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Executors Gone Wild!

Executors Gone Wild! by Tom Sciacca

{Read in 4 minutes}  As I discussed in a prior article, one of the most important things that a client can do when writing their estate plan is pick an appropriate Executor. The Executor has to do a lot of work, including but not limited to:

– Offering the deceased’s Will for probate

– Dealing with creditors

– Accounting to the beneficiaries

– Managing or selling real property

– Discovering assets if the deceased failed to leave good and detailed records

As I’ve mentioned before, some people see the role of Executor as an honor, but as my diligent readers know, it is really a tremendous amount of work as well.

Unfortunately, every now and then, an Executor strays from the path. What am I talking about here? I’m talking about an Executor who takes actions in an Estate that are in his or her own best interests — as opposed to the interests of the Estate as a whole. Examples of this might be:

– The Executor wishes to purchase a piece of real property for substantially less than its fair market value.

– The beneficiaries believe that the Executor stole money from the deceased during their lifetime and refuses to address that in his or her Accounting.

– Possibly even worse, the Executor, once appointed, simply refuses to do anything (such as failing to collect assets or defending the Estate against creditors’ claims), and to the detriment of the beneficiaries, allows the assets of the Estate to go to waste.

In any of these scenarios, we have a problem. Sometimes the beneficiaries and the Executor (or their legal counsel) can work this out, but often a Court proceeding is involved.

What does that Court proceeding look like? It would involve an interested party (such as a beneficiary or a creditor) bringing a proceeding in the Surrogate’s Court, asking the Court to remove the Executor (or the Administrator) for cause. The Court would issue a Citation to the Executor to show cause why the Court should not remove him or her.

What happens when this matter comes before the Court? The Court may try to see if the parties can resolve their differences amicably. For example, if the grounds for removal is that the Executor has failed to take any actions to collect estate assets, the Court might suggest a resolution by ordering the Executor to perform that action within a certain amount of time or else the Court will revoke the Executor’s Letters.

Another option would be to proceed in a litigated fashion whereby the Court would allow the parties to conduct discovery and eventually hold a hearing on whether or not the Court should remove the Executor. Such a proceeding would not happen before a jury but rather would be a “bench trial” heard by the Judge. The Judge would receive testimony and other evidence from both parties and their witnesses, and render a decision.

Finally, whether the Court ultimately removes the Executor or not, the Court may direct the Executor to file an Accounting wherein the Executor details all of the transactions they conducted on behalf of the Estate and shows what is left to go to the beneficiaries.

In that proceeding, the beneficiaries and creditors will have the right to be heard and resolve any fraudulent transactions or any waste that the Executor caused by failing to promptly attend to his or her duties.

If you would like more information on this topic, please contact me.