If you’re the Personal Representative of an estate, you will be held to an extremely high standard of ethical behavior. As Executor, the money and other assets you now control are not yours. They have only been entrusted to you for safe keeping until they can be disposed of according to the wishes of the deceased.
Your every decision as Executor must be made with the best interest of the Estate in mind. In legal terms, you now have a “fiduciary duty” to the estate, it’s creditors, and its beneficiaries. A violation of that fiduciary duty can be the basis on which the beneficiaries or creditors might request that the court void your actions or remove you as Executor of the Estate .
To help protect you from even the appearance of improper handling of your fiduciary duties, here are five (5) things you, as an Executor, must NEVER do:.
1. NEVER mix estate assets with personal assets. Immediately establish a checking account solely for Estate funds. All income generated from the estate should go immediately into the Estate account. All Estate liabilities should be paid out of the Estate account.
2. NEVER lend money to yourself from Estate funds. You may know you will pay it back, quickly, and with interest, but such a loan is absolutely forbidden!
3. NEVER receive payments from the Estate for serving as Executor without documenting EXACTLY what the payments are for and a clear explanation, justifying the expenditure.
4. NEVER sell estate property to yourself. Property within an estate should only be sold when its sale is in the best interest of the Estate. Even then, your job is to seek the highest possible price. It is virtually impossible to avoid a conflict of interest, if you, yourself, are the buyer.
5. NEVER make deals as Executor of an Estate that benefit someone close to you, i.e. spouse, children, or other family members. Under the law, such a deal is the same as one in which you are directly benefited.
Again, if you remember that your job, as Executor of the Estate, is to take good care of the assets within the Estate until you can turn them over to their new owners, all your decisions will reflect that commitment, and the “Never-Do’s”, discussed above, will not be a temptation.
For more information regarding Probate and issues related to it, email me at Shirley Bertholf, lovinlife@ShirleyBertholf.com, or call 360-840-1863.