs, but the process may be far more extensive than you realized.
As the executor, you represent the estate in necessary matters. The matters may include settling claims from creditors, closing accounts, interacting with beneficiaries and distributing assets, just to name a few. In attending to these and other tasks, you must take care not to breach your fiduciary duty.
What is fiduciary duty?
You become a fiduciary when you take on the role of executor because a fiduciary represents a person or entity and can act on behalf of that person or entity. In an executor’s case, that person acts on behalf of the estate. As the fiduciary in this capacity, you have the obligation of meeting the highest standard of care when handling estate-related tasks. This obligation is your fiduciary duty.
What actions must you take?
As part of your role as executor, you will need to make sure to settle the final affairs of your loved one’s estate. If he or she created an estate plan, which likely named you as executor in the will, you have a duty to follow the directions in that plan to close the estate. Some of the responsibilities you will need to address include the following:
- Handling final debts
- Addressing the estate’s tax obligations
- Distributing assets to beneficiaries or state-designated heirs
During this time, you have a fiduciary duty to act appropriately on behalf of the estate, and you also have a fiduciary duty to treat the beneficiaries properly.
What is breach of fiduciary duty?
You hold a great deal of power and trust when you act as executor. If you take actions that do not benefit the estate, carry out steps for your own personal gain, betray the trust of beneficiaries, or participate in a number of other actions that could harm the estate or its beneficiaries, you have breached your fiduciary duty. As a result, you could face liability for any financial or civil damages the estate suffered due to your actions.
Having the duty to correctly and appropriately close an estate can seem overwhelming. Fortunately, you do not have to act alone. You could enlist the help of a knowledgeable attorney to guide you through the probate process, help you understand your fiduciary duty and inform you on your options for handling any disputes or claims of breach of fiduciary duty.