Typically, the Executor of an Estate named by a Will has little or no prior experience in administering an Estate. As such, this somewhat complex process lends itself to the possibility of errors being made by the Executor or Executrix which could result in litigation. The purpose of this blog is to advise you as to some potential pitfalls to avoid if you are the Executor or Executrix of an Estate.
The first major pitfall to avoid is that the Executor/Executrix must first make sure that they are properly qualified by the County Surrogate to serve as the Executor/Executrix of the Will prior to taking any actions. This is done by bringing a copy of the Last Will and Testament and a Death Certificate to the County Surrogate, and thereafter, qualifying as the Executor of the Estate. Thereafter, the Executor must be careful to notify all potential heirs of the Estate and not only those referenced under the Last Will and Testament. Often times, the Executor may neglect to notify all potential heirs of the Estate aside from those listed under the Last Will and Testament. This is a typical error which could potentially result in the litigation if these individuals are not notified.
Another important task an Executor must undertake is to open an Estate account which is solely for the Estate. At times, an Executor/Executrix will make the error of combining an Estate account with their own personal account. This comingling of Estate assets with personal assets could result in unnecessary litigation and confusion in the Administration of the Estate. As such, a separate Estate account must be opened. Prior to making any distributions, an Executor/Executrix must ensure that all appropriate and necessary state and federal taxes have been paid. A common mistake made by an Executor/Executrix occurs when partial distributions are made prior to taxes being finalized. Should this occur and there is a shortfall, this can result in penalties being assessed against the Estate, or disgruntled heirs of the Estate refusing to pay back the entire or part of their bequests.
The final point that will be discussed during this blog, and one that is often rife with conflict in the context of estate litigation involves Executors keeping appropriate records. In administering an Estate it is essential that the Executor maintain meticulous records, consisting of receipts, checks, and other documents evidencing payments made on behalf of the Estate. If this is not done it is almost guaranteed that the formal or informal accounting will be challenged by beneficiaries of the Estate. This may result in unnecessary litigation which could have been easily avoided had these records been kept.
As such, the above lists serves solely as a partial guide as to the pitfalls to avoid as an Executor/Executrix of the Estate. It is always suggested that if you are appointed an Executor that you consult with an attorney and seek their counsel in serving as Executor of the Estate. The attorneys at Stark & Stark are versed in this regard.