Both executors and successor trustees are estate “fiduciaries.” So, if you have been appointed executor of a will or successor trustee of a trust, usually at the death of a loved-one, you can be held personally liable for any losses caused by your failing to follow the rules. Here are five tips to get you started and keep you out of trouble:
- Take a deep breath. Usually there is nothing major that needs to be done within the first few weeks after the death. To start, locate the original estate planning documents, including any wills, trusts, and amendments. Then, obtain at least seven certified copies of the death certificate.
- Gather the account statements. You will need identifying and titling information for all estate assets. Gather any bank or brokerage statements that are lying around the decedent’s house and start listing all the accounts by type, institution, and account number. Statements and refunds will keep arriving, so have the mail forwarded to you. For real estate, get copies of the deed, mortgage, and any title policies from a title company or online title information service.
- Diligently track expenses. Relatives or creditors may challenge your actions as fiduciary. Keeping thorough records will aid your defense. List each expense by date, account, check number, payer, and payee. Include detailed information about the purpose. Your initial attention to detail here will pay off later when you prepare statutorily required financial reports and individual and estate income tax returns.
- Heed the cardinal rule. Though shalt not mix estate money with your money! This goes both ways: don’t put estate money in your accounts and don’t put your money in estate accounts—even temporarily. While you may pay for funeral and other “last expenses” out-of-pocket and get reimbursed later, you should pay all other estate bills out of estate accounts.
- Get competent advice before you act. Although you may be able to handle most aspects of a simple estate yourself, you should at least consult with an Estate Attorney and a CPA shortly after the death. Distributing assets, making death benefit claims, or paying creditors, without thoughtfully considering the consequences, might irrevocably harm the estate and make you personally liable.
As you can see, attention to detail and competent advice will help you meet your fiduciary responsibilities as executor or successor trustee. For more information or advice on probate or trust administration, please call me at 707-636-4806.
David J. Collier practices law in Sonoma County in the areas of Real Estate, Wills, Trusts, and Probate. David is responsible for the content of this advertisement. The information in this article is not legal advice. To obtain legal advice you must discuss your unique circumstances with an attorney.