An executor performs significant duties on behalf of the estate. They are trusted to make decisions that impact potential financial outcomes for other beneficiaries. Thus, they have a fiduciary duty to the estate, and they can be personally liable when they breach it.
Fiduciary duties fall into two categories. The first is the duty of loyalty. The executor must place the interests of the estate over their own personal interests. In other words, they cannot engage in conflicts of interest or take any action that would cause them to profit at the expense of the estate. These conflicts could include transactions with related entities. For example, if they bought a house themselves from the estate, it could be a breach of their fiduciary duty.
In addition, the executor also has a duty of care when they are making decisions on behalf of the estate. They must make reasonable efforts to make informed decisions. The duty of care for an executor is similar to any other case where someone cannot act negligently. For example, if the executor entrusts assets to someone who has a track record of fraud, the executor may have breached the duty of care. The executor should have performed basic research on the person with whom the estate was doing business.
Executors should consider seeking the help of an experienced attorney if they need to make key decisions. The attorney could advise them on how to make the decision while upholding their fiduciary duties. Executors need to be careful, or else they can end up paying for mistakes.
Contact a Lincolnshire Estate Planning Attorney
The attorneys at Charles T. Newland & Associates can help executors or work with family members who believe that the executor has breached their duty. You can speak with an attorney by messaging us online or calling us today at 847.797.9300.