Probate In Real Life II: The Executor’s Duties and Liabilities

January 12, 2011
376900808 e6148e7227 m Probate In Real Life II: The Executor’s Duties and Liabilities

Image by jepoirrier via Flickr

Today, we continue our discussion of probate and the executor’s duties.  In Part I, we discussed what happens if a person named as executor does not want to serve.  In this post, we will cover the executor’s duties of preparing an inventory of the decedent’s property, controlling the estate’s assets, and his potential for personal liability.

Preparation of Inventory

The executor is in charge of cleaning up and liquidating the assets, as it is his main duty to make sure the estate is distributed properly.  Before doing this however, the executor must prepare an inventory of  all assets and debts of the estate, including each item’s value.  The level of detail necessary to do this depends on several factors.

For instance, if there is just one beneficiary in the will, then creating the inventory will likely be much easier, since there is little risk of dispute or error – the beneficiary will simply receive all of the assets.  However, a will with many beneficiaries requires great detail in your inventory to help you assure the court and the beneficiaries that the estate is being distributed properly.

Additionally, the value of the estate must be considered as well.  If the decedent’s estate is likely to owe federal or state estate tax or a state’s inheritance tax, then accurate valuation of the estate is critical, and hiring a professional to help is pretty much a necessity.  Similarly, most states allow for a simplified procedure if the value of the estate is below a certain amount ($50,000 in Virginia, $25,000 in Pennsylvania, $30,000 or $50,000 if to surviving spouse in Maryland), so more detail is necessary to determine this as well.

Cleaning Out and Liquidating Assets

If the executor fails to properly account for the value of the estate assets, he makes himself more vulnerable to liability against the estate’s beneficiaries or creditors.  This is one of the main reasons why many decline the job, and why states generally recommend that the executor carry insurance or bond.

Coming up with a value for each asset is certainly easier said than done.  Certain valuations will be easier to obtain, such as stocks and mutual funds, since daily prices are readily available online.  Others, such as jewelry, antiques or artwork, may require that you hire an appraiser, a consignment shop or even an auction house to help you get a proper valuation.  Probate courts, experienced lawyers and other professionals can also assist.

Executor’s Liability

As executor, you owe a “fiduciary duty” to the estate, which means that you must always act in the best interest of the estate.  If as executor you perform any self-serving acts or are negligent with your duties, you may be held liable for the costs of your errors to the estate.

The executor is responsible for providing the estate inventory to the beneficiaries before dispersal of the assets.  The beneficiary may object to the commissioner regarding the valuation of any listed asset or may later sue the executor for any damages caused by negligence or by not fulfilling his fiduciary duty.

For example, let’s say our executor has an antique dresser listed on the inventory, but it is incorrectly valued at $10.  In Virginia, the beneficiary will have an opportunity to challenge the executor’s valuation by either protesting to the Commissioner of Accounts or by simply contacting the executor to request that the dresser’s value be appraised.  The executor could be personally liable if he fails to do so — obtaining less than full value for estate assets is not in the estate’s best interests and violates his fiduciary duty.

Comment Below With Other Questions

In Part III of this series, we will discuss wrongful removal of property by the beneficiaries and estate creditors’ rights (including landlords).  If you have any other questions on this topic, please don’t hesitate to list them in the comments section below.

 Probate In Real Life II: The Executor’s Duties and Liabilities
 Probate In Real Life II: The Executor’s Duties and Liabilities

Scott

Scott R. Zucker, Esq. is the owner of The Zucker Law Firm PLLC, located just outside the Capital Beltway in Annandale, within five miles of the City of Fairfax, the county seat of beautiful Fairfax County, Virginia. The firm focuses mainly on estate planning services for Virginia, Maryland and Pennsylvania clientele, and seeks to do so in an affordable and approachable way. People interested in learning more can contact Scott by phone or email.

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17 Responses to Probate In Real Life II: The Executor’s Duties and Liabilities

  1. J Mudrick
    January 31, 2011 at 11:28 pm

    I am the executor for my grandmother’s estate and I am currently preparing the estate’s inventory. I have read through the directions on the Fairfax County website several times and contacted the Commissioner of Accounts but I can’t seem to get a straight answer- are you required to provide proof of each item in the inventory (ie bank statements, photocopies of savings bonds, etc) or are you simply required to list the item and its value to the best of your ability? Thank you.

