Although the exact process can vary by state, executors don’t always work under a legal microscope when settling an estate. After the initial flurry of court filings, they may not be required to notify the court of the estate’s progress until they file the final accountings with the court. This leaves a lot of time and opportunity for fraudulent actions, or even honest mistakes. Beneficiaries and other interested parties – anyone who has a personal financial stake in the estate -- can file a lawsuit against an executor for wrongdoing if the wrongdoing results in a financial loss.
The executor of a will has a fiduciary duty to the estate and its beneficiaries – an obligation to always act in their best interests and not her own. This prohibits her from taking certain actions:
- She can’t make risky or unsafe investments or transactions on behalf of the estate. She must manage the assets in a way that a prudent person would.
- He can’t use estate property or assets for his own benefit or realize financial gain from any actions he takes while probating the estate.
- She can’t mix the estate’s money with her personal funds.
- He must be open and forthcoming with the estate’s beneficiaries.
- She can’t pay herself more than a reasonable amount of compensation for serving as the executor.
- He must explicitly follow the terms of the will and the deceased’s final wishes.
The Legal Process
When an executor breaches her fiduciary duty, you can sue her by filing a lawsuit for damages in civil court. You must establish that she does indeed have a fiduciary responsibility to the estate – she’s accepted the position of executor and this should be clearly confirmed by court documents. You must establish to the court’s satisfaction that the estate lost money and its beneficiaries were denied their rightful inheritances because of what she did.
You might begin with a review of the will and any and all documentation you’ve received from the executor – in many states, he has a legal obligation to send copies of all of his written activities and communications to the beneficiaries. If you haven’t received anything, this might be a good indication that something’s wrong. Keep a chronological diary of actions he’s taken that you consider wrong. The rules for filing a complaint with the court are the same as with any civil lawsuit, including doing so before the statute of limitations expires. Take your documentation to a lawyer or legal aid for review and to find out if you have a case and how long you have to file.
If You Win Your Case
If you win your case, the executor may be ordered to personally reimburse you for losses you and other beneficiaries sustained because of her activities. If the estate is still open, the executor will most likely be removed from office and someone else will be appointed to serve.
Kenneth Vaccerman & Associates, a law firm in New Jersey, indicates that you might also be able to stop the executor in his tracks if the estate is still open, before he actually loses or misappropriates estate assets or money. If you have reason to believe he is doing something wrong, you can file a show cause proceeding in many states. This isn't a whole new lawsuit, but a motion you'd make as part of probate case. You can ask the judge to order the executor to make a full accounting of what he’s done so far. If he is violating his fiduciary duty, it should be apparent from the accounting. The court can remove him from office. If the estate has already lost money or value, the accounting might provide pivotal, concrete evidence if you also choose to sue him in a separate civil action lawsuit.