Understanding Estate Fiduciaries: Roles, Responsibilities, and Risks

When it comes to estate planning and administration, the role of an estate fiduciary is paramount. These individuals are entrusted with important responsibilities to carry out the wishes of the deceased and manage the estate’s affairs efficiently.

Who are Estate Fiduciaries?

Estate fiduciaries, also known as executors or trustees, are individuals appointed to manage and distribute the assets of a deceased person’s estate according to their will or trust. Similarly, an administrator appointed by the Court to administer an intestate estate is also a fiduciary.

Role and Duties of Estate Fiduciaries

The primary role of an estate fiduciary is to oversee the administration of the deceased person’s estate. Their duties may include:

• Asset Inventory and Management: Identifying and valuing all assets owned by the deceased, including real estate, investments, and personal property.
• Debt Settlement: Paying off outstanding debts and taxes owed by the estate.
• Beneficiary Notification: Informing beneficiaries named in the will or trust about their entitlements.
• Distribution of Assets: Distributing assets to beneficiaries as specified in the will or trust, or as directed by law if no will exists.
• Estate Accounting: Maintaining accurate records of all financial transactions related to the estate.

Responsibilities of Estate Fiduciaries

Estate fiduciaries have legal and ethical responsibilities, including:

• Acting in Good Faith: Fiduciaries must act honestly and in the best interests of the estate and its beneficiaries.
• Following Instructions: They must adhere to the terms outlined in the deceased person’s will or trust.
• Prudent Management: Fiduciaries are expected to manage estate assets responsibly and prudently.
• Timely Administration: Fulfilling their duties in a timely manner, including filing tax returns and distributing assets promptly.

Risks of Being a Fiduciary

While serving as an estate fiduciary is an honorable role, it comes with inherent risks:

• Legal Liability: Fiduciaries can be held personally liable for mismanagement of estate assets or failure to fulfill their duties.
• Conflicts Among Beneficiaries: Disputes among beneficiaries over asset distribution can lead to legal challenges for the fiduciary.
• Complexity and Time Commitment: Administering an estate can be complex and time-consuming, especially for larger or more intricate estates.
• Financial Responsibility: Fiduciaries may be required to post a bond, and they could be personally liable for any financial losses resulting from their actions.

Estate fiduciaries play a critical role in the estate planning and administration process. While the position entails significant responsibilities and potential risks, it is essential for ensuring the orderly transfer of assets and honoring the wishes of the deceased. Seeking professional guidance from an estate planning attorney can help estate fiduciaries navigate their duties effectively and mitigate associated risks.

If you are in line to serve as an estate fiduciary or need assistance with estate planning, please contact my office.

About the Author:

Bill Hutcheson works with clients to ensure that their wishes are carried out after their passing. His experience includes drafting wills, powers of attorney, and living wills. Bill is keen on preparing a comprehensive estate plan that is custom-tailored for each client’s own unique situation, which he achieves through various non-probate planning tools. He often draws upon his experience and knowledge as an investment professional prior to his legal career to understand the non-probate instruments his clients readily have at their disposal in preparing a comprehensive estate plan. In addition to Bill’s guidance in estate planning, he also has significant experience in administering estates upon the decedent’s passing. Bill steers Executors and Administrators through the labyrinth of state and local statutes related to the administration process. Regularly, Bill ensures the estate’s assets are properly distributed, debts are paid, and taxes are filed. Bill and his team focus heavily on the timeliness of proper filings required by an estate’s Executors, Administrators, and Trustees, as well as ensuring they meet all of their fiduciary duties and standards. Lastly, when disputes arise amongst an estate’s stakeholders, Bill defends and/or pursues the rights of his respective clients’ positions related to the estate in question.