Being the executor of an estate in New York is a difficult job. While much of the work is unpleasant, rarely does anyone sue the executor. Yet, a lawsuit can occur if the executor fails in specific duties. When can this happen?
How executors open themselves to personal liability
Most executors are generally not liable for the debts of the person whose estate they administer. However, there are two instances where they can leave themselves open to probate litigation. The executor must pay estate taxes and creditors and maintain and distribute property to beneficiaries. They agree to act in good faith and in the estate’s best interest. The court formally names the executor, but it generally is the person named in the deceased’s will.
Executors can be sued if they are dishonest in administering an estate. Generally, the most common type of litigation involves an unpaid claim by creditors. This usually means that the deceased owed someone money. Executors must pay claims in order of priority. Creditors must file estate debt claims within a specific time frame. Estate beneficiaries may also be able to sue an executor over failure to perform fiduciary duty. Breaches of fiduciary duty are vast and can encompass not paying taxes, making improper investments, having a conflict of interest, buying something with funds from the estate, or committing outright crimes like embezzlement.
Family disputes can lead to litigation
Legal disputes involving a loved one’s estate often are complex and can become contentious. The laws that govern estate administration are difficult for most people to understand. What frequently happens is some family members have a flawed understanding of what needs to occur during probate. Consider mediation to resolve the dispute before heading to litigation.
Reaching an agreement with a creditor may be more complicated. If you are the executor, you must prove that you are paying creditors in order of importance. If the case heads to court, you will bound by a judge’s decision and may be prohibited from paying beneficiaries until the debts are taken care of.