The executor of a will is in charge of making sure the wishes of the deceased are carried out, as well as handling the final affairs of the estate. The executor has authority from the county probate court to act in this role, but that doesn’t necessarily mean that the executor has the final say on all decisions regarding the estate. In fact, they’re are instead tasked with simply following the guidelines set forth by the will and other estate planning documents.
A financial advisor can help you create an estate plan that potentially includes a will, trusts and more.
What an Executor Can Do
An executor has the authority from the probate court to manage the affairs of the estate. Executors can use the money in the estate in whatever way they determine best for the estate and for fulfilling the decedent’s wishes. Typically, this will amount to paying off debts and transferring bequests to the beneficiaries according to the terms of the will.
There may be a case where the estate has more debts than it has available assets to pay them. This is what’s called insolvency. If the estate is insolvent, the executor will decide how to readjust things such that all debts can be paid. This could involve reducing inheritances or liquidating large assets.
What an Executor Can’t Do
The biggest limitation on an executor’s actions is that he or she is a fiduciary to the estate. This means executors must to act in the best interest of the estate at all times. For every decision you make as an executor, you should be able to explain how that is the best choice for the interests of the estate.
This requirement is intended to curb executors conducting the affairs of the estate in their own self-interest. It’s particularly important when the executor is also a beneficiary. That’s because the law gives executors a good deal of power in directing the assets of the estate. In turn, the court takes this measure to address any potential conflicts of interest.
What Happens If There Is a Dispute?
Beneficiaries may disagree with the contents of a will or decisions that executors make. It’s important to note that attempts to contest a will can be expensive, drawn out and often unsuccessful. In most cases, beneficiaries can’t go to the court and contest an executor simply because they disagree with one or more of the executor’s decisions.
In order for the court to remove an executor, someone (usually a beneficiary) must prove that the executor is engaging in misconduct or is otherwise incompetent. Executor misconduct can take many forms. Examples include a failure to record the will in probate court, failure to pay estate debts, using estate funds for personal expenses and failure to distribute assets according to the will.
If you can prove to the court that the current executor is incompetent or is mishandling the affairs of the estate, the court will relieve that executor and choose a replacement. If the will names an alternate executor, that will likely be the court’s choice. Otherwise, each court has a priority list of individuals to appoint as executor. The lists vary from court to court, but surviving spouses and adult children are typically very high on the list.
Bottom Line
The executor of a will has a big job. Collecting assets, paying debts and distributing inheritances, all while documenting the process correctly with the courts, can take significant time and energy. To effectively complete the task, the executor needs formal authority to spend money from the estate and otherwise manage affairs. The executor can even decide if and how bequests should change in the case of insolvency.
That authority isn’t without limits, however. He or she must always be acting in the best interest of the estate. Like any job, there are systems in place to hold executors accountable. This help ensure that no executor is misusing their authority. When you’re naming your own executor, it’s crucial that you choose someone whom you know to be both highly competent and highly trustworthy.
Estate Planning Tips for Beginners
- Many financial advisors specialize in estate planning, trusts and other end-of-life planning strategies. This makes them valuable partners for people in that position. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Larger estates may be subject to estate taxes. If you don’t want your estate gobbled up by taxes, plan ahead. You can gift portions of your estate in advance to heirs or set up a trust.
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