You’ve been named Executor. While it is an honor, great responsibility comes with this appointed role. There are five clear lines you should never cross if you want to avoid legal hot water. Wrapping up someone’s estate can feel overwhelming but it is not a valid excuse for taking shortcuts that  could cause you to pay the estate back and more, or worse, contempt of court or even criminal charges. In this blog, we walk through the crucial don’ts for any executor. From paying yourself without court approval to ignoring provisions in the will, if you do any of the following five things, you may just end up with a lawsuit with your name on it.

Ignore the Law or the Terms of the Will
The Estate has to be administered in a specific order, and using estate funds to pay for things now without waiting to see what other expenses the estate might have can land you in hot water quick. The most common mistakes are 1) not following NCGS § 28A-19-6, which discusses the order of payment of claims and 2) using estate funds to pay expenses of the real estate.

First, claims must be paid in order, so unless you are absolutely certain there are sufficient funds to pay back ALL claims, because if not, you could be required to pay the “unfunded” claims of the estate out of your own pocket, up to the amount that would have otherwise been distributed (not to mention any possible legal fees and such).

Second, under normal circumstances, real estate in North Carolina passes outside of probate unless it is brought in to pay expenses either by unanimous agreement of the heirs or by a special proceeding before the Clerk of Court. If the heirs who inherit the real property are not also the heirs who inherit under the Will, then that is misuse of estate funds and the Executor could be required to repay the funds out of their own pocket.

Likewise, the terms of the will and any related planning documents dictate how to distribute assets. An executor cannot modify or ignore distribution instructions, no matter how unfair or impractical they may seem. If beneficiaries wish to change distribution terms, they must do so in writing and be in unanimous agreement, typically called a “Family Settlement Agreement”, and there are legal formalities which must be followed for the agreement to be enforceable. Even when all beneficiaries agree to an alternative arrangement, some counties in North Carolina require all family settlement agreements to go before a superior court Judge.

Refuse to Provide Information to Beneficiaries
Fiduciary duties to the beneficiaries obligate the executor to keep interested parties reasonably informed about the estate settlement process. That means providing a copy of the will when requested, sending periodic status updates, and answering reasonable questions. The executor of the estate understandably cannot perform every time-consuming request or constantly update interested parties. But refusing to share information or withhold details without justification invites litigation, unnecessary expenses and hostility. As the ultimate receiver of funds, beneficiaries have a right to stay updated on a reasonable basis and it’s in everybody’s best interest to keep them apprised.

Use Estate Funds for Personal Gain
An executor is a fiduciary and must always act in the best interest of the estate instead of their own. This duty means they cannot use estate funds for personal benefit unless authorized by the will or court.

For instance, the executor cannot pay or reimburse themselves until the court approves, hire friends or family for estate work at inflated rates, or siphon off estate assets for financial gains or personal use. All actions must benefit the estate itself and its heirs.

Make Drastic Changes to Estate Assets Without Approval
An executor may need to sell estate property to access cash for paying debts or taxes. However, they cannot make unilateral decisions to change a beneficiary’s inheritance without consent. This limitation includes liquidating a business, terminating a lease, or significantly altering real estate holdings. An executor should typically obtain beneficiary approval or court permission before taking disruptive actions that significantly impact estate assets. They must balance acting decisively in the estate’s best interests while avoiding detriment to valuable assets. For example, the estate may need to liquidate an asset to pay expenses – which is legitimate, however in doing so, obtaining consent in advance or at a minimum, giving notice to the beneficiaries, can help reduce conflict and decrease the chances of costly litigation.

Override Beneficiary Rights Specified in Estate Documents
Suppose the will or a trust designates certain beneficiary rights like a right of first refusal on real estate or mandatory payout terms. In that case, the executor cannot override or ignore these rights. Their fiduciary duty is to uphold all valid instructions in the estate plan. Executors should also raise concerns about contradicting beneficiary rights with the beneficiaries and/or probate court. While executors hold leeway when exercising judgment for certain decisions, they must follow the estate planning documents and comply with strict fiduciary responsibilities.

