In Texas, the executor of a will handles affairs relating to the estate of a deceased person and has a fiduciary duty to the beneficiaries and the estate. The role includes paying debts, distributing the estate’s assets to beneficiaries and handling related legal issues.
When an executor is careless or dishonest in the role, they have likely breached their fiduciary duty, providing grounds for creditors or beneficiaries to sue.
What is a fiduciary duty?
Fiduciary duty means an executor must perform their duties in the best interests of the beneficiaries and the estate. For example, requirements include accurately following the will’s instructions, treating all beneficiaries equally and fairly and providing accurate and timely information regarding the estate’s transactions and assets. The executor must also act in the best interests of the estate and its beneficiaries while exercising care and prudence in managing the estate’s affairs and investing its money.
Creditors can sue an executor
One of the executor’s first responsibilities is to pay off any estate debts if the estate has enough money. The executor must pay all debt claims before distributing the remaining funds to beneficiaries. If the estate does not have enough funds to pay all the creditors, the executor must pay secured debts first, then unsecured debts.
An executor might pay creditors incorrectly and lack the funds to pay higher-priority creditors. They might also illegally take funds from the estate and choose not to pay the creditors. Either of these actions could trigger creditors to pursue probate litigation to get their money.
Why beneficiaries might sue
An executor might breach their fiduciary duty in various ways that affect the beneficiaries. Their actions might not be intentional, but they can still create situations that cause assets to become damaged or for beneficiaries to lose money and file a claim, in the following ways:
- Distributing assets to beneficiaries too soon
- Making poor or improper investment choices that reduce the estate’s value
- Not paying taxes or filing tax returns late
- Losing property such as jewelry or letting insurance lapse on a property, causing issues
- Generally not able to handle the demands or responsibilities of the job
Additional breaches of fiduciary duty
In some cases, the executor might not understand the proper procedures or has difficulty managing all of the tasks. In other situations, however, the breach of duty is more intentional:
- Conflict of interest between what is best for the beneficiaries vs. what is best for the executor
- Self-dealing, by using the estate’s money to pay personal bills, buying items for themselves or others using the estate’s money
- Outright crime, such as embezzling funds from the estate
Awareness of the circumstances under which you can sue to remove an executor and possibly recover damages will help you better protect your financial interests.