Executors Behaving Badly: 6 Pitfalls for You to Avoid
By Joe Busnengo, Attorney At Law
You’ve just been named the executor of an estate. Can someone in your position get themselves into real trouble? Well, quite frankly, yes. If you mismanage an estate, whether intentionally or not, there are consequences to an executor behaving badly and they aren’t often pretty.
That’s what today’s blog post is all about – addressing the pitfalls with being an executor that can occur if you don’t know what to watch out for. However, if you know what to avoid, you can keep the process steered in the right direction.
One of the biggest things that I stress to someone who talks to me about probate issues is, there are a lot of traps in probate law. It's not something that is very well understood by the general public and there are a lot of misconceptions out there. These misconceptions can have a lot of serious repercussions. Let’s take a closer look at each of the more popular pitfalls that executors can fall into.
Pitfall #1: Misunderstanding the Lifespan of a Power of Attorney
Starting with a myth of estate planning that many people believe to be true, I may hear, “My mom just died and I was her power of attorney. How do I get my name on her house?”
Sorry, but the power of attorney “died” with your mother. A power of attorney doesn't mean very much after someone passes away, with a few exceptions. Power of attorney does not give you any rights or control over their assets once they've passed away. It means absolutely nothing once they’ve passed away.
Pitfall #2: Taking Too Long to File the Will
Did you know how soon you have to file a will in Illinois? Don’t delay. In this state, it is mandatory for whoever has the original will to file it “immediately” with the circuit court in the county that the decedent lived in. As soon as you discover that the person has passed away, you need to move quickly.
Many executors never get around to doing this and that’s a big mistake because if you intentionally do not file the original will, it is a felony in the state of Illinois to conceal it.
Pitfall #3: Overestimating Your Authority as Executor
If you are named executor of the will, does that instantly grant you authority over a wide range of assets to distribute? No. You have little authority until a judge has looked at the will, admitted it and said, "Yes, I am going to appoint you executor." Until this occurs, the will doesn’t mean very much. You are not the executor until appointed.
Therefore, you don't have the authority to manage the assets other than perhaps taking certain emergency measures. For example, you may be able to pay the gas bill so the pipes in a home don't freeze – but only things that are absolutely necessary apply. You do not have the authority to move into the house and treat it as your own. Nor do you have the authority to access the decedent’s bank accounts.
There is a defined list of what’s allowed, according to the statute:
- Carrying out a gift of the decedent’s body
- Burial of the decedent
- Payment of necessary funeral charges
- Preservation of the estate – meaning that if some action is necessary to keep the estate from losing value, you can take it.
Remember: It's not the decedent who appoints you. It's the court. Yes, the court is likely to follow the decedent's wishes on who they appoint, but the final decision still rests with the court.
Pitfall #4: Distributing Assets Before All Debts Are Paid
This is a big one. Let's say you've opened probate and been appointed executor so that now you're actually managing all the decedent’s assets. The will claims that not only are you the executor but you also get the decedent’s house. However, before you call the moving company, wait a minute. The house is not yours because you cannot distribute the assets until all debts are paid off. Not only must you pay off the debt, but you also have to publish a notice in the newspaper that the decedent died and that anyone who thinks that the decedent owed them money has six months to come forward.
If you find potential creditors when you’re going through the decedent’s papers, you will need to contact the creditor on your own and send them a notice about the debt, giving them a window of time to come forward. Keep in mind that debts aren’t limited to the more obvious categories that come to mind such as credit cards and mortgages – it can include parties like the phone company and electric company too.
Pitfall #5: Thinking That You Get to Decide Who Gets What
A lot of people seem to have the misconception that the executor has final say about who gets what assets. That’s not really the case. If you are appointed executor, you must follow what’s in the will.
For example, if the will says that your recently deceased mother’s home goes to your brother and your mother’s lake house goes to your sister, you as the executor can’t swap the two. You also can’t give your sister the value of the lake house instead and keep the lake house for yourself. You, as the executor, must act as a personal assistant after death.
Executors may have a lot of autonomy and trust to do things, but you still need to run your decisions past the boss – the “boss” in this case being someone’s wishes within a will. If you distribute an asset to someone who you shouldn't have and you can't get it back from them, you run a great risk that whatever you distributed that you shouldn’t have is going to come out of your own pocket.
Take the scenario of an executor who sees that the deceased had four children and thinks, “Well, surely these assets should be evenly divided among the four kids, right?”
Yes, they should - if they’re all still alive and that’s what the will says.
However, what if the eldest of those four children passed away and he left behind two children of his own? The three surviving children, his siblings, will each get 25% of the assets evenly. The remaining 25% will be split among his two children. If he had more than two children, the percentage will be split differently. What you cannot do is give everyone the same amounts across the board in an effort to try to make things “fairer.” In doing so, you may be breaking the law and liable if someone objects.
Pitfall #6: Letting Your Emotions Get the Best of You
90% of the time, the executor is someone who is very close to the person who passed. That person is probably very emotional at the time and may not be in a state of mind to make the most rational of decisions.
In that event, getting a third party involved who is not emotionally attached can make a world of difference. They may be sympathetic to your situation, but at the same time, they didn’t know the deceased so they aren’t clouded by emotions. They can look at all of these elements dispassionately and make sure that things are being handled right. Most importantly, they can ensure that you’re not making irrational decisions due to the nature of the relationship or simply not understanding certain legal concepts.
In so many cases, an executor is not intentionally behaving badly or trying to manipulate their role for their own gain. More often, we hear of people who have the best of intentions who have stepped into a role that they’re simply not prepared for and a variety of problems occur.
Every executor should have an estate planning attorney who can help minimize the occurrence of things that can go wrong, explain how to properly handle the distribution of assets and warn you of potential liabilities for certain actions.
That’s where Miles & Gurney, LLC can be a fantastic partner to executors. So if you find yourself in that role, don’t wait another moment to connect with our estate planning attorneys so that we can help you navigate an executorship with confidence. Call Miles & Gurney today at 312.929.0974.
Joe Busnengo practices in the areas of probate, family law, and estate planning. While a student at Northwestern University School of Law, he gained experience with family law as an extern at Chicago Volunteer Legal Services and with probate and estate planning as a clerk at Prather Ebner LLP. Since graduating and being admitted to the bar in 2013, he has represented clients in adoption, divorce, and estate planning matters through Chicago Volunteer Legal Services and Wills for Heroes. He is currently a member of the Chicago and Illinois State Bar Associations and serves as co-chair of the CBA YLS Public Outreach—Wills for Heroes subcommittee.