    • Scott
      February 1, 2011 at 11:28 am

      Mr./Ms. Mudrick–

      I suspect the reason you are not getting a straight answer is because unfortunately, different situations call for differing measures of proof. Generally, if the estate is small or if there will be little to no opposition, the necessity of detailed proof tends to be lower. Without knowing your particular situation, I tend to lean on the side of being extra cautious and might suggest you do indeed look to provide the proof you cite — these items will prove the value of your grandmother’s assets whether required or not.

      In any event, consider seeking counsel for your particular situation.

      Thank you for your question!

      Scott

  2. J Mudrick
    February 2, 2011 at 3:02 am

    Thank you for your advice, it is highly appreciated.

  3. Mark P.
    February 17, 2011 at 11:05 am

    My wife an I purchased a car from an estate. The executor had us write the check to the business name of the dealership since it is Inc. All went smoothly, car was bought as-is and is now in another state outside of Pa.
    I am now being contacted that I need to write a new check that simply lists the deceased persons name as the bank will not allow the executor access to the Inc dealership account.
    Am I wrong in concluding that this issues needs to be resolved on their end? I can not bring myself to write a check to a deceased person, plus the car was in inventory at the dealership, again an Inc. entity to my knowledge. the deceased has one daughter and appointed his girlfriend executor, so they are not talking.
    I’d like to just walk away and let them work out the issue, or is there a proper way to redo the check that I NEED to do?

    • Scott
      February 17, 2011 at 2:50 pm

      Mark–

      I am merely guessing, but I would recommend you not write any checks yet! You need more information.

      Before I clarify, I want to be sure that you understand that I am merely taking a guess at what is going on in your situation, and that you should not rely on the following (check this site’s Disclaimer Page for further information about this). Please use my guess to further investigate or potentially seek legal counsel.

      That being said, I will give you two guesses:

      1) I also find it quite strange that someone is asking you for a new check in the deceased person’s name, rather than in the name of, say, the “Jane Doe Estate”. Who is making this request? Is it the bank? Is it the dealership? Is it the executor? Do you have any of this in writing? Do all of these parties agree that this is the proper course?

      Additionally, probate is a public process, so you could also call the deceased’s county clerk and ask them if there is any record of the estate and/or the name of the executor.

      Also, has your original check been cashed? If so, I would strongly, strongly hesitate to write any new check until you got your original money back.

      2) I think the executor erred by having you write a check to the Inc. instead of to the estate. If there was some arrangement with Inc. and the estate for Inc. to sell the car, then the issue would be between Inc. and the executor (although we don’t know if such an arrangement existed — this would also be worth finding out).

      Bottom line — get as much information as you can, in writing, before you take any steps to send out any money. There is too much photo-shopping, fraud, etc. out there for this not to raise some eyelids, and legitimate businesses should have no problem in further documenting and/or proving the story.

      However, also be sure to do this legwork relatively soon — fully ignoring it could also have its potentially detrimental effects as well.

      Best of luck, and thanks for the question!

      Scott

  4. Lee Walker
    March 30, 2011 at 8:10 am

    Hello,
    Suppose the executor sells timber from property he is representing, and the proceeds are deposited into his own personal account. He never tells out of state interests about the transaction. A year later an heir travels to the property prior to the sale of the realestate and finds that timber had been removed. The executor then claims he forgot to transfer funds to the estate. Also, the executor paid his own construction company to complete a large amount of improvements to the property. The executor charged the estate $50.00 per hour that he was on the job. This seems to me that the executor is getting extra compensation while performing his fiduciary duties. These two examples of his actions as executor can not be ethical and in the best interest of the estate and beneficiaries he is representing. Am I on to something? Thank you Lee

    • Scott
      April 1, 2011 at 2:27 pm

      Mr. Walker–

      Thank you so much for posting!

      Without knowing what state or anything else about your particular situation (please don’t act upon what I write here beyond directly seeking an attorney’s guidance), I would have concerns about the following aspects of your story:

      1. The executor deposited the proceeds of the timber he sold into his own account — Usually, the executor obtains a new tax-ID number for the estate and places any proceeds into an account in the Estate’s name. However, it is unclear whether or not he did indeed transfer the funds after the heir questioned him. If he did, did he include interest?

      2. The executor paid his own construction company to complete improvements — Generally, the executor’s primary duty is to the estate. Hiring his own construction company to do improvements might appear like a conflict of interest involving self-dealing. However, it is not certain whether he sought other bids on the project and his company’s was the least expensive, whether the improvements are considered “waste” under state law, and whether the improvements have greatly enhanced the value of the estate. Depending on the state’s law, executors can charge the estate for services, but you are right to at least make inquiries regarding the double-payment for the work if you are somehow personally involved in the estate.

