Following the death of an individual, an executor takes charge of the estate of the deceased. The primary task of an executor is to close out the estate and make sure heirs to the estate receive their inheritance. You may have heard that an executor serves as a fiduciary to the people who will benefit from the estate.
Being a fiduciary involves important responsibilities. People who breach those responsibilities breach their fiduciary duty. People who stand to benefit from an estate should understand what it means to be a fiduciary, since an executor who breaches a fiduciary duty will likely cause harm to the individuals the executor should serve.
Definition of a fiduciary
According to The Street, a person serving as a fiduciary has responsibilities to another person, known as a client or a beneficiary. They may act as a financial adviser or invest money on behalf of a client. Fiduciaries must act in the best interests of their clients, exercise proper care and diligence, and act in an ethical manner. A client should not suffer loss because of the unethical actions or incompetence of a fiduciary.
Fiduciaries and estates
Executors who take up the position have a fiduciary responsibility to the beneficiaries of the estate. This means the executor should protect the estate from actions that cause loss to the heirs. Marketwatch explains that executors may mishandle an estate and break their fiduciary responsibilities in a number of ways.
For example, an executor may invest money even though the will did not instruct the executor to invest any of the estate money. The result could be money lost in a risky investment and loss of assets to the beneficiaries. Executors should also protect the tangible assets of the estate. Should a home or a car belonging to the estate suffer damage, the executor may be liable.
Litigating an executor
Executors may mishandle an estate in many other ways, from blocking beneficiaries from receiving their inheritance, changing beneficiaries listed in a will, or breaking the law. An executor who breaches his or her fiduciary duty can become the subject of litigation from heirs. Estate beneficiaries may sue the executor for damages, or even seek to have the executor removed from the position.