You may think that Texas executors have difficult jobs after reading our last post on specific court-imposed requirements. That’s only the half of it. Texas executors must also follow their fiduciary duties to the estate and its beneficiaries. This post describes several prominent fiduciary duties owed by executors. If you have any concerns about specific duties of Texas executors, please contact us. If you are an executor, it’s far better to consult with a lawyer before you breach any duties. And if you are a beneficiary and suspect the executor has breached his or her duties, you should take corrective action before your rights are damaged further.
Executors are fiduciaries, meaning they hold a position where they are entrusted to act faithfully in someone else’s interest. For executors, that “someone else” is the estate and its beneficiaries. The duties described below are similar to the duties we discussed in our series on trust disputes. In fact, as a general rule, if a trustee’s duty can be coherently reworded in the context of a deceased person’s estate, then the executor likely has the same duty. All of the duties below apply both dependent and independent administrations. There are too many specific duties to list here, but several important ones are highlighted below.
Protect, preserve, and maximize estate assets. Executors have a duty to gather up estate assets, secure them, and if reasonably possible make them productive or increase their value. For example, if squatters are living in a deceased person’s house, the executor must use legal means to evict or otherwise remove them. The executor must also maintain insurance on estate vehicles and properties. And if a large amount of estate funds is sitting in a basic checking account, the executor must move some or all of those funds into an interest-bearing account.
Communication with beneficiaries. As discussed above, executors have a statutory duty to provide beneficiaries with a copy of the will. Executors also have a more general fiduciary duty to communicate pertinent estate-related information with the beneficiaries. In practice, it’s often difficult to say whether an executor has a duty to communicate a specific fact to a beneficiary. We recommend you speak with a probate attorney to determine whether a communication falls within this duty.
Duty of loyalty and prohibition of self-dealing. Executors assume a specific role when they get appointed. Whenever they act on behalf of the estate, they should specify they are acting in that role. For example, an estate bank account should clearly identify its owner as “John Smith as Executor of the Estate of Jane Smith” rather than simply “John Smith.” In this example, even though the two accounts are owned by the same person, the law treats them as two different people, called “capacities.” Whenever a person’s dual capacities become blurred, and financial interests are at stake, then the executor may be breaching the duty of loyalty. For example, John Smith acting as executor cannot loan funds in the Estate of Jane Smith to himself individually. This is called self-dealing. Texas law treats self-dealing transactions extremely suspiciously and punishes its offenders quite severely. If you have any doubts at all whether a transaction counts as self-dealing, speak with a Texas probate attorney before making the transaction.
Our Dallas, Texas probate lawyers are experienced at advising executors of their fiduciary duties, helping executors comply with those duties, seeking redress for beneficiaries when those duties are breached, and defending executors accused of breaching their duties by beneficiaries. If you are involved in a dispute or potential dispute over breach of an executor’s duty, contact us today to discuss your situation. Our offices also service Plano, Frisco, McKinney, Denton, Fort Worth, Garland, Irving, Austin, Houston, San Antonio, Nacogdoches, Lufkin, and Center.
Our next post wraps up our series on following your duties as an executor and highlights some of the more important points we discussed.