Is the Executor in Breach of Fiduciary Duty?

What do you do if you suspect the executor is in breach of the fiduciary duty?

We received a question recently from an user and instead of just responding individually, we thought it would be beneficial to share our thoughts with everyone.  The individual is concerned that the executor of a relative’s estate might not be acting in good faith; that she might not be honest in her communication or may be acting unfairly in some way.  She wants to know–what can be done to ensure the executor duties are being fulfilled correctly? 

What’s required?

To know whether an executor is in breach of their duties, you must know what those duties are.  In this context, the most important executor duty is the fiduciary duty.  An executor must act in the best interest of the beneficiaries while serving in the executor role.  This means that an executor cannot use his position to advantage one beneficiary over another, for example.  An executor cannot do things that would knowingly hurt the value of the estate or an asset in the estate.  An executor also cannot use his position to break the law–stealing from the estate, for example.  

What’s not required?

One of the keys to being a good executor is to communicate with the beneficiaries.  Some serving in the executor role will be great communicators, while others get by with the bare minimum.  While the executor duties require that beneficiaries receive some information, including notice that they are listed as a beneficiary in the will, an executor will likely be able to perform the executor duties without providing a play-by-play to all the beneficiaries.  So while open and frequent communication between the executor and beneficiaries about the tasks in the executor role is always a good idea, it may not be required.  

Nowhere in the executor duties is an individual serving in the executor role required to include the beneficiaries in the decision-making process for any of those executor duties.  The authority to make decisions rests with the executor.  

What do I do if I think the executor may be breaching the fiduciary duty?

So what do you do if you think the executor is stealing money from the deceased’s bank account or working with an appraiser to incorrectly value items in the estate for their own nefarious purposes, for example?  Consult with an estate attorney or with the Probate Court.  There is paperwork you can file and actions you can take that can alert the Probate Court to these issues and prompt the Probate Court to take a closer look at the estate administration.  

What happens if an executor breaches that fiduciary duty?

On one end of the scale, an executor may be required to provide a regular accounting to the Probate Court to ensure the executor duties are being completed as required by the Court and the law in that jurisdiction.  A Probate Judge may also find cause to remove an executor and appoint a new executor.  And if an executor is found to be in breach of their fiduciary duty, they may face penalties, depending on the specifics of their actions/inactions. If they break the law, they can be criminally liable.

As a beneficiary, you could also hire an attorney to bring a civil suit against the executor for this wrongdoing.  It is important to remember that if the executor is working with an estate attorney, that estate attorney is not your personal attorney.  The estate attorney will be working strictly for the estate.  If you need to hire an attorney, you will want to find a different estate attorney.  

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