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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