Getting socked with drastic stock market losses is bad enough. But Executors face the added problem of having to answer to disgruntled beneficiaries. The current market meltdown illustrates an important point many Executors fail to recognize.
An Executor is the person named in a Last Will & Testament who is responsible for distributing a decedent’s estate. Simply being named as Executor in the Will does not alone confer that status. In order to qualify, one must take an oath to the Court to well and truly administer the estate according to law. Failure to properly administer the estate exposes an Executor to personal financial responsibility for any resulting loss to beneficiaries or creditors, including liability for unpaid taxes.
An Executor is obliged to identify, safeguard, and value estate assets and distribute them to the beneficiaries named in the Will after first meeting all financial and other legal obligations of the estate. Depending on the assets involved, this process can take some time, especially if there is a home or other real estate.
When it comes to handling a decedent’s investments, contrary to what many believe, it is not the duty of an Executor to continue to manage and grow the fund. On the contrary, an Executor is obliged to safeguard it until ready for distribution. Accordingly, the prudent thing for an Executor to do in most cases is to liquidate investments at the earliest opportunity. An Executor who seeks to maximize the investments or otherwise increase the value of the estate does so at his or her own peril if the results turn out badly.
A beneficiary might prefer to receive as an inheritance the securities themselves rather than their liquidated cash proceeds. But it is the Executor who controls that decision. A beneficiary cannot demand preservation of the investments. But he or she can possibly hold an Executor personally liable for the diminished value of the investment fund during the Executor’s management of those securities. Contact Vasiliadis Pappas Associates for help in properly distributing an estate and avoid mistakes that can lead to personal financial responsibility for investment or other losses.