As the famous late N.Y. Yankee, Yogi Berra, once said “We made too many wrong mistakes.” Executors make many “wrong mistakes.” It may be an honor to be named as an executor in someone’s Will, but there are many pitfalls and errors that an executor can make including, but not limited to, the following:
- DELAY IN PROBATE
This is particularly frustrating to beneficiaries whose anxiety often increases the longer no action is taken which may result in other attorneys getting involved.
- MAKING DISTRIBUTIONS TOO SOON TO BENEFICIARY OR BENEFICIARIES
Often beneficiaries request a distribution before all bills are paid. If there is not enough of the estate funds left, the executor could be personally liable.
- PAYING CLAIMS TOO EARLY
There are different classes of claims under Texas law. For example, funeral bills and secured creditors (such as a lien against the real estate of the deceased) have a higher priority for payment than credit card claims. The executor could have personal liability for paying some claims too early.
- NOT PICKING UP MAIL
Executors may learn about creditors by picking up the mail – not to mention the risk of burglars who might see a house is vacant if mail is not taken.
- FILING THE WRONG WILL
Sometimes executors file the first Will they see instead of the most recent Will which results in delay and possible legal action.
- LACK OF COMMUNICATION WITH BENEFICIARIES
Many beneficiaries assume the worst when the executor fails to communicate as to the status.
- CONFUSION OF PROBATE VS NON-PROBATE ASSETS
Some assets, pass outside probate (i.e., most retirement accounts, life insurance policies, annuities, bank accounts with beneficiary designations, etc.) and are not part of the probate process or estate.
- FAILURE TO FOLLOW TERMS OF THE WILL
Sometimes the deceased may have told the executor about what they want distributed that is contrary to the terms of the Will. The executor must follow the terms of the Will or else risk personal liability.
- TRYING TO MAKE ESTATE MORE PROFITABLE
The more risk the executor takes in investing assets of the estate to make it more profitable, the greater risk of personal liability.
- FAILURE TO MAKE REQUIRED NOTIFICATIONS
Creditors must be notified about probate so they can make a timely claim against the estate. This could be as simple as putting an advertisement in a newspaper.
- FAILURE TO IDENTIFY WHETHER ASSETS ARE SEPARATE OR COMMUNITY PROPERTY
The executor is required to differentiate separate and community property when filing an inventory of the estate to the court.
- FAILURE TO MAKE A FAMILY ALLOWANCE
Sometimes a surviving spouse, minor or incapacitated person can be entitled to an allowance even if not named as a beneficiary.
- NOT IDENTIFYING ALL PROBATE ASSETS BEFORE AN INVENTORY IS FILED
Although an amended inventory can be filed, this delays the probate process.
- NOT ADVISING OF POTENTIAL DISQUALIFICATION
Some named executors are not qualified to serve as an executor (i.e., if convicted of a felony, incapacitated, etc.). This could result in a delay once the attorney or court learns of the failure to qualify.
- IGNORING CLAIMS AGAINST THE ESTATE
Often executors simply ignore claims against the estate such as credit card bills. However, if the executor distributes all the assets and the creditor gets a judgment at a later date, the executor could be personally liable.
- FAILURE TO PUT ESTATE FUNDS INTO AN ESTATE ACCOUNT
This is generally more of a problem if there is more than one beneficiary or if there are creditors of the estate as it looks bad and creates potential liability if the executor simply transfers estate funds into their own account.
Sometimes executors feel like they are entitled to an extra benefit for handling the estate and transfer assets of the estate to herself or himself at a discounted rate. This could result in personal liability.
- HANDLING TANGIBLE ASSETS IMPROPERLY
Distribution of personal property items such as furniture, jewelry, artwork, clothing, etc. often results in acrimony between the executor and beneficiaries. If the Will doesn’t provide a method for division of the personal property items, then the executor should attempt to resolve the division of the tangible personal property in an equitable manner to reduce risk of liability rather than being solely responsible for how the property is divided.
- FAILURE TO FILE ESTATE TAX RETURNS
Although most estates do not require an estate tax return be filed since most do not have taxable estates, sometimes it is still best to file a return. For example, if there is a married couple and there is no estate tax when the first spouse dies, sometimes there is an estate tax when the surviving spouse dies that could have been avoided by timely filing an estate tax return within nine (9) months after the death the first spouse died to utilize the unused credit of the first spouse to die. This is called portability.
- NOT GETTING PROFESSIONAL HELP
Do not rely on non-professionals for determination of valuation of assets belonging to the estate. Probate of the Will should be handled by an attorney who handles probate on a regular basis.
If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming virtual Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation.