Risks for Executors
An executor is responsible for the complete administration of the deceased estate until the final distribution of the estate’s assets is made to the beneficiaries.
Executors owe a duty of care to the beneficiaries of the deceased estate to exercise the same degree of care as would an ordinary prudent business person.
To successfully administer a deceased estate an executor requires a good understanding of legal, accounting, taxation requirements and possibly superannuation legislation. As it is unlikely an executor will possess all of this knowledge, professional help is required.
It is paramount that the appointed executor understands the risks of deceased estate administration. Examples include:
- The deceased estate administration needs to be commenced and completed in a reasonable time. If an executor fails to do this and the beneficiaries experience a financial loss, they could be personally liable for the loss.
- An executor needs to protect the estate assets. They can be held personally liable for any damage to property that has not been appropriately secured or insured.
- Executors need to accurately determine who benefits from the deceased estate. If they make incorrect distributions, they may be personally liable to make amends.
- Executors are required to attend to the payment of all liabilities of the estate, including any taxation liabilities. If assets have been distributed leaving insufficient funds to discharge liabilities the executor may be personally liable to make these payments.