Serving as the executor of an estate is a privilege often extended to a trusted friend or relative. But the privilege comes with considerable responsibility and involves numerous tasks that can go awry.
When can an executor (called personal representative in Colorado) be held personally liable for failing to fulfill his or her fiduciary duty in settling the estate?
There are several common situations in which an executor can face liability.
Some of these are fairly straightforward, such as failing to use reasonable care in managing the deceased person’s property or improperly taking money out of the estate. Failure to follow the will (if there is one) and failure to pay the beneficiaries are also clear breaches of duty.
Common traps for executors
Other breaches are more subtle. Indeed, there are some common traps executors can fall into if they are not careful.
One such trap is failure to properly inventory the deceased person’s personal property and distribute it as intended. Wittingly or unwittingly, the executor may allow family members access to the property and allow important items to go missing.
If the items were sufficiently valuable, it could lead to litigation against the executor for breach of duty.
Another scenario in which things can go wrong for the executor is failing to obtain a proper appraisal of property to be distributed among several heirs. This can easily happen, for example, where there is a family farm or other business. If shares in the farm or business are to be sold so that some beneficiaries buy out others, an accurate valuation is critical to the fairness of the distribution of shares.
If the executor does not oversee this process in an equitable manner, the potential for personal liability is definitely there.
These are only a few of the potential areas where executors can find themselves in over their heads and facing legal challenges. If you are uncertain of how to proceed, it makes sense to discuss your situation with an attorney knowledgeable about probation litigation.