      So I would think that yes, some further investigation may be warranted in your scenario. Again, strongly consider hiring an attorney local to the property to help you in the effort.

      I hope this is helpful.

      Take care,
      Scott

  5. Wendy
    June 16, 2011 at 8:27 pm

    Im the executor of my fathers estate and I want to know; can I gift my fathers car to my brother (worth $1500) if my other brother writes a letter stating he is ok with it?

    • Scott
      June 20, 2011 at 5:03 pm

      Wendy–

      This will depend on the following:

      1. Your father’s state’s law regarding estate administration or probate.
      2. If your father had a will, what it said.
      3. If your father did not have a will, what his state’s intestacy law says.
      4. If there are any other beneficiaries entitled to the car besides your two brothers.

      I hope this helps.

      Take care,
      Scott

  6. Trudy
    August 23, 2011 at 12:04 am

    Scott,
    My Mother passed away and named me and my 4 living sisters as equal beneficiaries to her entire estate. Each will get 20%. Involved is property consisting of 5 lots. A dwelling is involved and sits on 2 of the 5 lots. The remaining 3 lots are undeveloped The property sits like this: vacant lot/developed 2 lots/vacant lot. Across the street is 1 vacant lot. There are 4 individual deeds covering the property. The issue is that due to my financial situation I do not want to keep my interest in the dwelling and the lots it occupies. I do want to keep my interest on the remaining 3 undeveloped lots. Note that these lots are located in what used to be a popular summer resort area. It is more depressed now and most vacationers are home owners or family rather than renters looking to spend a week away from home (Dinsey is now the hot spot!) There are now building restrictions that prevents new construction on a single lot, not that bothers me as I am not looking to build in the future. Just a place that I grew up, love and would want to be able to visit as I wish, pitch a tent, spend the day, whatever. I just learned that my 4 sisters do not want me to be able to keep my interest in the 3 undeveloped lots since they will be buying me out of my interest in the dwelling, etc. The other reason is that they do not want to “separate” the property as if for some reason they want to sell, they want to sell it all together. My question…can I be forced to sell my interest in the undeveloped lots which are deeded and taxed individually? An appraisal was done which I did not see but I am told the appraisal was done on all the property as a whole not individually. Any advise you can give is will be very much appreciated. Thank you,
    Trudy

    • Scott
      August 26, 2011 at 11:37 am

      Trudy–
      I am so sorry for your loss. I hope things are going all right for you and your family during this trying time.

      I am a bit unclear about some of the facts you presented, so my insurer would remind me to tell you to please take the following tips with a grain of salt, and are not to be taken as direct legal advice. In that vein, I assume the following:
      • You and your sisters are listed as owners of all 5 of the lots, and that all 5 of you are listed on each of the 4 individual deeds.
      • Someone other than you is the personal representative of the estate.
      • The personal representative does not have a power of sale over the properties.

      With these assumptions, here are my general thoughts:
      • A new appraisal may be necessary if the five of you cannot agree on how to divide the property. This would include valuations of each individual property.
      • If you cannot agree voluntarily about how to split the properties, a lawsuit could be filed so that the court can create an enforceable partition of the property. If the court ends up deciding how the property should be partitioned, all five of you would have to adhere to its decision whether you wanted to or not.
      • The personal representative of your mother’s estate is under an obligation to give your mother’s property away exactly as she would have wished.
      o My guess is that your sisters would like to keep the lots together as one unit so that they can get a better price for them in the marketplace. If only the lots with the dwelling are sold, then the remaining three vacant lots would not be worth very much at all, especially given the building restrictions.
      o In other words, your sisters / the personal representative likely have a reason to believe that selling the 5 lots together would yield a price that is higher than selling the lots individually.
      o Would your mother have wanted all five of you to receive the highest price possible for the properties or would she have wanted you to keep some portions and sell others? The personal representative (as well as your sisters) is likely assuming the former.

      Finally, please remember that even though you and your sisters may not agree at this point, it will most likely be best for you all to eventually come to an agreement to preserve your relationships with one another. Administering your mother’s estate is already a stressful process. If you throw in an adversarial court proceeding, certain negative and undesired effects could linger long after the ruling.

      I hope this is helpful. Best wishes to you and your family.

