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Challenges of serving as an executor – and how an attorney can help

Being named as an executor of someone’s estate is an honor, signifying an immense degree of trust placed in you. At the same time, in serving as an executor, there are myriad challenges and potential problems that may arise. Executors are fiduciaries, which means the law entrusts them with certain legal and ethical obligations. Failure to observe these duties could open the door to personal liability. The North Carolina estate planning attorneys of Patrick, Harper & Dixon are here to help you carry out your duties in accordance with the law.

These are a few challenges that come with being an executor:

Securing the property: One of the first steps an executor must take upon assuming his or her duties is to secure the real and personal property of the decedent. This includes any homes, vehicles, boats, personal effects, bank accounts, financial instruments, and so forth. Failure to secure the property could result in losses due to theft, market fluctuations, fees, and other preventable problems.

Any losses resulting from an executor’s missteps could render him or her personally liable to both heirs and creditors. If an heir experiences a loss in his or her inheritance because the executor did not secure the property, or the estate is unable to pay creditors for the same reason, those parties could sue the executor.

Notifying creditors and heirs: Executors are responsible for providing ample notice to creditors and heirs that the testator of the will has passed away. With respect to creditors, this process usually entails running legal notices in a newspaper. The notice must contain specific information and be run for a certain amount of time. The goal is to ensure legitimate creditors have ample opportunity to pursue valid debts of the estate.

Heirs of the estate must also be notified, but not just because of their inheritance claims. In some cases, heirs might have an argument that the last will and testament was invalid. For example, the testator may have been unduly pressured to make last-minute changes before passing away. A rightful heir may be able to pursue a will caveat proceeding to challenge the validity of the will, making proper notice all the more important.

Tax issues: Taxes are included in the estate debts that must be paid. As part of this obligation, the executor must prepare and file the decedent’s final income tax return and pay any remaining taxes owed. This area gets many executors in trouble because they simply forget that the IRS and state taxing authorities are owed money along with other parties. The tax paperwork is complicated, but overlooking this responsibility could land the executor in hot water.

Filing Accountings:  Several accountings and other forms must be filed with the Clerk of Court during the estate administration process.  If the accountings are filed late or not filed at all, the Clerk may issue an order requiring that the executor appear in court to explain why an accounting has not been filed.  The Clerk may remove an executor from office and appoint a new executor.  It is important to make a note of all filing deadlines to ensure that all filings are made in a timely manner.

Maintaining accurate records: Keeping accurate records will make the probate process much easier. In some cases, record-keeping is required to properly carry out an executor’s duties. For example, executors must compile a complete and accurate inventory of estate assets. If this is not done soon after opening probate, property can quickly become misplaced and mismanaged. But record-keeping also ensures you are checking each box in the probate process and making progress in closing the estate.

Understanding the law: All of the above, and more, is addressed at various points in North Carolina’s estate and probate statutes. There are forms to file, deadlines to meet, and important steps that have to be taken before the estate can be closed. More complicated estates may require the involvement of several third parties, such as accountants, stock brokers, and realtors. But even simple estates can be difficult to handle because of the various rules.

Hiring an experienced attorney can relieve much of the stress and headache of serving as an executor. A lawyer who understands North Carolina’s probate and estate laws will be able to walk you through each step of the process and explain your duties along the way. From opening the estate to closing it, an attorney can help you avoid common mistakes that could expose you to personal liability.

If you’ve been named an executor and need to get started with probate, or you simply have questions about your duties, get in touch with Patrick, Harper & Dixon. We can schedule your confidential consultation today.