How to Protect the Estate Interests and Hold Executor’s Responsible
Sometimes, an executor just isn’t the right fit. They may drag their feet on sales, dodge their questions, or want to quit but don’t address their inability to serve. Beneficiaries can protect the estate’s interests if an executor shows incompetence or unfitness in their duties. This guide covers red flags to watch for, plus options to legally uphold wishes if the appointed administrator falters.

Warning Signs of Executor Misconduct
Below are four common signs that an estate executor may be engaging in misconduct or otherwise failing to fulfill duties properly:

• Withholding information from beneficiaries – Refusing reasonable requests for updates or important documents can signal deliberate evasion.
• Misusing estate funds – An executor cannot unjustly utilize estate assets to benefit themselves or others. Even a whiff of impropriety can merit scrutiny.
• Failing to accurately inventory assets – Omitting certain assets from inventory filings is a tactic some executors use to hide mismanagement.
• Dragging out the estate settlement process – While some delays are expected, excessively drawn-out timelines often indicate negligent oversight or outright stonewalling. Note: Estates can take 12-18 months to administer, so if you haven’t heard anything for two weeks that doesn’t mean anything is amiss. A general rule is once every 30-90 days, depending on the circumstances.

These warning signs offer opportunities for beneficiaries to seek accountability from an executor for falling short of their obligations. However, proving grounds for formal removal can be challenging without experienced legal guidance.

Options for Removing or Replacing an Executor
Beneficiaries have options for legal recourse if an executor’s misconduct or wrongdoing is indisputable. Beneficiaries can submit a formal complaint seeking the court-ordered removal of an executor and replacement with an alternate fiduciary. Grounds for removal requests often include breach of fiduciary duty, criminal behavior, or wasting estate assets. Probate judges have broad discretion for determining what merits removal and replacement.

Documenting how an executor’s inappropriate actions have specifically breached their good faith responsibilities to the estate can help strengthen the case for their dismissal. Experienced probate litigation counsel helps assemble actionable evidence.

Beyond misconduct, interested parties can seek replacement when executors become incapacitated due to health issues that prevent them from actively administering the estate. However, more than “unwillingness” is required if they can still technically perform duties.

Despite the court’s discretion, the mere threat of litigation can motivate some executors to step aside voluntarily. But successful court battles are never guaranteed. An estate attorney experienced in probate litigation can advise beneficiaries on realistic prospects before moving to file removal
petitions.

Working with a Qualified Probate Attorney
While executors are responsible for carrying out the administration of a deceased person’s estate, working with an experienced probate and estate planning attorney can be invaluable for navigating this process. They can assist you in avoiding legal missteps or liability in your role.

At Tuggle Duggins P.A., we can help executors to:

• Accurately interpret and file the will with the Clerk of Court for probate
• Inventory assets and create estate accountings
• Communicate properly with all beneficiaries
• Ensure accurate valuation and valid distribution
• Help resolve creditor claims or conflicts between beneficiaries if they emerge
• Provide reliable guidance on meeting court and paperwork filing requirements
• Handle the sale of property, investments, or transfer of assets if required
• Coordinate with the CPA, accountant or other tax preparer(s) for the executor as needed to facilitate accurate information for any tax returns, deductions, etc. for the estate.
• Facilitate smooth closing processes for estates of all sizes

Rather than facing tricky legal situations alone or trying to interpret unclear guidance, engaging our probate lawyers allows executors to get answers and have greater confidence they are fulfilling their duties properly. This provides helpful accountability and oversight. Whether you are just getting started as an executor, have been handling the estate and are just overwhelmed, or are nearing the finish and don’t know where to go or how to finish, contact one of our Estate Administration attorneys at Tuggle Duggins P.A. today for a consultation.