Have you been named an executor of an estate? Like many people, you may not have any idea what you are supposed to do. An estate executor or executrix is the person who has been named to administer the estate of a deceased person. Understanding the role of an executor is vital to ensuring an estate is properly managed and distributed.
The executor is appointed by the testator of the will (the person who makes the will) or by a court, when there was no prior appointment (and the individual dies intestate).
As the executor, you take a chance in distributing the estate before everyone has approved a final accounting and signed a Refunding Bond and Release.
This means that the heirs accept their distribution and release the executor from any claims concerning his or her administration of the estate.
Nj.com’s recent article entitled “Can I distribute inheritances now or do I have to wait?” says that if one of the beneficiaries doesn’t accept the executor’s form of accounting and his or her purported share, the executor will need to bring an action in court seeking its approval of a formal accounting and release as executor.
This process can be very expensive and, if there is no misfeasance by the executor found by the court, the expenses are usually paid for from estate funds. This reduces the total pay-out to heirs. As a result, it reduces all the beneficiaries’ distributive shares.
An executor has a fiduciary duty to the beneficiaries of the estate, which means he or she must manage the estate as if it were their own and manage the assets prudently. Thus, an executor can’t do anything that intentionally harms the interests of the beneficiaries.
If the executor decides to pay some beneficiaries before all of the named beneficiaries agree to the distributions, he or she may not have the funds to bring the formal accounting action in court.
It’s usually a best practice to wait until everyone approves the accounting and provides the necessary paperwork, before making any distributions to any heirs. To learn more about drafting a will, consider our previous post, What You Need To Know About Drafting Your Will.
Reference:nj.com (May 8, 2020) “Can I distribute inheritances now or do I have to wait?”