Acting as an executor is a big job. And one that comes with a lot of responsibility. Perhaps not surprisingly then, there is a lot of room for error and mistakes are sometimes made.
As we specialize in estates at our law office in Stittsville (Ottawa), we meet with a lot of executors and have first-hand knowledge of the mistakes that executors often make. Unfortunately, mistakes can be costly, both to the estate and to the executor.
Here are what I consider to be three of the biggest mistakes made by executors:
1. Keeping Poor Records
If I was forced to choose, I would say this is possibly the biggest mistake that I see executors making. It is absolutely essential for an executor to keep detailed records of everything, and I mean everything, that they do on behalf of the estate from paying the deceased’s bills to cancelling cable to making notes about a conversation with a beneficiary.
Bottom line, an executor must be prepared to provide an accurate accounting of all money received by, and paid out of, the estate. The estate accounting is also the basis for determining executor compensation. So good record-keeping also benefits the executor in the long run. In some cases the estate accounting report must be submitted to the Court for approval (called “passing your accounts”) and having detailed, accurate records is an absolute requirement.
We also advise our clients who are acting as executors to keep a journal of everything they do including the date, amount of time spent, who they met with, what was done/discussed, mileage records, disbursements, etc. This will be very helpful if a beneficiary objects to a compensation request or questions the executor’s actions.
2. Paying Estate Expenses Out of Own Money
This is a no-no. An executor should not mix their own funds with estate assets and never use estate funds for personal liabilities. This is a breach of an executor’s fiduciary duty (more on this below).
If there are bills to be paid before the executor has access to the deceased’s bank account, the bank will usually issue a draft drawn on the deceased’s account to pay for a bill in the name of the deceased. However, if the executor is concerned that there may not be enough funds in the estate to cover all of the deceased’s debts, he or she should proceed with caution. In the event of a shortfall, there are certain debts that must be paid first. Making a mistake can lead to personal liability for the executor.
3. Procrastinating
Executors and beneficiaries are often surprised to find out just how long it can take to administer an estate. Generally speaking, it can take a year to a year and a half to administer even a simple estate … longer if the estate is complex or if there are problems. And no matter how big or complex the estate, there is lots to be done. And some of the steps take a fair bit of time.
An executor is in a special position of trust. Being in control of someone else’s property means the executor is a fiduciary. This means that the executor must always act in the best interests of those with an interest in the estate and must act with honesty and loyalty.
Fiduciaries must also carry out their duties with care and attention and in a timely manner. Procrastinating can be a breach of an executor’s fiduciary duty.
If you have been appointed or are acting as the executor of the estate of a loved one, make an appointment to meet with me. We will advise you of your duties and responsibilities and help you avoid these and other mistakes commonly made by executors.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
