Serving as Executor? Avoid These Mistakes.
Serving as executor of a loved one's estate carries many responsibilities, and often, it seems, nearly as many pitfalls. Most family members who serve as executors have little experience doing so, making the task even more challenging. Unfortunately, it is possible to make missteps in administering an estate and not realize it until after the harm is done.
It may be helpful to become aware of some of the more common, and sometimes surprising, mistakes that executors make, and learn how you can avoid them.
Rushing Administration of the Estate
It's very important to open a probate case promptly, but take enough time to make sure you're doing the right things in the right order. Mishandling of estate business, even inadvertently, can result in personal liability for an executor. Even if you're not held liable for a mistake, errors caused by haste could delay the resolution of the estate.
For instance, Ohio law forgives almost all unsecured creditor claims if the estate is not opened for six months after the death. Opening the estate too soon could result in the loss of thousands of dollars.
Paying Bills as Soon as They're Received
Chances are, if you're serving as the executor of the estate of a family member, you're trying to be extra diligent in making sure estate business is carried out properly. Since one of your responsibilities is paying estate bills and the debts of the deceased, you may try to take care of bills as soon as they come in. This is one of those things that sounds reasonable, but could be a huge mistake.
Here's why: Ohio law provides for certain debts to receive priority for payment. If the estate doesn't have the money to pay higher-priority debts, like taxes, because it paid lower-priority debts, like credit card bills, this could be considered a breach of your fiduciary duty and possibly lead to personal liability on your part for unpaid priority debt.
Consult with an experienced probate attorney to understand Ohio law on priority of debt, and how to deal with any bills or invoices you receive.
Failing to Inventory and Safeguard Personal Property
Your niece may have always wanted that pink porcelain sculpture that sat on Grandma's mantel, and Grandma may have verbally promised it to her many times. But, as odd as it seems, once Grandma passed away, she didn't own the sculpture anymore—her estate did. And the estate is a new legal entity whose assets you, as executor, are duty-bound to keep safe.
That doesn't mean that Niece won't ultimately receive the statue. It just means that it, like all of Grandma's other assets, large and small, will have to go through the probate process first. That process includes gathering all the assets, valuing them, and inventorying them. It may include liquidating some assets in order to settle debts of the estate.
Circumventing the probate process, whether or not "it's what Grandma would have wanted" is a breach of your duty to the estate. If the other heirs are okay with Niece getting the sculpture, the delay caused by the probate process won't change that. And if it turns out that Grandma promised the sculpture to more than one heir, you won't find yourself in the middle of a legal dispute because you handed it over to someone prematurely.
Mishandling Real Estate
Dealing with real estate holdings after a death is challenging. If the property in question was the deceased's home, it may need to be sold. If there is still someone living there, such as an adult child who was caring for the deceased, they may want to delay the sale, while other heirs want to hasten it. If the property needs repairs before it can be sold, you will need to find out if you have (or have to obtain) authority to use estate funds to pay for repairs.
If the deceased's residence will be vacant after the death, you will need to keep it insured in case of loss such as fire or a burst pipe that causes a flood. However, most insurers prefer not to insure unoccupied houses for long periods, since some types of damage to the property (like that burst pipe) might not be discovered promptly and could become extensive (and expensive) as a result.
If the deceased owned property outside the state where they lived, such as a timeshare in Florida or a vacation cottage in Michigan, an auxiliary probate proceeding may need to be opened in the state where the real estate is located. Don't overlook the need to address out-of-state real estate, or the resolution of the estate may be delayed.
Thinking You Have to Handle Everything Yourself
As you've no doubt concluded by now, there's a lot to get right when you're serving as the executor of an estate. Just because responsibility falls on your shoulders doesn't mean that you need to shoulder all of the responsibility yourself, especially if you have never administered an estate before.
An experienced probate attorney who has helped oversee the administration of hundreds of estates can help you manage the tasks of estate administration much more efficiently than you could do on your own. What's more, because an attorney's services are considered by the state to be a benefit to the estate, they may be paid for out of estate funds. So before you plunge into the role of executor, take the time to consult with an attorney who may be able to save you time, money, and stress in the administration of the estate.
You may also be interested in: