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.
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 I: Named Executors Declining to Serve (estateplanninginfoblog.com)
- Fiduciary Duties – Locating the Assets (wrightsel.blogspot.com)
- Can misbehaving executor be imprisoned? (lawprofessors.typepad.com)
- Who’s The Boss? The Fiduciary-Beneficiary Relationship (deathandtaxesblog.com)