Examples of Executor Misconduct

The Executor Position: How it can be abused

Being appointed as an administrator or executor is a privilege, but there are more duties and liabilities than you would realize. Allegations of impropriety are one of the problems that commonly arise with such a role. Executors have a fiduciary duty towards the heirs and beneficiaries, you see. Therefore, rather than acting selfishly, they must follow the Will’s instructions. Should you believe and have proof of breach in fiduciary duties, call Hess-Verdon & Associates at 1-888-318-4430.

Misconduct frequently emerges from endeavors or acts over which the administrator or executor has a sizable amount of control. This can entail self-dealing, in which the executor profits from the estate. On other occasions, executors may neglect their duties or merely disregard state law obligations.  Here are some examples of executor misconduct:

Failing to Secure Estate Property

When an executor fails or neglects to secure the property of an estate, it can lead to loss, damage, or theft of assets. Executor misconduct might involve not properly safeguarding real estate, leaving valuable items unsecured, or failing to manage digital assets effectively. Such negligence can significantly diminish the estate’s value, impacting the beneficiaries’ inheritance.

Hiding Estate Assets

An executor engages in misconduct by intentionally hiding assets to prevent them from being included in the estate. This deceitful act could involve concealing cash, investments, real property, or other valuable items to either keep them for personal gain or to favor particular beneficiaries over others, thereby undermining the equitable distribution of the estate.

Ignoring Beneficiaries

When a trustee ignores beneficiaries, it can lead to significant distress and complications within the framework of trust administration. When a trustee undermines the trust’s intended purposes and executor breaches their fiduciary duty, like ignoring the beneficiaries, the beneficiaries can opt to get a trust litigator to have the trustee removed. Addressing this issue promptly and effectively is crucial to resolving disputes and ensuring the trust operates as intended.

Mismanagement of Assets

Mismanagement of estate assets occurs when an executor fails to responsibly manage the estate’s assets, leading to financial losses. Examples include making poor investment decisions, neglecting property maintenance, or failing to collect debts owed to the estate. Such mismanagement of estate money can significantly reduce the estate’s value to the detriment of the beneficiaries.

Withholding Inheritance

An executor may unlawfully withhold inheritance from beneficiaries by delaying distribution without valid reason or by outright denying beneficiaries their rightful share. This action breaches the executor’s fiduciary duty and causes financial and emotional harm to the beneficiaries.

Overpaying Creditors

Executors are responsible for settling the estate’s debts. Overpaying creditors, whether due to negligence or intentional overcompensation, can unjustly diminish the estate’s assets, leaving less for the beneficiaries and potentially violating the executor’s duty to act in the estate’s best interest.

Misappropriation

Misappropriation by an executor involves the unauthorized use or theft of estate assets for personal gain. Misappropriation could range from embezzling funds to using estate property for personal benefit, which is a direct violation of the executor’s duty to manage the estate solely for the benefit of the beneficiaries.

Merging Personal Funds and Estate Funds

An executor must keep personal finances separate from estate finances. Commingling these funds can lead to conflicts of interest, mismanagement, and difficulty in accounting for the estate and beneficiary’s assets, potentially resulting in legal consequences for the executor.

Delaying the Probate Process

An executor who unnecessarily delays the the probate court process through inaction or inefficiency can cause significant harm. This delay can lead to increased costs, asset depreciation, and undue stress for the beneficiaries.

Unnecessarily Delaying Distributions to Beneficiaries

Executors are expected to distribute assets in a timely manner. Unnecessary delays in distributions can be seen as a breach of fiduciary duty, mainly if these delays cause financial detriment to the beneficiaries.

Unnecessarily Prolonging the Estate Administration

When an executor prolongs the administration of an estate without valid reasons, it can result in increased administrative costs and emotional distress for the beneficiaries. This prolongation may be due to negligence, incompetence, or intentional misconduct.

Committing Further Types of Asset Theft

Beyond misappropriation, asset theft can include selling assets under market value, pocketing the proceeds, or transferring assets to oneself or others without authorization. Such actions are clear violations of the executor’s legal and other fiduciary duties and responsibilities.

Disobeying Court Orders

An executor must comply with all court orders related to the deceased person estate. Disobeying these orders, whether through action or inaction, constitutes misconduct and can lead to legal penalties, including removal from the executor role.

Failing to Pay Debts and Taxes

Executors are responsible for the estate management and ensuring that all debts and taxes of the estate are paid. Failure to do so can result in legal complications, financial penalties, and reduced assets available for distribution to beneficiaries.

Ignoring the Terms of the Will

An executor must adhere to the terms outlined in the will. Ignoring these terms, whether by distributing assets contrary to the will’s directives or failing to fulfill specific instructions, is a severe breach of duty.

Paying Oneself Exorbitant Salaries

While executors of estates may be entitled to reasonable compensation, paying oneself an exorbitant salary from the estate funds is unethical and constitutes misconduct. This act reduces the assets available for beneficiaries and breaches the executor’s fiduciary duty.

Refusing to Distribute Property

An executor who refuses to distribute property as directed by the will or by law is failing in their duty. This refusal can be due to personal motives or misunderstandings of legal obligations, but it ultimately harms the estate’s beneficiaries and integrity.

Selling Any Assets of the Decedent

If an executor sells assets without the authority or necessity to do so, especially if the sale is below market value or for personal gain, it constitutes misconduct. Such actions can significantly reduce the estate’s value and violate the rights of the beneficiaries.

Taking Too Long

An executor who takes excessively long to settle an estate without reasonable cause is failing in their duty. This prolonged process can lead to financial losses for the estate and undue hardship for the beneficiaries.

Wrap-up

The difficult responsibility of dispersing the decedent’s estate and ensuring that all necessary debts are settled and all legal requirements to close the estate are met falls on the executors’ shoulders. Although they have a wide range of jurisdictions and considerable discretion, they do not have ultimate control over the probate courts.

Per rules on inheritance theft, an executor may be ordered to restore property they’ve misappropriated, neglected, or lost; in extreme cases, they might even be removed from the position. However, this is only possible through probate court. It’s always wise to employ the services of an experienced attorney to help during the process. If you have concerns regarding the executor of your deceased’s estate and want to take legal action, reach out to us. We’ll be glad to provide guidance.