      Take care,
      Scott

  7. Nancy Boltwood
    November 7, 2011 at 6:40 pm

    Hi Scott. I am a beneficiary in an estate of my deceased Uncle. One of seven beneficiaries (all neices and nephews.) The estate was co-mingled between two brother who lived together all their lives. 20 years ago, one brother married and this wife lived with both Uncles until the times of their death (both passing recently.) One law firm settled the estate of the Uncle/Husband for the widowed wife. Another law firm was switched to at the last minute for the surviving brother. To avoid conflict of interest (but durress may have been involved for some relatives who wished to gain control of the estate’s assets from a very ill man at the time, dying of cancer.) Estate valued at $1MM+ maybe as high as $1.9MM as assets were spread out everywhere. The Executor is acting questionably. Case in point, a 15-20lb container of silver coins was discovered in the ceiling of the house. The Executor (at the time the coins were removed with 2 witnesses present) was asked by the estate’s holder (my uncle) to hold the coins for “safekeeping.” I questioned the attorney’s office settling the estate about the coins and she said the Executor would “secure” these coins as an asset of the estate (as opposed to leaving them in a now empty home in a neighborhood where there would be “crime opportunities.”) The next day she called me and said “there were no coins.” (after I assume asking the Executor, who happens to be a husband of one of the beneficiaries.) The next day, this same attorney called me and revised this saying “there were coins but your Uncle gave them as a gift to the Executor.” The two witnesses present at the discovery of said coinse say “no, not a gift, but asked to hold for safekeeping.” My concern is obvious. Is this a conflict of self-dealing? Thanks for reading and appreciate your time. Nancy Boltwood

    • Scott
      November 10, 2011 at 3:58 pm

      Ms. Boltwood–

      Thank you for your question. Unfortunately, I’m at a disadvantage here because I don’t know if there was a will here, and if so, I obviously have not seen it. Therefore, any opinion I express here is merely a guess (i.e. you shouldn’t rely on it to make any final decisions).

      If there was a will, you would look to it to provide your answers. If your uncle specifically intended to leave the coins to the executor, then this gift should be listed in the will. If it is not listed, it is still probably part of your uncle’s estate and would pass under the terms of the will’s residuary clause (which may very well gift some amount of the estate to the executor).

      There could be plenty of things that happened that would not result in any conflict or self-dealing. The two witnesses may not have ever seen the will. The attorney who called you back may have found something in the will after your phone call to her (she did take the initiative to call you back).

      On the other hand, if the estate is going through probate, as one of the first steps, the executor will have to prepare an inventory of assets. As a beneficiary, you would have the opportunity to have your “day in court” if you think the inventory is missing any items.

      I hope this is helpful to you and I wish you the best of luck during this tough time. Let me know if you have any more questions.

      Take care,
      Scott

  8. Rebecca
    July 2, 2012 at 7:26 pm

    What can be done about an executor in Virginia who does not communicate with the beneficiaries? We have no idea what’s going on. My aunt passed away in August 2008 and so far we’ve only received communications twice. Are there no rules or regulations on how long it takes to execute someone’s final wishes. There was only a house (and contents) a car, which he sold, and money in the bank. There was a safe deposit box, but that was not mentioned in the list of assets. It’s been almost 4 years! Is there no time limit? He is paying the house taxes and insurance himself and is reimbursed from the estate. He has had someone living in the house as well. We don’t know if he collects rent or not. Looks like this can go on and on until the estate is used up. I had a lawyer look into the situation, but he couldn’t make anything happen.
    Thanks

    • Scott
      July 17, 2012 at 4:30 pm

      Rebecca–

      I suggest that you go to the Probate Court in the county where your aunt was domiciled so that you can see the court records of what has happened since your executor filed the will. If you bring ID, you should be able to get access.

      I would also suggest that you try to maintain contact with the executor and try to resolve any difference peacefully. Before the estate is distributed, you should be able to have the ability to challenge the estate’s inventory in court if necessary, but hopefully, due to the small amount of assets and the time passed, things can be resolved before you get to that point.

      I hope this helps.

      Take care,
      Scott

  9. Michele
    September 29, 2012 at 10:04 am

    Recently legal fees have been incurred by the executor of the estate that was probated 20+ years ago. He was compensated $2500 for his service. But he could not remember that he probated the will and could not find a copy of the will. So he engaged the services of a probate attorney to obtain copy of will from courthouse and now expects me (the only other heir) to reimburse him for half of these expenses. What is my financial obligation to him??

    • Scott
      December 3, 2012 at 6:18 pm

      Michele–

      This is a tough question to answer without knowing further details, such as whether or not the estate was closed years ago and what the rationale is behind the present services.

      Take care,
      Scott

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